Shopify is laying off 10 percent of its workforce, a move that affects about 1,000 of its employees, as first reported by The Wall Street Journal. In a memo posted on Shopify’s website, CEO Tobi Lütke says the company “has to go through a reduction in workforce” that mostly affects those working in recruiting, support, and sales.
Lütke notes that the e-commerce company is also cutting down on “over-specialized” and duplicate roles as well as “groups that were convenient to have but too far removed from building products.” He attributes the layoffs to a miscalculated bet that the e-commerce industry would continue to grow beyond the COVID-19 pandemic.
As pointed out by the WSJ, Shopify’s workforce jumped from 1,900 in 2016 to around 10,000 in 2021 to meet the expected growth. But Lütke notes that things are “reverting to roughly where pre-Covid data would have suggested.”
“Ultimately, placing this bet was my call to make and I got this wrong,” Lütke writes. “Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that.”
Lütke adds that impacted employees will receive 16 weeks of severance pay plus one added week for every year the employee has been at the company. Shopify is also providing career coaching to help affected employees find another job as well as a “kickstart allowance” to replace the company laptop that employees must return to Shopify. When reached for comment, Shopify pointed The Verge to Lütke’s statement.
Shopify is but one of a string of companies cutting down on jobs due to the fallout from the post-pandemic economy. Netflix laid off hundreds of workers after reporting a dip in subscribers, while Peloton let go of about 2,800 staff members as the company underwent a number of organizational shifts. The cryptocurrency industry is also struggling with the economic drop-off, with crypto firms like Coinbase, Gemini, BlockFi, and Crypto.com dealing with layoffs. Meanwhile, Spotify, Apple, Meta, and Google are either slowing down on hiring or planning to do so.