Thursday, June 1, 2023

Shopify lays off 20% of workforce and sells logistics business


Shopify announced on Thursday that it will lay off 20% of. Its workforce and sell its logistics business to take over Flexport.

The Ottawa-based e-commerce company says the move is a way to help it focus on core business support.

But achieving this efficiency also means reducing “side operations”. Which CEO Tobi Lutke describes as “always relevant because the company has to”. “But now we are at the dawn of the age of intelligent AI unlocking new capabilities never seen before,” said changes noted in the opening letter. “Our core mission now requires us to create the best, and that has completely changed.”

Sec. Lutke’s statement did not specify how many employees will leave the company. But Shopify laid off nearly 1,000 workers last summer. Previously, it had about 10,000 employees.

Mr. Lutke wrote, “I know that this decision has had a great impact on some of you and I have not taken it lightly.”
20% of the additional workforce will represent approximately 1,800 people.

In February, Shopify President Harley Finkelstein said the company has no other layoffs on its listings.

Lutke promised affected employees a minimum of 16 weeks of severance. plus one week of severance pay for each year they worked at Shopify. Health insurance and a workers compensation program will also be provided to employees who quit their job during the same period. Those who leave will also be able to receive office furniture. Though the company will have to return their laptops, and Shopify will help them pay for new laptops, Lutke said.

Sec. Lutke also announced that he has decided to sell Shopify Logistics to Flexport to help. The company become more flexible and global.

Under the terms of the agreement, Shopify will receive a stake equal to 13% of Flexport. And will be able to appoint a director to Flexport’s board of directors.
Flexport will become Shopify’s official logistics partner.

The transaction is expect to close in the second quarter of 2023, subject to certain conditions and regulatory approvals.

Shopify’s announcement comes as the company’s latest financial results are announce. In the first fiscal quarter, Shopify reported a profit of $68 million, compared to a loss of $1.4 billion a year ago.

Earnings per share were 5 cents compare to a loss of $1.17 per share the prior year.
Revenue for the quarter ended March 31 increased 25% year over year to $1.5 billion.

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