Shopify has announced it is cutting 10 per cent of its staff.

Tobias Lütke, the e-commerce company’s chief executive, said in a written statement that the cuts would span areas of the business including recruiting, support, and sales.

Explaining why the cuts were being made, Lütke pointed to the Covid pandemic and how it had supercharged the e-commerce sector.

Lütke anticipated a five-to-ten-year ‘leap ahead’ in e-commerce for a growth trajectory which had previously been steady and predictable. His bet was that the evolution spurred on by the pandemic would become the ‘new normal’ in e-commerce.

“We bet that the channel mix - the share of dollars that travel through e-commerce rather than physical retail - would permanently leap ahead by five or even 10 years,” said Lütke. “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.”

He concluded: “It’s now clear that bet didn’t pay off. What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point.”

Lütke acknowledged that he did not make the right call, and the outsized growth predictions were the chief reason for trimming the company’s headcount.

To smoothen the onward journey of departing staff, Lütke said that Shopify would be providing outgoing staff with outplacement services including career coaching, interviewing support, and resume crafting.

Share Story: