Shopify, an e-commerce platform, revealed on Tuesday that it will reduce 10% of its staff – around 1,000 people across verticals – because it could not foresee that the e-commerce business would continue to grow at the same rate after the pandemic.
Tobi Lutke, the company’s CEO, stated in a statement that Shopify must reduce its employees, with around 10% leaving by the end of the day.
“The majority of the impacted positions are in recruiting, support, and sales, and we’re also cutting specialised and duplicate roles across the organisation, as well as certain groups that were handy to have but too far off from producing products,” he explained.
The corporation is sending emails to anyone who have been affected and will “have a meeting with a lead in their team.”
According to Lutke, ecommerce growth had been stable and predictable prior to the epidemic.
“Was this a one-time occurrence or the start of a new normal? So, based on what we saw, we made another wager: we gambled that the channel mix – the percentage of dollars that move through ecommerce rather than physical retail – would always be 5 or 10 years ahead “He mentioned it.
To match the planned expansion, Shopify’s headcount increased from 1,900 in 2016 to about 10,000 in 2021.
However, Lutke stated that it is now obvious that the gamble did not pay off.
“What we’re seeing now is the mix returning to basically where it should be at this stage based on pre-Covid statistics. Still rising gradually, although not by much in the last five years “He informed them.
Those laid off will get 16 weeks of severance compensation, plus an extra week for each year of service at Shopify.
“Any equity cliff will be removed, and any medical benefits will be extended. Knowing that Shopify is only one stop on a professional path, we’d like to assist everyone succeed as they take their next steps “said the CEO, adding that the firm will provide outplacement services such as career counselling, interview preparation, resume writing, and so on.
