Shopify lays off 10% of workers as online sales slow – WWD

Shopify is losing ground, slashing its workforce by 10% as its bet that the pandemic would push e-commerce forward five years has crumbled.

Tobias Lütke, CEO, told company workers on Tuesday: “The next part of the journey will involve fewer teammates than we picked up along the way. Shopify is due to undergo a downsizing which will see around 10% leave by the end of the day.

The roles that will be most affected will be in recruitment, support and sales as well as what Lütke described as “over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from the building products”.

It’s a big step back for the company, which has built a buzzing business by helping anyone get started with e-commerce in minutes, then selling them access to more services as sales were increasing.

Investors sent shares of the company down 15.4% to $31.05 as of midday, taking the company’s market capitalization down to $40.2 billion.

“For a company like ours, this news will be hard to digest,” Lütke said. “It will be even more difficult for those who leave today.”

By way of explanation, the CEO said that demand for Shopify has skyrocketed during the pandemic as more brands seek to grow online during shutdowns.

“Before the pandemic, e-commerce growth was steady and predictable,” Lütke said. “Was this surge a temporary effect or a new normal? And so, given what we’ve seen, we’ve placed another bet: We’re betting that channel mix — the share of dollars flowing through e-commerce rather than brick-and-mortar retail — would jump in before permanent five or even 10 years.

“It is now clear that the bet did not pay off,” he said. “What we are seeing now is that the mix is ​​getting back to roughly where the pre-COVID-19 data would have suggested it should be at this point. Still growing steadily, but it wasn’t a significant five-year leap forward. Our market share in e-commerce is much higher than in retail, so that’s important. »

The online setback amounts to a blow to retail, which was also digesting Walmart Inc.’s profit warning on Monday, which came as shoppers spent more on food and less on food. fashion in a period of ultra-high inflation. .