Shopify is laying off 10 percent of its workforce, a move affecting about 1,000 of its employees, The Wall Street Journal first reported. In a note posted on Shopify’s website, CEO Tobi Lütke says the company “has to go through a workforce reduction” that mostly affects those working in recruiting, support and sales.
Lütke notes that the e-commerce company is also reducing “over-specialized” and duplicative roles, as well as “groups that were convenient to have but too far removed from product creation.” He attributes the layoffs to a miscalculated bet that the e-commerce industry would continue to grow beyond the COVID-19 pandemic.
As the WSJ noted, Shopify’s workforce grew from 1,900 in 2016 to about 10,000 in 2021 to accommodate projected growth. But Lütke notes that things are “returning roughly to where the pre-Covid data would have suggested.”
“Ultimately, making that bet was my call, and I was wrong,” Lütke writes. “Now, we have to adjust. As a result, we have to say goodbye to some of you today and I’m very sorry.”
Lütke adds that affected employees will receive 16 weeks of severance pay plus an additional week for each year the employee has been with the company. Shopify also offers job training to help affected employees find another job, as well as a “start-up 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 just one of a number of companies cutting jobs due to the fallout from the post-pandemic economy. Netflix laid off hundreds of workers after reporting a drop in subscribers, while Peloton let go about 2,800 staff as the company underwent several organizational changes. The cryptocurrency industry is also struggling with the economic downturn, with crypto companies like Coinbase, Gemini, BlockFi and Crypto.com dealing with layoffs. Meanwhile, Spotify, Apple, Meta and Google are slowing hiring or planning to.