Shopify cutting 10 percent of its workforce by the end of the day

Shopify is set to lay off nearly 1,000 employees by day’s end, a memo from the company’s CEO, Tobi Lütke, states.

The move to cut 10 percent of the roughly 10,000 employees working at the Ottawa-based company is necessary as the demand for e-commerce, fueled by restrictions brought on by COVID-19, dies down.

Lütke said Shopify “threw away our roadmaps” to help businesses throughout the pandemic. Before COVID-19, Lütke said growth in e-commerce was steady, and it raised questions if the surge in demand experienced during the pandemic was temporary. If it weren’t, the company would have to expand to keep up with demand.

“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 wrote.

“Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that.”

Shopify will pay impacted employees 16 weeks of severance pay. Tenure employees will have one week added for every year of tenure. The company will also offer outplacement services, including career coaching, and cover internet costs for this period.

You can read Lütke’s full memo here.

Image credit: Shutterstock

Source: Shopify