The ecommerce juggernaut Shopify recently announced it will be letting go of nearly 1,000 employees, shaving down its workforce by 10%.
In a memo released to staffers today, the company's founder and CEO Tobi Lütke explained that Shopify expanded too quickly in the wake of COVID-19. Now, as online shopping continues to decline in popularity, the company's workers are unfortunately the first to feel the brunt.
As stocks continue to plummet across the industry, the future looks tough for smaller ecommerce websites too. Read on to learn more about Shopify's recent decline and for tips on how to remain competitive online.
Shopify Cuts 10% of its Workforce
As the ecommerce market cools, Shopify has been forced to make difficult decisions to stay afloat. Chiefly, the company's chief officer has decided to let go of 10% of its global workforce.
These cuts will impact divisions across the company, with a particular emphasis on recruiting, support, and sales roles, along with over-specialized and redundant positions.
When justifying these mass layoffs, Tobi Lütke said that he increased his workforce by almost double in 2019 to prepare for the rapidly expanding demand in ecommerce.
While Shopify's revenue is apparently still growing steadily, online spending didn't jump ahead the five to 10 years as Lütke expected. Therefore, as the ecommerce market settles to pre-Covid levels, making cuts to staff was unavoidable.
“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,” said the Shopify CEO in the letter to employees.
But Shopify isn't the only tech company that's been affected by the tapering off of COVID-19 trends. In recent months Meta, Alphabet, and Amazon have all announced hiring freezes, with the streaming giant Netflix recently laying off 300 employees in its second round of job cuts.
However, as online demand falls to below pre-pandemic levels, it's the ecommerce market that appears to be impacted the most. But all hope is not lost. By staying savvy and harnessing clever tech, you can maximize your business's chances of success.
How Can Small Ecommerce Stores Remain Competitive?
In 2022, competition among ecommerce businesses is fierce. Pair this with a steady decline in online shopping, and the need for effective sales strategies has never been greater.
If your store is looking to expand its reach while keeping costs low, embracing digital marketing solutions like MailChimp is a great way to stay competitive. Not only does it help you to convert more leads by streamlining the marketing process, but it also helps you to unlock valuable insight into your business' performance.
Additionally, despite its recent stock challenges, ecommerce website builders like Shopify continue to be invaluable tools for small online stores — allowing them to build polished websites, sell across channels, and embrace social marketing.
But Shopify isn't the platform designed to boost your online presence. Read our breakdown of the best ecommerce website builders to discover other top solutions on the market.