- E-commerce site Shopify (SHOP) announced a new round of layoffs Thursday, while at the same time saying it will sell its logistics division
- The Ottawa-based company’s stock soared following the news, gaining more than 25 percent at one point Thursday
- The company is reducing its workforce by 20 percent, CEO Tobias Lütke said in an open letter to employees
- Flexport Inc., a San Francisco-based multinational supply chain management company is buying Shopify Logistics, in exchange for a 13-percent equity stake
- Shopify Inc. (TSX:SHOP) share price is up 23.19 percent, trading at $77.67 at 1:29 pm ET
E-commerce site Shopify (SHOP) announced a new round of layoffs Thursday, while at the same time saying it will sell its logistics division.
The Ottawa-based company’s stock soared following the news, gaining more than 25 percent at one point Thursday.
The company is reducing its workforce by 20 percent, CEO Tobias Lütke said in an open letter to employees.
Flexport Inc., a San Francisco-based multinational supply chain management company is buying Shopify Logistics, in exchange for a 13-percent equity stake.
Flexport will become the preferred logistics company for Shopify.
“We are changing the shape of Shopify significantly today to pay unshared attention to our mission. There are a number of consequences to this, and I don’t want to bury the lede: after today Shopify will be smaller by about 20 percent and Flexport will buy Shopify Logistics; this means some of you will leave Shopify today. I recognize the crushing impact this decision has on some of you, and did not make this decision lightly,” Lütke wrote in the letter.
The company will now focus on its core business, moving away from logistics operations.
Last July, Shopify spent $2.1 billion to buy delivery service Deliverr, Inc. The deal was meant to expand the e-commerce company’s expansion into the world of logistics and delivery.
Less than a year later, it is reversing course.
“The main quest of the company is its mission, the reason for the company to exist. Side quests are everything else. Side quests are always distracting because the company has to split focus. Sometimes this can be worth it, especially when engaging the side quest creates the conditions by which the main quest can become more successful,” wrote Lütke, the company’s billionaire founder.
“In the beginning, as a small startup, companies are intensely focused. It’s often said that larger companies are more sluggish but this is not because of their size, it’s because of all the side quests and distractions they accumulate along the way.
“Logistics was clearly a worthwhile side quest for us, and started to create the conditions for our main quest to succeed. From the beginning, we worked with lots of partners on all aspects of this same problem: warehouses, robotics, transportation, crossdock, freight.
Shopify Inc. (TSX:SHOP) is up 23.19 percent, trading at $77.67 at 1:29 pm ET.
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