Shopify announced a massive layoff of 1,000 people, CEO: I was wrong...

On July 26, Canadian e-commerce platform Shopify announced that it would lay off 1,000 employees, accounting for 10% of its global workforce. The main reason was that the company's revenue unexpectedly declined after the explosive growth caused by the epidemic.

After the news broke , Shopify 's stock price fell 14% to $31.55 on Tuesday . Since Shopify 's stock price peaked in November last year , it has now fallen nearly 80 %.

Shopify founder and CEO Tobi Lutke said in an internal memo to employees on Tuesday that the company will lay off employees in recruitment, support and sales . The company will reduce over-specialized and duplicated positions, as well as some teams that are not closely related to product development.

Since the outbreak of the COVID-19 pandemic in 2020 , Shopify 's online sales have surged, and the company has predicted that the pandemic will accelerate Shopify 's e-commerce sales growth by 5 to 10 years . In order to meet sales expectations, the company has been expanding its scale . But now it is clear that the bet has not paid off , and now revenue has returned to pre-pandemic levels, so the company has to make the decision to lay off employees.

"It was my idea to make this decision, but I was wrong, and now we have to make adjustments, and I'm deeply sorry for that," Lutke said.

Founded in 2006, Shopify is a one-stop SaaS e-commerce service platform that provides e-commerce sellers with technology and templates for building online stores, and manages omni-channel marketing, sales, payment, logistics and other services.

According to filing documents submitted by Shopify, the company's total number of employees has increased from 7,000 at the end of 2020 to 10,000 in 2021 .

Shopify 's sales grew 86% from 2019 to 2020. Sales in 2021 grew 57% to $4.61 billion .

However, in May this year , Shopify warned that platform sales growth would slow as the pandemic boom subsided .

RBC Capital Markets analyst Paul Treiber said he expects Shopify to revise its full-year sales forecast.

Shopify said that laid-off employees will receive 16 weeks of severance pay, and an additional week of severance pay can be added for every additional year of employment . Laid-off employees will receive career guidance, interview support, and resume preparation services, and Shopify will pay part of the Internet costs during the severance period.

It is understood that Shopify is not the only company to lay off employees . According to statistics from data aggregator Layoffs.fyi , a total of 401 global startups have laid off 57,552 people so far this year .

Facing competition from Amazon and other brick-and-mortar stores, Shopify is now working with social media companies including Twitter and YouTube to allow users to buy items posted by Shopify merchants on those platforms.

Shopify is set to report its quarterly results this week , and many investors are eager to see whether its partnerships with social media platforms will allow it to tap into the creator economy and pull itself out of its doldrums.

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