Shopify to lay off more than 2,000 employees, or 20% of its workforce
Canadian e-commerce company Spotify becomes the latest tech company to announce job cuts amid the ongoing economic slowdown and geopolitical uncertainties. Shopify announced Wednesday that it’s laying off more than 2,000 people, or 20% of its workforce.
In addition, the company, best known for providing e-commerce software for online retailers, also announced it’s selling its logistics business to Flexport for 13% equity.
The news comes about 10 months after Shopify announced a reduction of its workforce by 10%, which affected about 1,000 people. This move is in line with a trend that has seen many big technology companies engage in multiple rounds of job cuts in response to economic challenges.
In a blog post, Shopify CEO Tobias Lütke said: “We are changing the shape of Shopify significantly today to pay unshared attention to our mission. 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% and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today. I recognize the crushing impact this decision has on some of you, and did not make this decision lightly.”
Shopify is one of the several tech companies that have implemented cost-cutting measures in recent months as concerns grow over the global economic slowdown, the possibility of a looming recession, and the impact of generative AI. Yesterday, video game developer Unity Software also announced it was laying off 600 employees, about 8% of its workforce, according to a filing with the Securities and Exchange Commission (SEC).
Also this week, IBM announced it plans to suspend hiring for approximately 7,800 jobs that will be replaced by Artificial Intelligence (AI) in the coming years. Lyft also laid off 1,072 workers or 26% of its workforce, just a month after the founders stepped down.
Tech giants like Meta, Google’s Alphabet, and Nvidia have all taken measures to rein in spending. Other companies like Coinbase, Shopify, Netflix, and Twilio have also announced layoffs. In March, Facebook-parent company Meta announced it would cut 10,000 jobs, just four months after it let go of 11,000 employees, making the social giant the first Big Tech company to announce a second round of mass layoffs.
The global economic downturn that started in the second quarter of 2022 is beginning to have a major impact on tech companies. At least 629 tech companies have let go of 185,136 workers, according to Layoffs.FYI, a site that has been tracking all tech layoffs using data compiled from public reports.
Shopify was founded in 2004 by Tobias Lütke, Daniel Weinand, and Scott Lake after attempting to open Snowdevil, an online store for snowboarding equipment. Dissatisfied with the existing e-commerce products on the market, Lütke, a computer programmer by trade, instead built his own. In 2018 alone, Shopify sold more than $41.1 billion worth of merchandise on its platform.