Shopify’s big e-commerce bet failed. What does that signal for retail’s future?
Global News
Shopify says its big bet on e-commerce accelerating didn't pan out, leading to layoffs this week. What does that mean for the future of retail, post-pandemic?
A slower-than-expected shift to e-commerce and decades-high inflation are among the headwinds slowing Shopify’s growth, but experts say these trends also have a significant bearing on the future of retail itself.
“We do not get the future right 100 per cent of the time,” Shopify’s president, Harley Finkelstein, told investors and analysts during the company’s earnings call Wednesday morning.
He was referring to a big bet the Ottawa-based company made during the COVID-19 pandemic, when lockdowns forced brick-and-mortar stores to go online: that the overall transition to e-commerce would continue its rapid acceleration once the economy reopened.
Shopify, best known for its online store software, saw a huge sales boom during the height of the pandemic as it met the surge in demand. Accordingly, it scaled up its team — the company effectively doubled to 10,000 employees by the start of this year from roughly 5,000 in March 2020.
On Tuesday, the company announced its big bet on retail’s accelerated digital transition was misguided, as e-commerce adoption is returning to its pre-pandemic pace.
The company said it was letting go of 10 per cent of its workforce as a result, or around 1,000 employees.
“In short, we overshot our prediction,” Finkelstein conceded Wednesday.
Shopify, which reigned as Canada’s most valuable company during much of the pandemic, has long been a champion of retail’s digital future.
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