Shopify will sell its logistics company and layoff 20% of its global workforce

Ottawa-based Shopify announced Thursday it was cutting its global workforce by 20 percent and offloading its logistics business to Flexport in order to focus on its core e-commerce activities.

In a memo to its more than 11,000 staff, company founder and chief executive Tobias Lutke said: "We are changing the shape of Shopify significantly today to pay unshared attention to our mission."

"This is a consequential and hard week," he said. "It's the right thing for Shopify, but it negatively affects many team members who we admire and love working with."

Lutke, who launched the online platform in 2006, said the company should focus on its core mission of e-commerce.

He said that the company's "side quest" of building out logistics and order fulfillment operations over several years to rival such e-commerce giants as Amazon and Walmart had become a distraction.

Shopify's plunge into transporting and warehousing, and cross docking its e-commerce clients' goods in recent years mirrored similar moves by rivals. All of them expected that a boom in demand through the pandemic would last.

But consumers last year started turning away from online shopping while cutting back on discretionary purchases.

Shopify initially responded by slashing its workforce by 10 percent in July 2022 and trimming its operations.

The sale of Shopify's logistics business to San Francisco-based supply chain technology firm Flexport, Lutke said, would allow the company to end its "split focus."

Shopify's share price jumped 26 to 28 percent in early trading (1500 GMT) in Toronto and New York following the announcement.