Shopify is laying off 1,000 workers, around 10 percent of its staff, citing stagnant growth in the e-commerce market.
The company has told staff the cuts were essential as consumers resumed previous shopping patterns and reduced online orders, which had supported its recent growth.
The Ottawa-based firm will reduce jobs in all its divisions, especially in recruiting, support and sales.
Tobi Lütke, the company’s CEO, had estimated the surge in e-commerce sales growth would last past the peak of the pandemic.
He said: “We’re also eliminating overspecialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products.”
Shopify, a company that helps businesses create e-commerce websites, has warned that revenue growth may decelerate this year.
After compensating for a recent stock split, the shares have dropped more than 80 percent since they hit a peak in November at $175.
Shopify’s redundancies are among the most significant so far in a wave of layoffs and hiring halts are sweeping across technology companies.
Interest rate rises, supply-chain constraints, and the reversal of pandemic trends like remote jobs and e-commerce shopping have chilled what was once a red-hot tech industry.
Several companies had cut headcount in the previous month including Netflix, Twitter, and Tesla.
Other companies, notably Microsoft and Google, have stated that they will delay hiring till the end of this year.
The downsizing is the first significant layoff announced by the firm since Lütke established it in 2006.
Shopify’s headcount had grown from 1,900 in 2016 to around 10,000 in 2021, in order to keep up with the company’s rapid growth.
During the pandemic, e-commerce shopping increased, and many small-business owners opened online sites to sell products and services.
However, the firm reported a slowdown this year and cautioned that the pandemic patterns would not improve its results in 2022.
In recent years, Shopify has expanded its company to provide new services to merchants.
It has designed point-of-sale hardware for retailers, a shopping app for its merchants to sell items, and a network of fulfillment centers for its business partners to ship orders.
Source: The Wall Street Journal