Global Ecommerce Hit By Recession? Shopify Fires 10% Workforce As Online Shopping Slows Down
Canada’s e-commerce company Shopify is in the news for slashing the jobs of 10% of its workforce. This moves comes due to the slowdown in online shopping post the pandemic and company’s inability to keep up with the sales numbers.
Slow Post Pandemic Boom
Chief Executive Officer Tobias Lütk admitted that the bets that they placed in the pandemic-driven boom in online shopping didn’t quite go as expected and said that “It’s now clear that bet didn’t pay off”.
CEO said that the company will soon eliminate the “over-specialized and duplicate” roles, as well as groups that CEO says, were “convenient to have but too far removed from building products.”
The company did well in the pandemic as the pandemic created a surge in demand for Shopify’s software as the consumers shifted to making a higher number of purchases online. However, the post-performance is not how it was projected and as many as 1,000 workers will be affected in the layoff.
The company said that those affected by the layoff shall be given 16 weeks of severance pay, plus an additional week for every year of tenure.
The shares of the company tumbled by 15%.
History of Shopify
Founded in 2006 as web designer for retailers, Shopify later expanded into a suite of services including payments, marketing, shipping and customer engagement tools.
Shopify is a Canadian e-commerce company headquartered in Ottawa, Ontario which reported a revenue of US$4.611 billion in 2021. The name of the company comes from the proprietary e-commerce platform for online stores and retail point-of-sale systems.
As of May 2021, the company had more than 1,700,000 businesses in approximately 175 countries. As of 2021, as many as 1.58 million websites run on the Shopify platform. As many as 4.4% of the top 10 million websites use Shopify.
For the calendar year 2019, total gross merchandise volume exceeded US$61 billion. When it comes to the market cap, it is among the top 20 largest publicly traded Canadian companies.
Speaking of performance of company in pandemic and post pandemic situation, sales leapt 86% between 2019 and 2020, and another 57% jump, to $4.61 billion, last year. By May, however, Shopify warned of slower revenue growth as the pandemic boom faded.