E-commerce platform Shopify is set to lay off 20% of its workforce, impacting over 2,000 employees, and sell most of its logistics business to supply-chain technology company Flexport. The announcement was made by CEO Tobi Lutke in a note to employees and shareholders, where he acknowledged the tough decision and its impact on employees.
Severance Packages and Continued Benefits for Impacted Employees
Employees affected by the layoffs will receive a minimum of 16 weeks of severance pay, along with an additional week for each year of tenure at Shopify. They will also continue to receive medical benefits and access to an employee assistance program and outplacement services during this time. Shopify will also allow impacted employees to keep their company-provided furniture and will pay for a replacement laptop to help with future entrepreneurial pursuits.
Sale of Shopify Logistics to Flexport
As part of the restructuring, Shopify will sell most of its logistics business to supply-chain technology company Flexport, a move that the company believes will enable it to focus on its core business of developing e-commerce technology. Details of the transaction have not yet been disclosed.
Shopify’s Second Round of Layoffs in Less Than a Year
This is the second round of layoffs at Shopify in less than a year. In July 2020, the company announced a 10% reduction in its workforce, impacting around 1,000 employees across different verticals. The company has cited the need to adapt and evolve its business to stay competitive as the reason for both rounds of layoffs.
Impact on Shopify’s Stock
The announcement of the layoffs and sale of Shopify Logistics caused the company’s stock to drop by nearly 6%. However, some analysts believe that the move could ultimately benefit the company in the long run by enabling it to focus on its core business and invest in other areas such as international expansion and product development.
Final Thoughts
While the layoffs are undoubtedly difficult for impacted employees, Shopify’s decision to sell its logistics business and focus on core business areas could ultimately benefit the company in the long run. The severance packages and continued benefits being offered to affected employees are also commendable and demonstrate the company’s commitment to supporting its workforce during a difficult time.
