Affected staff will be notified today. Most of the layoffs will be in recruiting, support and sales, the company says. According to regulatory filings, the company had about 10,000 employees at the end of 2021, double the amount it had before the pandemic. The cuts amount to 10 percent of the company’s entire workforce. “For a company like ours, this news will be hard to digest,” founder and CEO Tobi Lütke said in an email to staff later posted on the company’s website. Like many digital-focused companies, Shopify saw demand for its services soar during the pandemic as lockdowns forced consumers and businesses to quickly adapt to buying and selling online. In response to this increased demand, Shopify expanded aggressively, hiring to keep up with the mass of new customers for its core service of helping real-world retailers sell goods online. The boom was so huge that at some point in mid-2020, Shopify became the most valuable company in Canada, surpassing Royal Bank of Canada, with a valuation of nearly $300 billion. While the uptick in sales and revenue was very real, sustaining that momentum proved difficult as the company’s growth showed signs of slowing toward the end of 2021. Today, the company is valued at around $50 billion. The company’s shares fell about 15 percent when the TSX opened on Tuesday. Shopify isn’t the only tech company feeling the sting of the slowdown. US giants such as Netflix, Google, Apple, Microsoft and Paypal all saw their prospects dim as the specter of inflation dragged on consumer spending. In his letter to staff, Lütke says that demand for e-shopping is growing, but no longer at the frenzied pace seen in 2020. Overall, e-commerce is about where it would be if its wave hadn’t happened pandemic, he said. Shopify had boosted staffing levels on the assumption that explosive growth would continue. “We’re betting that the share of dollars traveling through e-commerce rather than physical retail will grow permanently,” said Lütke. “It is now clear that the gamble did not pay off.” The company is set to reveal its quarterly results on Wednesday morning, and financial analysts who cover the company are trying to play down their expectations.
