On Thursday, Shopify CEO Tobi Lütke revealed the company's plans to reduce its workforce by 20% and sell a significant portion of its logistics business to supply-chain technology firm Flexport. Lütke addressed employees and shareholders in a note, stating that the decision was not taken lightly and acknowledged its significant impact on affected team members.

Shopify did not clarify which divisions would be affected by the cuts. Employees had grown anxious over potential layoffs following the recent cancellation of several teambuilding events and off-site trips, known as "bursts." Analysts and insiders had also anticipated major changes to Shopify's logistics division.

Shopify will sell Deliverr, acquired in 2022 for $2.1 billion, and any progress made on Shopify-operated warehouses for a 13% equity stake in Flexport, in addition to existing equity from prior investments. During an earnings call on Thursday, CFO Jeff Hoffmeister revealed that Shopify's stake in Flexport is now in the "high teens."

Meanwhile, 6 River Systems, a warehouse automation and robotics firm purchased by Shopify in 2019 for $450 million, will be sold to UK grocery company Ocado for an undisclosed amount. Investors have voiced concerns that the logistics endeavor is weighing down Shopify's balance sheet, with Lütke describing the entire initiative as a "worthwhile side quest."

Shopify announced on Thursday that Flexport would become its official logistics partner, and Lütke's letter indicated a stronger focus on incorporating artificial intelligence into ecommerce.

In pursuit of a more efficient and focused organization amid economic uncertainty, Shopify plans to hire fewer individuals this year, opting for targeted, "unorthodox" strategies to recruit the best talent. Earlier this year, the company introduced a new framework categorizing employees as either managers or "crafters" to encourage more employees to be individual contributors, resulting in fewer managers overall.

Lütke's note emphasized that the balance between managers and crafters at Shopify had become "unhealthy," leading the company to prioritize activities over outcome-driven results. The workforce reduction follows a series of quiet dismissals, including talent acquisition employees, and the retraction of full-time job offers for several former interns.

There have been several changes in Shopify's executive team in recent months, including the departure of CTO Allan Leinwand in January, the appointment of former Morgan Stanley investment banker Jeff Hoffmeister as CFO, and the promotion of Kaz Nejatian to COO. In July last year, Shopify laid off more than 1,000 employees – 10% of its workforce – citing a miscalculation of the pandemic's long-term impact on the ecommerce sector.