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Shopify cuts 20 percent of workforce

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By Published On: May 8, 20230 Comments

Despite soaring profits, Shopify has announced the redundancies of 20 percent of its global workforce in its biggest wave of lay offs.

In an update posted on May 4, Shopify confirmed it would be letting go of 20 percent of its 11,600 strong workforce in a restructure to focus on its mission to deliver cutting edge solutions for its customers. This marks the company’s biggest wave of layoffs, ahead of July 2022’s decision to layoff 10 percent of its workforce.

This news follows the release of Shopify’s quarterly results in which the company posted a $1.51 billion CAD revenue, well ahead of estimates and up 25 percent YoY.

Shopify CEO Toby Lütke posted the announcement on the public Company News section on its website. “We are changing the shape of Shopify significantly today to pay unshared attention to our mission,” he wrote. “There are a number of consequences to this, and I don’t want to bury the lede: after today Shopify will be smaller by about 20 percent and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today. I recognise the crushing impact this decision has on some of you, and did not make this decision lightly.”

The announcement was posted publicly with a note saying that those affected would receive an email letting them know they had been let go within five minutes of the public announcement. Around 2,300 people were laid off.

Many companies have been criticised by their impersonal handling of layoff announcements in recent months, especially major tech companies like Meta with many staff being blindsided by redundancies, locked out of their computers or finding their keycards don’t work. While this is criticised for being cold, many companies report that due to the sensitive nature of the data being handled by staff, they cannot risk spiteful employees potentially mishandling or compromising data.

While Shopify’s approach to the redundancies has been criticised for its impersonal analogical announcement, unlike other tech companies, Shopify announced it would be keeping Slack and internal email open on the day of the announcement for “farewells.” Lütke also wrote in the announcement that those affected would be receiving a minimum of 16 weeks severance plus a week for every year of tenure at Shopify with medical benefits and access to their employee assistance program (EAP) covered during that period. The memo confirmed Shopify will offer outplacement services. In terms of assets, all office furniture we provided by Shopify can be kept and the company will take back work laptops but will “help pay for a new one to replace it.” The announcement also confirmed former staff will have continued free access to the advanced Shopify plan “should you opt to take an entrepreneurial path in future. “

Alongside the layoff announcement and results update, Shopify also announced that Shopify Flexport, its logistics arm was to be sold. “Today we are announcing that Flexport will buy Shopify Logistics, becoming the preferred logistics partner for Shopify,” read the announcement. “Flexport, led by CEO Dave Clark and Founder Ryan Petersen, is the best builder and operator in the world of logistics. Contributing our work to Flexport, under the leadership of Harish Abbott, allows everything about Shopify Logistics to be more ambitious and global in nature. Making the global supply chains efficient and software addressable is Flexport’s main quest and so this is the perfect home for this part of Shopify.”

layoffs.fyi has calculated that 658 tech companies have laid off 191,416 employees in 2023 to date.

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About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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