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Shopify Inc., the Canadian e-commerce firm headquartered in Ottawa, Ontario, is laying off 10% of its total workforce, and this was revealed on Tuesday, July 26. The move comes as the company’s stock price drops by 15%.
As per Reuters, Shopify is also struggling to increase its sales as online shopping has slowed down after the COVID-19 pandemic situation got better. While this is good news, it is a bit unfortunate for Shopify’s business since most people have returned to the malls to buy their wants and needs.
This means that fewer people are shopping online now, and this is why the company is grappling with sales growth now. To see how bad things have become for the business, Shopify was forced to cut jobs, and about 1,000 workers are affected.
The job terminations will touch all of the divisions across the company, although most will be in the support, sales, and recruitment areas of the firm. According to CNBC, Tobi Lütke,
Shopify’s chief executive officer sent a memo to employees and announced that they will be eliminating “over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products.”
The CEO also explained that the company’s shares plunged 14.7% to $31.29 after online orders started to diminish. Before this, Shopify experienced a big surge in sales when the COVID-19 lockdowns were implemented.
At that time, many companies set up their online stores since people who were stuck at home had shifted to online shopping. Shopify also saw the growth and immediately expanded its workforce to keep up with the demand.
The company did not think that the online shopping boom will wane so soon; thus, it invested and hired more workers. Shopify’s chief has realized that it was not a sound decision, and now it has to lay off some of its staff as visits to brick-and-mortar stores are now back to the pre-pandemic levels.
"It is now clear that the bet did not pay off and ultimately, placing it was my call to make and I got this wrong," Lütke said. “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 was not a meaningful 5-year leap ahead.”
