Shopify to lay off 10% of workforce

Canada’s Shopify Inc is laying off 10% of its workforce as it struggles with sales growth due to a post-pandemic slowdown in online shopping. The company is carrying out the cuts because the COVID-19 pandemic created a surge in demand for Shopify’s software as consumers shifted to making a higher number of purchases online.

Shopify will also eliminate over-specialized and duplicate roles, as well as groups that were convenient to have but too far removed from building products. It is reported that about 1,000 workers will get affected.

Employees will get 16 weeks of severance pay, plus an additional week for every year of tenure. Shopify was founded as a web designer for retailers, but has expanded into a suite of services including payments, marketing, and shipping.

Shopify’s sales growth during the pandemic led the company to ramp up hiring and invest in technology, expecting that the shift to online from physical retail shops would not subside. Chief Executive Tobi Lütke said that roles in recruiting, sales and support are mostly affected.

Shopify is now tying up with social media firms including Twitter and YouTube as influencers start to sell their own brands. Following the lay off news, shares of the Ottawa-based company dropped 15%. The company will soon report its quarterly results.