Shopify CEO says it made the 'wrong bet' on e-commerce boom growth lasting
Shopify to Lay Off 10% of Workers in Broad Shake-Up
Shopify is cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth the technology company made during the pandemic, according to an internal memo.
Tobi Lütke, the company’s founder and chief executive, told staff in a memo late Tuesday that the layoffs are necessary as consumers resume old shopping habits and pull back on the online orders that fueled the company’s recent growth. Shopify, which helps businesses set up e-commerce websites, has warned that it expects revenue growth to slow this year, and its shares have tumbled nearly 80% since they peaked in November. It reports quarterly results on Wednesday.
Shopify Inc. shares tumbled in pre-market trading Tuesday as the Canadian tech giant revealed a significant round of layoffs as the pandemic e-commerce boom fades.
Founder and Chief Executive Officer Tobi Lütke announced in a staff memo that around 10 per cent of the company’s workforce, or approximately 1,000 employees, will be let go by the end of the day.
“When the COVID pandemic set in, almost all retail shifted online because of shelter-in-place orders. Demand for Shopify skyrocketed. To help merchants, we threw away our roadmaps and shipped everything that could possibly be helpful,” Lütke wrote in the memo, adding that his company also made a bet that the pivot to e-commerce would “permanently leap ahead by five or even 10 years.”
“It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-COVID data would have suggested it should be at this point.”
He said most of the roles being cut are in recruiting, support, and sales. Other cuts would target duplicate roles and what Lütke described as “over-specialized” functions.
Shopify tumbled 15 per cent to $40.02 on the Toronto Stock Exchange in the early minutes of trading Tuesday morning
