Shopify announces it will lay off approximately 1,000 employees

Shopify announced that it will lay off about 1,000 people.

Shopify announced that it will lay off about 1,000 people. Shopify announced that it will lay off 10% of its employees. The company’s CEO Tobi Lutke believes that during the epidemic, Rapid expansion during this period did not bring sufficient returns. Shopify announced that it will lay off approximately 1,000 employees. Shopify announced that it will lay off approximately 1,000 employees1

Canadian e-commerce platform Shopify announced in an internal memo that the company will lay off 1,000 employees, accounting for 10% of its global workforce. Chief Executive Tobi Lütke admitted the company was wrong to bet the e-commerce boom would continue to grow.

After the news came to light, Shopify’s stock price fell 14% to $31.55 on Tuesday. Shopify shares have fallen more than 80% since peaking in November.

Lütke said in a memo sent to employees on Tuesday that layoffs were necessary as consumers returned to their original shopping habits and online orders continued to decrease. Shopify also warned that it expects revenue growth to slow this year.

Luedtke said he had expected the sharp growth in e-commerce sales to continue, but "it is now clear that the bet did not pay off." "It was my decision to make the bet, but I was wrong. "

Luetke said layoffs will occur in all departments of the company, but the recruitment, customer support and sales departments will see the most layoffs. "We're also eliminating over-specialized and overlapping roles, as well as teams that improve convenience but are far removed from building products," he said. Employees who were laid off will be notified on Tuesday.

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The layoffs announced by Shopify are the first large-scale layoffs since the company was founded in 2006, and are also the current wave of layoffs and hiring freezes sweeping technology companies. one of the largest initiatives in China. Rising interest rates, supply chain shortages and reversing market conditions including remote working and e-commerce shopping are cooling the once-hot tech sector.

In June this year, the streaming media platform Netflix laid off about 300 people in response to the declining number of users. Twitter, now embroiled in a legal standoff with Elon Musk, has laid off nearly 100 members of its recruiting team. Musk's own electric car manufacturer Tesla announced at the end of June that it would lay off 10% of its salaried employees, involving about 200 employees.

Other companies, including Microsoft and Alphabet's Google, have also said they will slow down hiring for the rest of the year.

The memo released by the company on Tuesday is the first major step Luedtke has taken since Shopify shareholders approved the board’s plan to protect Luedtke’s voting rights.

According to the filing documents submitted by Shopify, the company’s total number of employees has increased from 1,900 in 2016 to approximately 10,000 in 2021. Shopify's latest round of massive hiring comes as it tries to keep up with its booming business. Consumer e-commerce shopping activity has surged in recent years, with many small business owners selling goods and services through online stores.

Shopify reported annual revenue growth of 86% and 57% in 2020 and 2021, respectively, but all performance figures declined this year.

"What we are seeing now is a return to roughly pre-pandemic levels," Luedtke said in Tuesday's memo. "While business is still growing steadily, the growth over five years is not extraordinary." Big. ”

Shopify has been expanding its business in recent years to provide more services to merchants. The company develops hardware for retailers to use at the point of sale and also builds a shopping app for merchants on the platform to showcase their products. In addition, Shopify has created a network of local delivery centers to ship orders for business partners.

In May of this year, Shopify agreed to acquire U.S. logistics company Deliverr for a total of approximately US$2.1 billion in cash and stock. In June, Shopify announced a partnership with Twitter, and earlier this month it announced a partnership with the video platform YouTube to allow users to purchase products published by Shopify merchants on these platforms.

According to reports, Shopify will pay 16 weeks of severance pay to laid-off employees, with an additional week of severance pay for every year of service. Shopify announced that it will lay off about 1,000 employees 2

According to reports, Canadian e-commerce company Shopify closed down about 14% on Tuesday local time, the largest decline since May 5, mainly due to poor performance expectations and the Related to layoffs.

Recently, Shopify announced that it would lay off 10% of its employees. Company CEO Tobi Lutke believed that rapid expansion during the epidemic did not bring enough returns.

Shopify has approximately 10,000 employees. A 10% layoff is equivalent to 1,000 people. The affected positions are mainly recruitment, support and sales.

Luke said: “We are betting that the channel mix—that is, the share of dollars circulating through e-commerce relative to physical retail—will be accelerated by the pandemic in five or even 10 years. This evolution is permanent. For now, our bets are not paying off, and we are seeing a return to pre-pandemic levels."

< p> Online shopping boomed in 2020 and 2021, and Shopify became a hot stock, but its stock price fell sharply by 77% this year.

Shopify’s profit in the first quarter deviated seriously from expectations, and analysts also lowered their expectations for the second quarter. RBC Capital Markets analyst Paul Treiber believes Shopify may even lower its full-year forecast. When Shopify announced its first-quarter earnings in May, it said it expected the pace of merchants joining the platform to remain consistent with 2021. Treiber told clients that Shopify will invest all the gross profits it creates into the business itself, and the layoffs increase the possibility of lowering its performance expectations for fiscal 2022.

Analysts believe that Shopify’s second quarter revenue as of June 30 may be approximately US$1.33 billion, an increase of 11% from the first quarter.

A Shopify spokesperson said the company will pay employees who lose their jobs this week severance pay for at least 16 weeks and extend additional benefits, including the purchase of laptops and temporary home Internet access allowances. Shopify announced that it will lay off about 1,000 people 3

On Tuesday local time, Canadian e-commerce software developer Shopify announced that it will lay off about 1,000 people, accounting for 10% of its total global employees, mainly due to business growth. Not as strong as expected, this is also Shopify's first large-scale layoffs since its inception. After the news was announced, Shopify's stock price fell by more than 16%.

In a memo to employees, Shopify CEO Tobi Lutke admitted that he misjudged the duration of the pandemic-driven e-commerce boom, which continues to grow as the The massive reduction in online consumption necessitates cutting some positions.

According to a securities filing, Shopify had more than 10,000 employees in the fiscal year ending December 31, 2021, which means that the number of people laid off this time was approximately for 1,000 people.

Ruedtke said in the memo that the layoffs will affect all departments of Shopify, but most will occur in recruiting, support and sales, and at the company level, it is eliminating some that are not very critical. Position.

As an e-commerce software developer, Shopify is one of the biggest beneficiaries of the epidemic era. As offline stores reopen and consumers return to their pre-epidemic shopping habits, Shopify and other e-commerce companies are beginning to cope with the new situation.

Shopify previously believed that the proportion of online shopping relative to physical store shopping will continue to increase, even after the new crown epidemic subsides. Lutke said that this trend will achieve a qualitative leap in the next five or even 10 years.

Ruedtke pointed out: "It is now clear that this bet did not pay off, and what we are now seeing is that the data of mixed shopping is roughly restored to pre-epidemic levels. "While online shopping is still growing steadily, it hasn't taken a leap, and my expectations were wrong." In its most recent earnings report, Shopify forecast lower revenue growth in the first half of the year and the first quarter. Profits were significantly lower than expected. Shopify is scheduled to report second-quarter earnings on Wednesday.

RBC Capital Markets analyst Paul Treiber said the layoffs increase the possibility that Shopify will lower its full-year performance forecast.

A Shopify spokesperson said laid-off employees will receive 16 weeks of severance pay, plus one extra week for each year of service.

Amid economic uncertainty and the gradual weakening of the epidemic trend, technology companies have been announcing layoffs and hiring freezes. Earlier this month, Microsoft, Alphabet and Meta all said they would slow down hiring. Companies including Netflix and Coinbase have announced layoffs, and Tesla's autonomous driving department has also laid off nearly 200 people.