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Shopify lays off 10% of its staff

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Shopify is tightening its belt in light of slowing sales growth as consumers return to their old shopping habits and reduce their reliance on e-commerce.

The e-commerce company announced on Tuesday that it would lay off about 10% of its staff. The move will affect approximately 1,000 employees, with the bulk of the cuts in recruiting, support and sales functions.

The company said it would also eliminate “over-specialized” and duplicate roles, along with some groups “that were handy to have but too far removed from building products,” CEO Tobi Lutke told staff in a press release. memo. The Wall Street Journal first reported news of the memo, which the company later posted on its website.

Shopify, which powers merchants’ ecommerce businesses by handling everything from payments to shipping, is just the latest tech company to announce layoffs in a tough economic environment as interest rates rise and consumers brace for a potential recession. Companies that have reduced their workforce so far include Netflix, Unity, Lyft, and Vimeo.

The downsizing announcement marks a precipitous decline for a company that was one of the first darlings of the pandemic as merchants relied on their online stores to make up for lost physical sales.

That prompted Shopify to expand its team to keep up with projected revenue growth. But Lutke told employees he overestimated how long the e-commerce pandemic would last, expecting the adaptation of online shopping to be permanently ahead by 5 or 10 years.

“It is now clear that the bet has not paid off,” Lutke said in the memo to the employees. “What we’re seeing now is the mix getting back to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a significant jump from 5 years ahead. Our market share in e-commerce is a lot higher than in retail, so that’s important. Ultimately, placing this bet was my call to make, and I was wrong. Now we have to adapt.”

Shares of Shopify have fallen from pandemic highs in recent months, dropping more than 77% year-to-date. The company will announce the results before the bell on Wednesday.

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