Digital in decline | Shopify axes 1,000 jobs as gamble on post-pandemic recovery fails

Shopify is the latest tech company to be implementing a round of staff lay-offs.

It has announced that it will be reducing its workforce by ten per cent – a move that will impact around 1,000 employees, mainly working in sales, recruiting and support roles, according to a memo sent round to staff by the company’s CEO Tobias Lutke, and reported on by abcnews.go.com. Shares in Shopify have since tumbled by 15%.

The announcement comes in the face of slowing sales growth for the proprietary e-commerce platform, which is based in Ottawa, Canada. During the pandemic, business boomed for Shopify – ABC News reported that sales leapt 86% between 2019 and 2020, and jumped by a further 57%, to $4.61billion, last year. Forecasting this as a long-term trend, the company expanded to meet expectations – but, Lutke said, as the pandemic receded, shoppers returned to their old habits and patterns, with a commensurate reduction to Shopify’s e-commerce revenue growth.

Failed gamble

“It’s now clear that bet didn’t pay off,” Lutke said in the memo to employees, reported on by FastCompany. “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 five-year leap ahead.”