The post-pandemic slowdown in online shopping forced the tech giant to slash jobs.
This week Reuters reported that Canada’s Shopify is laying off 10 percent of its workforce as the e-commerce company struggles with slowing growth due to a pullback in online shopping. The move comes after the company benefited from a pandemic-fueled surge in demand.
Shopify shares fell roughly 14 percent percent on the Toronto and US exchanges. The company’s shares lost 75 percent of their value in the year so far, according to Reuters.
Shopify’s fall from the most valuable company in Canada to its present-day struggle to increase sales comes as easing lockdowns have led consumers to return to brick-and-mortar stores.
CEO admits to getting it wrong
The company’s sales growth during the pandemic led Shopify to ramp up hiring and invest in technology, betting that the shift to online from physical retail shops would not subside.
“It’s now clear that bet didn’t pay off”, Chief Executive Tobi Lütke said in a blog post, adding that roles in recruiting, sales and support are the most affected. “Ultimately, placing this bet was my call to make and I got this wrong.”
Faced with competition from Amazon and other brick-and-mortar stores, Shopify is now tying up with social media firms, according to Reuters. These include Twitter and YouTube, whose influencers have started to sell their own brands.
The 18-year-old company will report its quarterly results on Wednesday, with investors keen to know if the partnerships with social media platforms will be enough to lift it out of a slump.