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Early last year Shopify announced plans to double the size of its engineering team in 2021 by hiring 2,021 new technical staff.
Today Shopify CEO Tobi Lütke announced that Shopify would be reducing their workforce by 10%, approximately 1,000 employees, by the end of the day.
According to Lütke, the layoffs are necessary as the e-commerce boom that fuelled Shopify’s growth in recent years has cooled.
“What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point,” the CEO wrote.
“Still growing steadily, but it wasn’t a meaningful 5-year leap ahead. Our market share in ecommerce is a lot higher than it is in retail, so this matters. 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.”
The roles most impacted by the layoffs are in recruiting, support, and sales. Lütke also noted that Shopify is eliminating “over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products.”
Lütke noted in the memo that Shopify is offering “a generous severance package” to laid-off employees. This includes 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify.
The company is also offering outplacement services, including career coaching, interviewing support, and resume crafting.
Shopify has also promised to connect those affected with companies looking to hire, and the memo notes that Shopify will continue to pay now-former employees’ internet costs for the period and allow them to keep at-home office furniture while offering an allowance that can be used to buy new laptops.