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Shopify Lays Off 10% of Staff, Says Pandemic Bet 'Didn’t Pay Off'

The company will cut roughly 1,000 workers this week, marking a sudden fall from grace for a company riding high on pandemic-fueled e-commerce growth.

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Add e-commerce behemoth Shopify to the growing list of tech companies struggling to steer through 2022 unscathed.

In a memo to staff, Shopify CEO Tobi Lütke announced the company’s decision to cut around 10% of its global workforce, which amounts to roughly 1,000 workers. Those layoffs are expected by the end of the day Tuesday and mark a dramatic reversal for a company recently riding high off of pandemic-era e-commerce growth.


“For a company like ours this news will be difficult to digest,” Lütke wrote in his announcement. “It will be even harder for those leaving today. I’ll share as many details as I can about how we got here and, for those that are leaving, what will happen next.”

The CEO said the layoffs will primarily impact workers in the company’s sales, recruiting, and support roles. Lütke said Shopify’s offering those workers 16 weeks of severance pay with an additional week of severance for every year they worked at the company. Medical benefits will be extended during that time.


The layoffs mark a sudden fall from grace for Shopify which emerged as one of the pandemic’s biggest winners. Shopify saw its business projects surge forward in early 2020 when millions of small businesses were suddenly forced to find ways to move their business operations online. Many turned to Shopify. The company’s success then carried over to 2021 when the company saw its total yearly revenues increase 57% year over year. Looking at those trends, Lütke says the company bet big with expectations that the share of retail dollars flowing through e-commerce instead of physical retail would, “permanently leap ahead by 5 or even 10 years.”

“It’s now clear that bet didn’t pay off,” Lütke wrote. Instead, Lütke says the mix of spending looks like it’s reverting back roughly to pre-pandemic era levels.

“Ultimately, placing this bet was my call to make and I got this wrong,” Lütke said. “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.”

Shopify didn’t immediately respond to Gizmodo’s request for comment.

Layoffs continue to spread through tech

Hiring freezes and layoffs are touching just about every corner of the tech industry from Web3 hopefuls to established video streaming juggernauts and just about everything in between. Tesla, Netflix, Coinbase, and Klarna have all announced layoffs in recent months. There are signs those downturns are heading for Big Tech giants as well.


Last week, Google reportedly sent an email to staff saying the company would pause hiring for two weeks. That revelation came a week after a separate email sent by CEO Sundar Pichai in which Pichai called on staff to, “be more entrepreneurial” and work with “greater urgency, sharper focus,” according to The Verge. Microsoft, meanwhile, reportedly moved to eliminate many of its open positions around the same time.

Meaningful hiring cuts and potential layoffs could reportedly be just around the corner for Meta too. Internal memos cited in a recent Insider report suggest the company’s moving to intensify performance evaluations, with one employee telling the publication the company could push for layoffs of up to 10% of staff. That report comes less than two weeks after another Meta executive advised managers to identify and “move to exit” poor-performing employees. Meta did not immediately respond to Gizmodo’s request for comment.