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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.”
He continued: “Our market share in e-commerce is a lot higher than it is in retail, so this matters. Ultimately, placing this bet was my call to make, and I got this wrong. Now, we have to adjust.”
Shopify has confirmed that employees who are let go will receive 16 weeks of severance pay, plus an additional week for every year they’ve been with the company. In laying off staff in this way, Shopify is following in the footsteps of Netflix, Vimeo and Lyft, tech firms which have all made similar announcements in recent weeks. Last month Elon Musk announced that Tesla would also be looking to cut ten per cent off its workforce, in response to his “super-bad feeling about the economy” and recession concerns.
Cryptocurrency exchange Coinbase has announced that it was cutting its workforce by 18%, with CEO Bryan Armstrong also warning of an oncoming recession. He said the company “grew too quickly” in 2021 as it scaled up to take advantage of the crypto craze, according to reporting by CBCS News.
Another cryptocurrency company, BlockFi, which also experienced rapid growth in 2021, announced last month that it was laying off 250 people. Intel and Meta have both announced hiring freezes.
Netflix recently cut a further 300 in a second round of layoffs, as the firm’s financial struggles continue.
First reported by Variety, the streaming giant’s latest redundancies affect several different departments, including some international workers but mostly those based in the US.
Netflix spokesperson Bao Nguyen told The Verge: “...we sadly let go of around 300 employees.
“While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.”
Netflix would not confirm whether there were plans for more layoffs in the near future.
This latest cull of workers comes after Netflix got rid of 290 employees in May, citing “a slow down in revenue and decline in subscribers”.
