Shopify had already quietly laid off nearly 50 employees earlier in the summer, delayed a compensation overhaul, and delayed dozens of job offers.
Shopify laid off around a thousand people, mostly in recruiting, support, and sales. A note shared on Shopify’s website also mentioned “over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products” as also being among those affected.
In the letter, CEO Tobias Lütke shared an admission that the tech giant’s bet on pandemic-fueled ecommerce growth “didn’t pay off.”
“We bet that the channel mix - the share of dollars that travel through ecommerce rather than physical retail - would permanently leap ahead by 5 or even 10 years.” he said, “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”
Shopify’s workforce has grown considerably over the last few years. In 2016, just 1,900 people worked at the ecommerce and retail tech firm. That number was closer to 10,000 before today’s round of layoffs.
Earlier this summer, The Globe and Mail reported that Shopify was delaying changes to their compensation packages, delayed job offers to candidates, and quietly let nearly 50 employees go in its first response to a falling stock price.
“Ultimately, placing this bet was my call to make and I got this wrong. 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,” said Lütke in his statement.
He continues, “Everyone will feel this news in their own way, but what’s universally true is that it will be hard for everyone.”
Shopify is offering employees 16 weeks of severance pay, plus an extra week for each year the affected employee was with the company. Shopify also said they would remove equity cliffs and extend medical benefits to team members let go.
Lütke ends his letter, “Most of the adaptations we’ve had to make have been to grow into something bigger. This time we grow into something more focused, more driven, and more singular in mission. The times demand it of us, and we will rise to the occasion once again.”