Canadian ecommerce giant Shopify Inc. is facing a setback as the growth of online shopping slows down, leading to the company’s decision to lay off 10% of its workforce. This decline in growth comes after Shopify experienced a surge in demand during the pandemic. The repercussions of this decline were seen in the company’s shares, with a 14.7% drop on U.S. stock exchanges and a 14% decline on the Toronto Exchange. Additionally, Canada’s main stock index was also impacted by this downward trend.

Previously hailed as the most valuable company in Canada, Shopify is now grappling with the challenge of boosting its sales. As lockdown measures ease and consumers return to physical retail stores, the demand for online shopping has decreased. In response to the significant sales growth experienced during the pandemic, Shopify had expanded its workforce and made substantial investments in technology. Unfortunately, it is now apparent that the company’s bet on the continued dominance of online shopping did not yield the desired results.

In a candid blog post, Shopify’s CEO Tobi Lütke admitted the misjudgment, stating, “It’s now clear that bet didn’t pay off.” The roles most affected by the layoffs are those in recruiting, sales, and support. At the end of 2021, Shopify had a total of 10,000 employees compared to 7,000 at the end of 2020.

To counter the competition posed by Amazon and traditional brick-and-mortar stores, Shopify has turned to partnerships with social media platforms such as Twitter and YouTube. This strategic move allows influencers to sell their own brands through the Shopify platform. The company sees this as an opportunity to tap into the growing creator economy and boost its sales.

Investors eagerly await Shopify’s quarterly results, set to be released on Wednesday. They are anxious to see if the partnerships with social media platforms will be sufficient in turning the company’s fortunes around. Analysts, including Tom Forte from D.A. Davidson, suggest that Shopify is starting to gain traction in ecommerce sales related to social networking.

While Shopify is undoubtedly facing challenges in the current market, the future will ultimately reveal if their strategies and partnerships can revive the company’s growth and restore investor confidence.

Useful Links:
1. Shopify Official Website
2. Understanding the Fortune 1000