In a memo posted on Shopify’s website, CEO Tobi Lütke said the company “has to go through workforce reductions” that are most affecting those working in recruiting, support and sales.
Lütke also noted that Shopify is also reducing “overly specialized” and duplicated roles, as well as “groups that were ‘nice’ to have but were too far away from building the product itself.” He attributes this situation to a miscalculated forecast that the e-commerce industry will continue to grow even after the coronavirus pandemic
As noted by the WSJ, Shopify’s headcount has “jumped” from 1,900 in 2016 to around 10,000 in 2021 to accommodate expected growth. But Lütke notes that things are “returning to roughly where the pre-coronavirus data would suggest.” Of course, the Russian invasion of Ukraine, which fueled inflation on a global level, plays a major role in these inaccurate forecasts.
“Ultimately, going with that forecast was my decision and I was wrong. Now we have to adapt. As a consequence, we have to say goodbye to some of you today and I am deeply sorry for that,” Lütke pointed out.
He added that the affected employees will receive 16 weeks of severance pay plus one additional week for each year they have spent with the company. Shopify is also offering training to help affected employees find other jobs, as well as a “start-up fee” to replace the laptop that employees must return to Shopify.
Shopify is just one of a number of companies cutting jobs due to the effects of the post-pandemic economy. Netflix has laid off hundreds of workers after reporting a drop in subscribers, while Peloton has cut around 2,800 jobs as the company undergoes a series of organizational changes.
The cryptocurrency industry is also struggling with the economic downturn, with crypto companies such as Coinbase, Gemini, BlockFi and Crypto.com facing cuts. Meanwhile, Spotify, Apple, Meta and Google are slowing hiring or planning to do so…