Shopify, the e-commerce company, has laid off 10% of its workforce, because the growth in online shopping during COVID-19 hasn’t been sustained, CEO Tobias Lütke said in a note posted to the company’s website.

The cuts will affect about 1,000 workers.

“Shopify has to go through a reduction in workforce that will see about 10% leave by the end of the day,” he said. “Most of the impacted roles are in recruiting, support, and sales, and across the company 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.”

In his note, Lütke said that when the company saw e-commerce adoption skyrocket during COVID-19, it believed that growth would be permanent.

“Before the pandemic, e-commerce growth had been steady and predictable,” he said. “Was this surge to be a temporary effect or a new normal? And so, given what we saw, we placed another bet: We bet that the channel mix—the share of dollars that travel through e-commerce rather than physical retail—would permanently leap ahead by five or even 10 years.”

But now, Shopify feels the mix is “reverting to roughly where pre-COVID data would have suggested it should be at this point,” he said. “[It is] still growing steadily, but it wasn’t a meaningful five-year leap ahead.… Ultimately, placing this bet was my call to make, and I got this wrong.”

Photo courtesy of Shopify

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