Shopify sees 10% reduction in workforce

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To ease the retrenchment process, Shopify is offering a severance package, with 16 weeks of severance pay, plus an additional week for every year of tenure.

E-commerce platform Shopify has gone through a reduction in its workforce, with roughly 10% of employees asked to leave the organisation. Most of the impacted roles are in recruiting, support, and sales.

In a statement, Tobias Lütke, CEO of Shopify clarified the intent behind the reduction, i.e. that the firm is essentially eliminating over-specialised and duplicate roles, as well as some groups that "were convenient to have but too far removed from building products." 

He went on to provide more context into the organisation's journey over the last few years. "Before the pandemic, ecommerce growth had been steady and predictable. Was this surge to be a temporary effect or a new normal?" Against this backdrop, the company went on to anticipate that the channel mix, i.e. the share of dollars that travel through ecommerce rather than physical retail, would permanently leap ahead by five or even 10 years.

Further, once the COVID-19 pandemic set in, almost all retail shifted online because of shelter-in-place orders. Lütke explains: "Demand for Shopify skyrocketed. To help merchants, we threw away our roadmaps and shipped everything that could possibly be helpful. It was hard, but we know for a fact that more merchants’ businesses survived the pandemic because of the work we did in this time and that’s exactly what our mission is about."

Fast forward to the present, Lütke admits that the company now sees the mix reverting to roughly where pre-COVID data would have suggested it should be at this point.

He explained: "Still growing steadily, but it wasn’t a meaningful five-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."

Aid for retrenched employees

Lütke expresses "sincere gratitude" to the employees being let go for "everything they’ve given to support merchants and the group's mission of making commerce better for everyone". 

To ease the retrenchment process, Shopify is offering a severance package. Those affected today will get 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify. The group will also remove any equity cliff, and extend any medical benefits.

To further support these employees in their continued paths, Shopify has also offered outplacement services with access to career coaching, interviewing support, resume crafting, and other similar services.

The group will also continue to pay internet costs for the period, and is letting employees keep the home office furniture that was provided. Retrenched employees may also receive a kickstart allowance that can be used to buy new laptops. Lastly, they may also add their email addresses to a list that Shopify will share with other companies looking for talent.

Shopify also covers a free account for those who find themselves drawn to the path of entrepreneurship.

Moving forward, Lütke clarifies that every team is "now either focused on building products or directly supporting those who do".

He ends his statement: "Our customers are merchants, entrepreneurs, and small businesses owners - the bedrock of our economy and precisely those that are typically hit hardest during recessions. Most are already feeling it. We again have a clear objective in these challenging macro economic times, and we will use everything we’ve got to help them succeed and come out stronger. That’s our core mission." 

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