Shopify Layoff: What Happened + 7 Actions to Take as an eCommerce Business Owner

9 min. read
All information of this content was reviewed by our team to ensure it was accurate and up-to-date at the time it was last updated. Learn more about our verification

Big news in the world of eCommerce.

Shopify, the biggest eCommerce platform in the world, has announced it'll lay off around 10% of its global workforce. And its share price plummeted.

Sounds scary…

Does this mean you'll have to close your online store, sell your TV, and start living out of your car?

No. Far from it. This isn't the end of days for dropshipping or Shopify.

People are still buying online, and Shopify is still the best place to build your store.

None of that changes because Shopify shares took a dip.

And even though it's cutting costs in some areas, Shopify is investing in others. The eCommerce juggernaut just made a $100 million strategic investment in the eCommerce marketing automation platform Klaviyo.

You can get the full story on this and an in-depth look at the platform in our Klaviyo review.

So what is happening at Shopify?

That's what we're going to answer today.

We'll examine what happened, why, and how it impacts you as an eCommerce store owner.

And we'll reveal 7 ways you can strengthen your store and gain a competitive advantage in post-pandemic eCommerce.

What Happened?

So Shopify has decided to let go of around 1,000 employees - that's around 10% of its global workforce.

This comes after the eCommerce platform had almost doubled the size of its workforce from 2019-2021.

In a letter to employees, Shopify CEO Tobi Lütke blamed the layoffs on the global slowdown in eCommerce following the pandemic.

There was a massive spike in online sales during the pandemic. And Shopify massively expanded its workforce, anticipating the demand would continue when restrictions were lifted.

But the trajectory of eCommerce growth hasn't continued as Shopify expected it to. As eCommerce sales levels returned to pre-pandemic growth rates, the platform has had to reduce the size of its team.

Here's how Shopify CEO Tobi Lütke explains it in his own words:

"Ultimately, placing this bet was my call to make, and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today, and I'm deeply sorry for that."

Why Did It Happen, and How Does It Affect You as an eCommerce Store Owner?

Now that's the story of what happened. But it doesn't answer all the questions that Shopify users and store owners worldwide want to know.

Should you be worried about the future of Shopify as a platform?

What about the future of eCommerce and dropshipping as a business model?

Let's examine the reasons for Shopify's struggles and how they affect you.

But first, let's make one thing clear.

Shopify is still the best platform to build an eCommerce store for the vast majority of online entrepreneurs and dropshippers. There isn't a new rival hoovering up Shopify's customer base and causing the platform's share price to drop.

It's still the best eCommerce platform out there and will not lose that crown anytime soon.

So why is Shopify losing share value and laying off employees?

We need to look at eCommerce as a share of total U.S. retail sales to answer that question. That's the graph you can see below.

As you can see, eCommerce gradually increased its share of total retail sales until 2020 and the start of the pandemic.

Then it rockets up with huge growth over a short period.

Shopify noticed this boom and anticipated that the growth rate would continue even after the pandemic ended.

In simple terms, Shopify bet that the number of people buying online and the amount they spent would continue to grow at an elevated level once restrictions were lifted and people could shop in-store again.

But that's not how things worked out.

You can see in the graph that eCommerce sales as a percentage of total retail sales have leveled off to pre-pandemic growth rates.

Shopify expanded its workforce based on a prediction that didn't come true. The eCommerce platform built a team for the next five years of growth, anticipating that growth would take place in a year or less.

So Shopify has to adapt, which unfortunately means losing some of its employees. The eCommerce platform has also announced it will be shutting down the dropshipping app Oberlo - just 5 years after purchasing the app for $15 million.

Read our guide to learn more about the Oberlo shutdown, what it means for dropshipping, and  the top 5 Oberlo alternatives that are taking over the dropshipping scene.

But what about the eCommerce industry as a whole?

Well, eCommerce growth is around the level it would have been if the pandemic had never happened.

It's still growing. And the global eCommerce market is worth more than ever, with a total value of nearly $7.4 trillion in 2022.

So there's no need to worry about the future of eCommerce or dropshipping as a business model. There's still heaps of money to be made.

There's also a silver lining whenever big industry news like this lands.

Some people get spooked and give up.

They hear about one big eCommerce company taking a hit and drop out. They close their store and go back to their day job.

And that's a good thing.

It means less competition and more opportunities to win new customers for your store.

This brings us to the next section.

7 Steps To Strengthen Your Shopify Store as an eCommerce Business Owner

With eCommerce growth slowing down, it's more important than ever to stand out and ensure you're doing everything possible to maximize your chances of success.

Quieter periods can give you time to take a step back and strategically improve your eCommerce business.

Here are 7 tips you can implement today to differentiate your store, convert more visitors, and make more sales.

And if you’re just starting out, check out our Shopify dropshipping guide to learn how to create a profitable store from scratch.

1. Eliminate Slow-Moving Products

There's a reason brick-and-mortar stores have end-of-season sales and 50% off discounts.

Slow-moving products take up shelf space and tie up cash that can be used elsewhere in the business.

While dropshippers don't have to worry about storing inventory or getting capital out of slow-moving stock, you should still look to weed out the products that don't generate sales.

You don't want a cluttered store listing hundreds of slow-selling products. These products take up space and distract users from your best-selling items.

Take a look at your inventory and find the products that are:

  • Seasonal
  • Have been replaced with newer models
  • Haven't sold in a month or more

If you're dropshipping these products, removing them from your store is easy.

But if you've bought a shipment, you'll need to offer discounts, use online marketplaces, and offer bulk buying promotions to shift your remaining stock.

