Shopify, a leading e-commerce software provider, has announced a significant reduction in its workforce, with more than 2,000 employees expected to lose their jobs. The company is also selling its logistics business to Flexport, in exchange for approximately 13% equity. This move comes just 10 months after Shopify’s last round of redundancies, and is part of a broader trend among major technology companies facing economic headwinds.
According to Tobias Lütke, CEO of Shopify, the logistics business was a “side quest” that was ultimately getting in the way of the company’s core operations. The sale of this business will allow Shopify to refocus on its main raison d’être – providing e-commerce software for online retailers. Lütke also cited the burgeoning AI revolution as another reason why Shopify may be better off going back to its bread and butter.
The logistics business was acquired by Shopify as part of its larger strategy to expand its offerings in the e-commerce ecosystem. Flexport, the company that is acquiring Shopify’s logistics business, is a freight and logistics platform that has raised over $2 billion in funding from investors such as Andreessen Horowitz and SoftBank.
While the sale of its logistics business may seem like a major writedown for Shopify, the move will allow the company to streamline its operations and focus on its core strengths. The company is now in a better position to weather economic headwinds and capitalize on new opportunities in the e-commerce industry.
Shopify has also committed to supporting those impacted by the layoffs, offering a minimum of 16 weeks severance pay and medical benefits for the same duration.