Shopify lays off 10% of its global workforce! CEO admits misjudgment of consumer trends

It is learned that on July 26, Shopify officially announced that it will lay off 1,000 employees worldwide, accounting for 10% of its total employees. Most of the layoffs will come from the recruitment, support and sales departments.

In addition to layoffs, Shopify will also reduce the size of its team. “We’ve also eliminated overly specialized and duplicative roles, as well as some teams that were easy to own but too far removed from building the product,” CEO Tobias Lütke wrote in the notice.

Tobias Lütke admitted in a blog post that the layoffs and team reductions were due to the company's misjudgment of consumer trends.

During the epidemic, offline physical merchants flocked to Shopify to open stores, and online sales continued to grow. Just in February, MarketplacePulse noted that Shopify is now close to 50% of the size of Amazon's market after surpassing $54 billion in GMV in the fourth quarter of 2021.

Amid the prosperous situation, Lütke once declared that the rapid growth driven by the epidemic will last for 5 or even 10 years. But today, this prophecy has not come true.

"While growth is still ongoing, it has slowed significantly," Lütke said in a blog post. "I made an error in judgment and now we must adjust."

GlobalData analyst Neil Saunders said Shopify was right to “right-size” its business but noted its difficulties in building its platform, particularly in offering sellers better logistics options.

“Shopify has started with its acquisition of Deliverr, but there is a lot of work to do in integrating this and building other helpful tools,” added Neil Saunders.

It is understood that Shopify had been actively recruiting until May this year, and the sudden announcement of layoffs revealed a major change in Shopify's development direction. Affected by supply chain problems and high inflation, the entire e-commerce industry has been hit hard.

Shopify's stock price fell sharply on Tuesday after the notice was issued, down nearly 80% from the beginning of the year. That makes it one of the tech companies in the industry hardest hit by the consumer downturn. Recently, Walmart's stock price fell 8% the day after it issued a profit warning, and related stocks such as Amazon and Target also fell.

Editor✎ Ashley/

Disclaimer: This article is copyrighted and may not be reproduced without permission.