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Shopify Lays Off Nearly 1,000 Employees

Shopify Lays Off Nearly 1,000 Employees

Shopify Cuts Nearly 1,000 Staffers

eCommerce giant Shopify is cutting its workforce by 10% — a sign that is indicative of both the decline in consumer spending and their interest in returning back to shopping in physical stores.

The move to lay off roughly 1,000 employees comes as the company’s bet on future growth prospects in the eCommerce space did not pay off.

“Give [the growth] we saw [in the pandemic]… we bet that the channel mix—the share of dollars that travel through eCommerce rather than physical retail—would permanently leap ahead by five or even ten years,” said CEO Tobias Lütke in a memo to staff.

“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 the bet didn’t pay off. … Ultimately, placing this bet was my call to make, and I got this wrong.”

Lütke noted that while eCommerce adoption is still higher than it was before the pandemic, the uptick in stay-at-home orders has declined. And with that shift, Shopify has seen its growth rate normalize, putting the company back on the trajectory it has followed for the past 20 years.

Furthermore, Lütke stated that the company struggled to execute on its roadmap as it had expected the surge in eCommerce to become the “new normal” – a reference loosely thrown around during the height of the COVID-19 pandemic. Consumers have instead primarily returned to traditional shopping habits, mainly in-store shopping.

After the news broke, Shopify’s shares tumbled 17%.

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