Shopify is laying off 10 percent of its staff, a move that affects about 1,000 of its employees, as first reported by The Wall Street Journal. In a memo on Shopify’s website, CEO Tobi Lütke says the company “must go through a workforce reduction,” which particularly affects those working in recruiting, support and sales.
Lütke notes that the ecommerce company is also reducing less “over-specialized” and duplicate roles, as well as “groups that were handy to have but were too far from building products.” He attributes the layoffs to a misjudged guess that the e-commerce industry would continue to grow after the COVID-19 pandemic.
As indicated by the WSJShopify’s workforce has increased from 1,900 in 2016 to approximately 10,000 in 2021 to meet projected growth. But Lütke notes that things “go back to roughly where pre-Covid data would have suggested.”
“In the end it was my decision to place this bet and I did it wrong,” writes Lütke. “Now we have to adapt. As a result, we have to say goodbye to some of you today and I am very sorry for that.”
Lütke adds that affected employees will receive 16 weeks of severance pay plus one additional week for each year the employee has been with the company. Shopify also offers career coaching to help affected employees find another job, as well as a “kickstart” fee to replace the company laptop that employees must return to Shopify. When reached for comment, Shopify pointed out The edge according to Lütke’s statement.
Shopify is just one of many companies that are cutting jobs due to the effects of the post-pandemic economy. Netflix fired hundreds of employees after reporting a drop in subscribers, while Peloton let go of about 2,800 employees as the company underwent some organizational shifts. The cryptocurrency industry is also struggling with the economic downturn, with crypto firms such as Coinbase, Gemini, BlockFi and Crypto.com facing layoffs. Meanwhile, Spotify, Apple, Meta and Google are delaying or planning to hire staff.