The news came from an internal email by Chief Executive Tobias Lütke, which has now been published online.
“Team, I’m sitting down to write this email not far from where I once sat down to write the first few lines of code for Shopify itself,” the email begins.
After breaking the news of the redundancies — writing that individual emails would be going out “in the next few minutes” following the initial all-staff email to “clarify if your role was affected” — Lütke then explained that the layoffs were due to a growth misjudgement.
“When the Covid pandemic set in, almost all retail shifted online because of shelter-in-place orders. Demand for Shopify skyrocketed,” Lütke wrote.
“We bet that the channel mix — the share of dollars that travel through e-commerce rather than physical retail — would permanently leap ahead by 5 or even 10 years.
“We couldn’t know for sure at the time, but we knew that if there was a chance that this was true, we would have to expand the company to match.
“It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point.”
In the past year alone, Shopify’s stocks have dropped 77% according to News.com.au, with a 14% drop reported today alone after news of these layoffs broke.
Even so, earlier this month Shopify announced merchants on its platform would be able to feature their products across their YouTube channels in an integration deal that would also help YouTube expand its in-app shopping push.
Most of today’s staff cuts are in the recruiting, support and sales departments, with many of the outgoing Shopify workers already looking for new jobs on LinkedIn.
“18 months ago, Shopify made a big bet. Unfortunately, that bet didn’t pay off and today I am one of many thousands of talented and bright individuals who woke up to learn we were the collateral damage of that gamble,” former content design employee Stevie Douglas posted on the employment platform.
Douglas also shared that the now-former employees do not know if this means they will now be deported from Canada, where Shopify is based.
While Lütke doesn’t disclose those ramifications in the email, he does inform staff that “those affected today will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify. We’ll remove any equity cliff, and extend any medical benefits”.
Shopify’s staff cuts aren’t the first for the tech industry, with Layoffs.fyi reporting that 73 large tech businesses had reduced staff in the two months prior to May 2022.