Shopify CEO Says He Bet Wrong on E-Comm Demand, Lays Off 10% of Workforce

Shopify co-founder and CEO Tobi Lütke said on Tuesday that the commerce tech company is laying off 10% of its staff as the pandemic rush to move retail business online has cooled. In a letter to his employees today, Lütke said most of the impacted roles are in recruiting, support, and sales. Over-specialized and duplicate roles, as well as some groups that were “convenient to have but too far removed from building products” were also affected, Lütke wrote. The founder and CEO said that those affected by the layoffs will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify. As for why these layoffs are happening, Lütke said that when the COVID-19 pandemic set in, demand for Shopify “skyrocketed” as more brands looked to build online during lockdowns. “Before the pandemic, e-commerce growth had been steady and predictable,” Lütke said. “Was this surge to be a temporary effect or a new normal? And so, given what we saw, we placed another bet: We bet that the channel mix – the share of dollars that travel through e-commerce rather than physical retail – would permanently leap ahead by 5 or even 10 years. We couldn’t know for

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