Shopify loses its “bet” and lays off a thousand employees
The Shopify co-founder explains that he’s recruited there for the past few years based on predictions based on trends surrounding the Covid-19 pandemic.
Online shopping platform Shopify announced on Tuesday that it was laying off 10% of its employees, or about 1,000 employees, because the mass adoption of e-commerce during lockdown didn’t result in a change in habits as quickly as it had hoped.
“By the end of the day, about 10% of the workforce will have left,” Tobi Lübke, the Canadian company’s chief executive, said in a letter addressed to his teams and posted on its website.
The Shopify co-founder explains that he’s recruited there for the past few years based on predictions based on trends surrounding the Covid-19 pandemic.
“We’re betting (…) that the proportion of dollars spent on e-commerce, rather than physical stores, will increase consistently 5 to 10 years ahead of our projections,” he said at length.
“Now it’s clear that bet didn’t pay off,” he admitted, saying “deeply sorry.”
Raging inflation
According to the Ottawa-based group, the share of online sales “continues to grow steadily” but has returned to levels expected before the health crisis skewed calculations.
The SMB online store hosting platform was down more than 15% on Wall Street as of 18:00 GMT.
Many other tech companies have decided to lay off employees or slow hiring after two years of reaping the rewards of the explosion in consumer online habits.
They started going out and working in the office again. Above all, rampant inflation, rising interest rates and supply chain difficulties are affecting the operations of companies and driving up labor costs.
Netflix and Twitter fired a few hundred people. Microsoft and Alphabet, Google’s parent company, have revised their hiring pace downwards.
The Shopify employees affected by the job cuts mainly belong to the human resources and sales departments, the boss said. You will receive 16 weeks of severance pay and an additional week for each year you have been with the company.
