Shopify Inc., an e-commerce giant that builds platforms for the enterprise and small businesses, announced today that it’s laying off 20% of its workforce, affecting more than 2,000 employees, and will sell most of its logistics business to Flexiport Inc.

This news comes less than a year after the company let go 10% of its staff in July, citing the slowing growth in the e-commerce sector during the post-pandemic recovery.

In a blog post, Shopify Chief Executive Tobias Lütke focused on speaking about slimming down the company to address “main quests” and avoiding “side quests,” which he appealed to as distractions.

“Shopify’s main quest is to make commerce simpler, easier, more democratized, more participatory, and more common,” Lütke said. “I think that we have built the best commerce platform in the world for that.”

According to Lütke, building up a logistics arm had become a side quest for the company, which he believes should focus on e-commerce instead. 

“Logistics was clearly a worthwhile side quest for us, and started to create the conditions for our main quest to succeed,” Lütke said. “From the beginning, we worked with lots of partners on all aspects of this same problem: warehouses, robotics, transportation, crossdock, freight.”

That included the $2.1 billion acquisition of Deliverr Inc., a startup that makes software that helps e-commerce companies ship merchandise to customers, in May 2022. Shopify also previously acquired logistics specialist 6 Rivers Systems Inc. in 2019 for $450 million, which it is now selling to the U.K. retail tech company Ocado Group for an undisclosed amount.

Flexiport is a 10-year-old company that focuses on supply chain management and logistics for freight by using software to integrate information data from multiple companies in order to streamline processing. As part of the deal, Shopify will sell much of its current logistics arm that it has been building over the past year to Flexiport and the logistics company will become Shopify’s preferred partner.

“Making the global supply chains efficient and software addressable is Flexport’s main quest and so this is the perfect home for this part of Shopify,” Lütke said.

In the announcement, Lütke commented that Shopify is also well positioned to use artificial intelligence to help its customers, suggesting that this will be incorporated into the company’s “main quest.” 

“Shopify has the privilege of being amongst the companies with the best chances of using AI to help our customers,” Lütke said. “A copilot for entrepreneurship is now possible. Our main quest demands from us to build the best thing that is now possible, and that has just changed entirely.”

This follows similar sentiments from tech companies and CEOs amid workforce reductions given the emergence of AI. Cloud-based storage firm Dropbox Inc. cut its staff by 500, or 16%, in late April, with one driving force behind the layoffs was the company’s increasing focus on AI. Also this week, IBM Corp. CEO Arvind Krishna said that the company plans to pause hiring for “back-office” jobs that could be automated by AI, which could replace up to 7,800 jobs in five years.

Photo: Shopify