Shopify bet the pandemic e-commerce boom was permanent — then laid off 3,000 people

In 2021 and early 2022, Shopify roughly doubled its workforce on the assumption that the pandemic-driven surge in online shopping was a step change rather than a spike. When growth normalised, the company found itself overstaffed.

In July 2022, Shopify cut about 10% of staff, roughly 1,000 roles, with CEO Tobi Lütke telling employees he had bet wrong on e-commerce growth. In May 2023 it cut another 20%, about 2,000 people, this time framing the reduction as a move toward a 'default digital' operating model.

The layoffs were widely criticised for impersonal execution and for the whiplash of rapid hiring followed by rapid cuts. Shopify's later caution on hiring — including a 2025 memo requiring teams to prove AI could not do a job before adding headcount — shows the lasting effect on its people strategy.

Cut 3,000 jobs in two rounds, admitting the bet was wrong; later required proof AI couldn't do a job before hiring.

Shopify treated a pandemic demand spike as a permanent structural shift and hired ahead of sustained revenue.

Workforce planning was not tied to a durable operating model, so when growth slowed the headcount became excess.

The two layoffs were communicated as strategic pivots rather than corrections, which made the second round feel like a repeat failure.

The company later institutionalised hiring friction, indicating it no longer trusted its own headcount instincts.

Do not hire to a demand peak as if it were the new baseline — workforce plans need a scenario in which the boom ends.

Shopify recovered financially and its stock rebounded, but its people strategy became more conservative, with explicit AI-first headcount rules.