Shopify - Company to reduce the workforce by 20%


Shopify Inc. says it will reduce its workforce by 20 percent and sell its logistics business to Flexport, a supply chain management company.


The Ottawa-based e-commerce giant announced the moves on Thursday morning, positioning them as a way to help him focus on his core pursuit: facilitating commerce.


But achieving that feat means cutting back on “side missions” that CEO Tobi Lutke described as “always a distraction because the company has to split the focus.”


“Technological progress is always moving towards simplicity, and entrepreneurs are more successful when we simplify. But now we are at the dawn of the AI ​​era and the new capabilities being unlocked are unprecedented,” he said, in an open letter. announcing the changes. .


“Our core mission demands that we build the best that is now possible, and that has just completely changed.”


Lutke’s note did not include the number of staff the company would be leaving, but before Shopify laid off about 1,000 workers last summer, it had roughly 10,000 employees.


“I recognize the crushing impact this decision has on some of you, and I did not take this decision lightly,” Lutke wrote.


Twenty percent of the remaining workers would amount to about 1,800 people.


In February, Shopify president Harley Finkelstein had said that no further cuts were in the works.


He told The Canadian Press on Thursday that the company has no further plans to lay off any more workers.


“We think, on the other side of this, we’ll be in very, very good shape,” he said.


Lutke promised departing staff at least 16 weeks of severance plus one week for each year they are with Shopify. Medical benefits and an employee assistance program will cover staff who leave during the same period.


Those who leave will also get to keep their office furniture, and while they will have the company laptops, Lutke said Shopify will help pay for the new ones.


“It’s a tough day. This is not something you want to do as a leader or as a company,” Finkelstein said.


“But sometimes easy and right aren’t the same, and in this case, hard turns out to be right.”


The changes will leave Shopify with an “incredible talent density” and the ability to execute on its goals at a “much, much better speed, better pace, and with better results,” he added.


“I am more optimistic now than ever before about the future of this company,” he said.


In addition to the staff departures, Lutke’s memo announced the sale of Shopify Logistics, which he had marketed as a way for merchants to get products “from the dock to the front porch.”


Under the terms of the agreement, Shopify will receive shares representing a 13 percent stake in Flexport and the ability to appoint a director to the Flexport board. Adding to his previous involvement with the company, Finkelstein said Shopify’s involvement in Flexport is now in its “teens.”


Flexport will become the official fulfillment partner of Shopify.


The transaction is expected to close in the second quarter of 2023, but is subject to certain conditions and regulatory approval.


Shopify’s announcements came as it revealed that it made US$68 million in the first quarter of the year. That compares with a net loss of $1.4 billion in the same period a year earlier.


The company’s net income, which it reports in US dollars, rose to a profit of five cents per share compared with a loss of $1.17 cents per share a year ago.


Revenue for the period ended March 31 increased 25 percent over the prior year to $1.5 billion.



This report by The Canadian Press was first published on May 4, 2023.


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