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Shopify to cut 20 percent of its workforce

By Nithya Bose in US Business & Employment News, posted May 5, 2023

Shopify CEO Tobi Lütke has announced plans to cut 20 percent of its workforce and sell most of its logistics business to supply-chain technology company Flexport.

Lütke acknowledged the "crushing impact" the decision will have on employees but emphasized that it is "the right thing for Shopify."

The company did not specify which divisions would be affected by the layoffs.

The layoffs come after several "bursts" — Shopify's name for team-building off-site trips — and other events were canceled, raising concerns among employees about possible layoffs.

An internal document sent to the company's talent organization in 2023 said that Shopify would hire fewer people this year and employ targeted, "unorthodox" strategies to find the "very best people in their respective craft" as it prioritized efficiency.

Shopify has frequently spoken about its goal to build a more efficient and focused organization amid economic uncertainty.

In March, the company announced a new framework to classify employees as managers or "crafters" to incentivize more individual contributors.

The company said it expected there would be fewer managers overall under this framework.

The layoffs follow a series of quiet firings affecting department employees, including those in talent acquisition.

In March, Shopify rescinded full-time job offers for several former interns who were set to join the company this summer and fall.

In his letter detailing the changes, Lütke indicated that Shopify would be doubling down on finding further uses for artificial intelligence in e-commerce.

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He also said the balance between managers and crafters had become "unhealthy" at Shopify, leading to the company increasingly celebrating activities rather than crafter-driven outcomes.

Shopify laid off 10 percent of its workforce — more than 1,000 people last July, citing miscalculations regarding the long-term impact of the pandemic on the e-commerce sector.

There have also been numerous changes in the company's upper ranks in recent months, including the departure of chief technical officer Allan Leinwand in January and the promotion of Kaz Nejatian to COO, a role previously held by Toby Shannan.

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