Shopify lays off more than 2,000 employees to reduce costs, sellers want to escape due to soaring costs

With the two pieces of news coming out, Shopify’s stock price surged 23%.

Shopify CEO Toby Luke announced the layoffs in a memo to employees posted on the company's website, but he did not specify which departments would be affected.

"I know this decision has a devastating impact on some of you, but it was made after careful consideration by management," Luke wrote in a memo to employees.

According to a securities filing, Shopify had about 11,600 employees and contractors as of December 31, 2018. This means that about 2,000 employees will lose their jobs in this round of layoffs.

In fact, this is the second round of large-scale layoffs for the Canadian e-commerce giant in the past two years. In July last year, Shopify carried out a round of layoffs, with the number of layoffs reaching 10% of the total number of employees. At that time, Luke admitted that he had misjudged the impact of the epidemic on the e-commerce industry.

Currently, Shopify's top priority is to lose weight quickly . The company recently announced plans to sell its logistics business to Flexport, including Deliverr, a logistics company it acquired for $2.1 billion last year.

In addition, Shopify also plans to sell 6 River Systems, a warehouse robot manufacturer acquired in 2019, to British retail technology company Ocado.

These moves indicate that Shopify has ended its logistics business, which it has developed for many years. From all indications, it can be seen that Shopify has not had a good time recently. Cutting off unprofitable businesses will allow the company to focus more on its core business.

According to the financial report, in the first quarter of this year, Shopify's GMV increased by 15% year-on-year to US$49.6 billion, total revenue increased by 25% year-on-year to US$1.5 billion, and gross profit increased by 12% year-on-year to US$717 million.

In terms of business type, Shopify's merchant solution revenue in the first quarter increased 31% year-on-year to US$1.1 billion, mainly driven by GMV growth and continued penetration of Shopify Payments; subscription solution revenue increased 11% year-on-year to US$382 million, mainly due to the addition of new merchants and higher platform fees.

However, although Shopify's financial report is impressive, many sellers are indeed suffering. As subscription fees increase, sellers' operating costs also rise. Many small and medium-sized sellers regret leaving the market because they cannot make ends meet. Only some large sellers with strong financial strength can stay.

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