Shopify layoffs – What it means for ecommerce

News broke yesterday of Shopify layoffs – around 10% of their workforce left the business, this equates to around 1,000 redundancies from a workforce of 10,000.

This is a real human tragedy and our thoughts are with those that lost their jobs, and for those who have had to watch their friends dismissed and out of the business by the end of the working day. Shopify have a raft of support measures in place including 16 weeks of severance pay, plus an additional week for every year of tenure at Shopify, gifting work at home office equipment, an allowance to buy a laptop, temporary home internet and medical benefits.

What’s more serious is the reasons behind the Shopify layoffs – the company bet big that the upsurge in ecommerce caused by the pandemic would propel online shopping forward by five years. That’s not been seen and to explain the Shopify layoffs the company published a chart of US ecommerce (image above, data from US Census Bureau) demonstrating that ecommerce in the US has normalised since lockdowns ended and they are seeing ecommerce adoption return to levels that would have been expected by now if there had been no pandemic.

Put simply, the pandemic caused a temporary boost to ecommerce in the US and that boost has since vanished and we’re back to where we should be in more normal times. Ecommerce is still growing, but it hasn’t leaped forward.

The Shopify layoffs may be something we see mirrored in other businesses – particularly in those companies who invested heavily in infrastructure such as fulfilment facilities. Businesses best placed to move forward will be those who relied on existing staff and investment to maximise on pandemic sales. Those worst placed will be businesses who rapidly expanded warehouse space and recruited to run the facilities and are now seeing the pandemic boost dissolve away.

Indeed, some businesses will not only be feeling the impact of pandemic sales waning, but will be facing the double jeopardy of reduced consumers spending due to inflation and the cost of living crisis.

It’s worth taking stock of your businesses and considering what your exposure is to decreasing turnover. Can you weather the storm, have you limited your exposure, and are you able to maintain your infrastructure and staff costs for the foreseeable future?

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