July 27, Beijing (TMTPost) – Multinational e-commerce platform Shopify announced on Tuesday that it would lay off around 1,000 employees, about 10% of the company’s global staff.
The company’s share price fell by over 14% after the news broke. Shopify’s share price has plummeted 80% since last November.
Shopify’s CEO has a pessimistic outlook on the e-commerce industry, which attracts great attention in the market.
Shopify’s CEO clearly stated that they were wrong about the e-commerce industry, meaning the growth in e-commerce sales did not continue as expected. The Covid-19 pandemic provided business opportunities for the e-commerce industry in the beginning since consumers had to turn to online shopping. But it is apparent that consumers have already returned to brick-and-mortar shopping malls even when the pandemic is not over yet.
Shopify is a multinational e-commerce company headquartered in Ottawa, Ontario. Shopify is the name of its proprietary e-commerce platform for online stores and retail point-of-sale systems. The company provides one-stop e-commerce services for online vendors, allowing vendors to use its sales client, application and hardware for sales activity. Vendors that own both online and offline operations can use Shopify to manage their shops.
Established in 2006, Shopify had enjoyed fast growth, especially in areas such as the United States and Europe. Statistics from market research firm eMarketer show that Shopify served over one million vendors in 2019. Shopify’s gross merchandise volume accounted for 5.9% of the total sales volume from e-commerce platforms in the United States, only second to Amazon.
Shopify’s founder and CEO Tobi Lütke addressed the massive layoff on Tuesday in a memo, saying that the layoff is necessary since consumers have returned to offline shopping and that there are fewer online orders.