Then, you can reinvest the funds in products that are more likely to sell.

If you’re looking for some inspiration for new products, check out our list of the 50 Best Dropshipping Products That Will Make Money in 2023.

So you've removed the slow-selling products from your store. The next step is to double down on your fast-selling items.

That means putting some promotional muscle behind your best sellers.

You can scale up social ads for your popular products, create recommended sections on product and category pages, and leverage your direct communication channels with customers.

One of the most effective ways to boost sales of top-selling items is to create FOMO (fear of missing out) with a pop-up notification that shows visitors other people are buying a specific product.

Here's an example using the ToastiBar - Sales Popup Shopify App:

This is a great way to increase sales for your most popular and trending products.

But how do you find those hot products in the first place?

That's where SaleHoo Market Research Labs can help. It's a market research tool with in-depth data on over 1.6 million eCommerce products.

You can quickly identify hot products with a high sell rate and low competition.

Visit SaleHoo Market Research Labs for a video tour to see how it works and how easy it is to find high-profit and fast-selling products.

3. Revamp Your Product Descriptions

Your product descriptions make or break a sale.

Get it right, and the product description will compel your visitor to make a purchase. Get it wrong, and they'll leave your store and probably won't come back.

Good copywriting is essential.

If you need help writing your product descriptions, you can get expert tips in our guide 7 Deadly Sins When Writing eBay Product Descriptions.

And the placement of your product description is crucial too.

Your visitors should be able to see the benefits and features of your product without having to scroll down to the bottom of the page.

Use bullet points above the fold to highlight your product's main benefits and features.

This will help buyers quickly get the information they need to make a purchasing decision and click the "Buy Now" button.

4. Enhance Your eCommerce Tech Stack

You need to regularly audit your eCommerce technology stack to stay competitive and maximize your most important resource - your time.

There are tools to streamline and optimize every eCommerce process - from order placement to customer retention.

But it's not easy putting together the right tech stack.

The key is to look at your current capabilities and then outline the things you want to be able to do. This will help you identify gaps you can plug with the right tools and technologies.

One of the areas where technology can make the fastest impact is by streamlining the process of finding and adding products to your storefront.

Using SaleHoo Dropship, you can find lucrative products from reliable suppliers and add them to your Shopify store in a single click.

It's an easy-to-use tool that helps you find trending AliExpress products without manually trawling through page after page of search results.

Every product is handpicked by our eCommerce experts here at SaleHoo.

Visit the SaleHoo Dropship page for a video tour of what the tool has to offer.

5. Avoid Backorders

A key benefit of the dropshipping business model is that you don't need to stock inventory, package goods, and deal with the shipping of the products you sell.

It's still the easiest way to launch a profitable online business with minimal startup capital.

But it also has one major drawback - you don't control the fulfillment process.

You have to rely on your suppliers to handle that for you.

And sometimes, things can go wrong.

For example, what happens when you accept an order in your store, but the supplier doesn't have the inventory to fulfill the order?

You'll have to refund the order or quickly find an alternative supplier with stock. And there's no guarantee that the replacement product will be of the same quality.

Both options risk upsetting the customer and your store getting a bad review.

The best way to avoid problems like these is to have direct relationships with reliable suppliers.

With the SaleHoo Directory, you can access 8,000+ pre-vetted suppliers.

Instead of gambling your store's reputation on unknown suppliers, you can search from the 2.5 million products on the SaleHoo Directory and speak directly with suppliers via email or phone or through our in-platform supplier chat feature.

Check out the SaleHoo Directory for a video tour and start finding reliable dropshipping suppliers today.

6. Boost Sales With Customer Reviews and Ratings

It's no secret that customer reviews are incredibly important for eCommerce sales. In fact, 89% of customers read online reviews before buying a product.

Unlike buying in-store, an online shopper can't touch or see an eCommerce product in person. So they rely on the experiences others have had to reassure themselves before committing to a purchase.

If you're looking to boost your conversion rate and drive sales, adding customer reviews and star ratings to your product pages should be top of the list.

You can encourage customers to leave reviews in a follow-up email after they have received the product.

Send a friendly email to make sure they are happy with their purchase, and then ask them to share a review with a link to the review submission form.

If you want more tips on increasing conversions and generating more sales from your existing traffic, check out SaleHoo Educate.

You'll find resources and guides on everything required to run a successful dropshipping store.

There are also a bunch of expert-taught courses that can fast-track your success, including a dropshipping on Shopify course taught by seven-figure store owner, Sarah Li.

7. Build Your Brand With Private Label Products

Private label products are an excellent way to scale your eCommerce business and build a strong brand that sets you apart from the competition.

You can include your own branded packing slips and create unique branded products with your logo.

This is one of the best ways to increase the perceived value of your products. You may also be able to charge a higher price and increase the chances of repeat sales and return customers.

You can target a specific market section and make it your own by offering something better and more memorable than the generic products sold by your competitors.

Take Your Dropshipping Store to the Next Level With SaleHoo

Shopify is laying off workers, and its share price is down…

But there's no reason to freak out.

eCommerce sales are still going strong and maintaining the same growth rate as they were pre-pandemic.

So what if the eCommerce percentage of total retail sales didn't jump ahead by 5-10 years?

It's still growing fast, and there are still plenty of opportunities to get involved and make money.

And by following the above steps, you can become a stronger, more profitable eCommerce business owner.

If you need help implementing any of the above tactics or have questions about dropshipping, use our live chat feature to speak to our support team.

Our eCommerce experts are on hand to help you on your journey to becoming a financially independent online entrepreneur.


About the author
SaleHoo Group

View profile
Already a member? Login to comment