Shopify has announced the sale of its logistics business, Shopify Logistics, including the company it acquired for $2.1 billion less than a year ago, Deliverr, to Flexport for a 13% equity stake. 

In a letter on the platform's blog, CEO Tobias Lütke noted that "Flexport, led by CEO Dave Clark and founder Ryan Petersen, is the best builder and operator in the logistics world. Contributing our work to Flexport, under the leadership of Harish Abbott, allows everything about Shopify Logistics to be more ambitious and global," reiterating that "making global supply chains efficient and software addressable is Flexport's core pursuit, so this is the perfect home for this part of Shopify."

Shopify also sold 6 River Systems, another retail fulfillment automation startup for which it paid $450 million in 2019, to Ocado. Expanding into logistics services as part of Shopify's ambition to support merchants selling on its platform with a one-stop shop.

However, as the Covid-driven e-commerce boom slows and Shopify's revenue growth slows, it's spending on the fulfillment network has come under closer scrutiny by investors, who fear the capital-intensive project could weigh on earnings. Indeed, in an interview with the Reuters news agency, Harley Finkelstein, president of Shopify, noted that "the change in strategy was a result of prioritizing product acceleration." "We can give our merchants great value. Flexport gets tons of new customers to use their amazing product, and we can refocus on what we do best," Finkelstein stressed.

Massive layoffs 

Shopify Inc. also said past Thursday it would cut 20 percent of its workforce, the second major round of layoffs at the e-commerce company in under a year. The layoffs came immediately after the public announcement and impacted multiple roles in the European and APAC regions. 

The official communication was done by CEO Tobi Lutke, who said, "This means some of you will leave Shopify today," told staff in a memo. "I recognize the crushing impact this decision has on some of you and did not make this decision lightly."

Affected employees have already been advised, via email, if they still have a job. Everyone will receive a minimum of 16 weeks severance plus a week for every year they worked at the company.

Shopify slashes at managerial roles

The company appears to be targeting managerial roles for the cuts, as opposed to people who work on the company's software, with Lutke saying in his note to staff that the company had too many of the former.

"The balance of crafter to manager numbers is a tricky one to strike. Too few and you risk misalignment on the most important things; too many add heavy layers of process, approvals, meetings, and… side quests. Our numbers were unhealthy, just like it is in much of the tech industry," he said.

It's the second major round of layoffs at the company in under a year. The company announced last summer that after expanding aggressively during the pandemic, it would lay off 10 percent of its staff, as sales growth on its e-commerce platform was slowing.

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Zalando has announced the layoff of hundreds of workers through a "program that will eliminate several hundred general functions in many of our teams," according to the letter released today by its co-CEOs and founders, Robert Gentz and David Schneider.

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While further details and the percentage of staff to be laid off are not yet known (negotiations with employee representatives began yesterday), Zalando has assured that certain key departments will not be affected: front-line operations functions in logistics centers, customer service, and outlet stores, as well as operational functions in our Zalando Studios.

The company, headquartered in Berlin since its founding in 2008, currently employs more than 17,000 people. Zalando has over 50 million active customers in 25 markets, including Spain.

The Covid boon is over… 

"Backed by a general consumer shift to online shopping and strong tailwinds from the pandemic in 2020 and 2021, Zalando has generated exceptional growth in recent years," Gentz and Schneider's letter notes. However, since 2022, Zalando acknowledges entering a phase of stagnation, further spurred by the financial instability unleashed by the war in Ukraine.

"This change has highlighted the increased complexity of our company and our speed of reaction. Instead of a large company with a large company structure and mentality, we must be a large company with a small company structure and mentality. An entrepreneurial company that embraces simplicity, pragmatism, and frugality. These principles will drive innovation and equip us to invest in our strategic priorities and shape the future of European e-commerce," they say in the statement.

In the latest results reported by the company, during Q3 2022, Zalando's GMV grew by 7.1% to €3.28 billion, and sales rose by 2.9% to €2.35 billion. Adjusted earnings before interest and taxes (adjusted EBIT) rose to €13.5 million from €9.8 million in the same quarter of the previous year.

For the full year, Zalando expects GMV to grow by 3% to 7% to €14.8 billion to €15.3 billion, while revenue would grow by 0% to 3%, or €10.4 billion to €10.7 billion, with adjusted EBIT of €180 million to €260 million. The company now expects to reach the lower end of these ranges.

Are Zalando layoffs an oddity or an industry-wide issue? 

One of the things that concern the most about Zalando's recent decision is the fact that to be honest; the e-commerce fashion sector remains in good health. 

In fact, according to Shopify, sales of apparel, footwear, and accessories continue to rise, hitting $204.9 billion in the US alone. 

That's tipped to grow by 13% this year, with consumers set to spend $204.9 billion on fashion items online.

The same situation is happening in Europe, where revenue in the e-commerce market is projected to reach US$730.30bn in 2023 and is expected to show an annual growth rate (CAGR 2023-2027) of 9.97%, resulting in a projected market volume of US$1,068.00bn by 2027.

Most of which is from the Fashion sector of e-commerce, the largest one in sales, accumulating well over 230 billion dollars in projected sales for 2023. 

That’s why Zalando's situation seems, at least odd, and many experts believe, is not indicative of an underlying problem in the e-commerce fashion industry.

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Disney will layoff 7,000 employees, which translates into 3.6% of its total workforce worldwide. This decision is part of its cost-cutting plan that will also affect its content divisions.

This was announced by Bob Iger, the company's chief executive, in a call with analysts to comment on the results of the first quarter of its fiscal year, in which it earned 1,279 million dollars (1,196.2 million euros), a 16% year-on-year increase. 

According to Bloomberg, the company's chief executive also said the restructuring would save $5.5 billion (5.1 billion euros) in costs.

Bob Iger's plan is to reorganize the company into three segments dealing with broader areas of products and services. 

The media and  entertainment giant would now be made up of three divisions:

• Disney Entertainment, which includes most of its streaming and media operations

• An ESPN division that includes the TV network and the ESPN+ streaming service

• A Parks, Experiences, and Products unit, which will include cruise ships and merchandise shops

The move marks the most significant action Bob Iger has taken since returning to the company as CEO in November. Disney announced the changes minutes after it posted its most recent quarterly earnings. The announcements also come as Disney engages in a proxy fight with activist investor Nelson Peltz and his firm Trian Management.

“We are pleased that Disney is listening,” a Trian spokesperson said Wednesday.

Iger said the changes are aimed at improving profit margins and are part of the transformation the company has embraced in recent years, including a strengthening of its franchises and the development of its online content platform.

Disney+ in red numbers 

In the presentation of its quarterly results, the company reported a loss of 2.4 million subscribers to its Disney+ streaming service. It indicated it was making a loss, although it did not quantify it. Thus, within this sector, streaming content earned 5.3 billion dollars (4.94 billion euros) but had operating losses of 1.1 billion dollars (1.025 billion euros) due, above all, to the losses of Disney+.

The technology sector is in the midst of a wave of layoffs, and more and more companies are announcing job cuts. 

Amazon alone (18,000 redundancies), Microsoft (10,000), and Alphabet, Google's parent company (12,000), have made 40,000 employees redundant so far this year. Facebook's parent company Meta also announced 11,000 redundancies in November last year, affecting 13% of its workforce.

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Spotify layoff was announced Monday and would impact over 6% of its global workforce to reduce costs, joining technology companies such as Amazon and Microsoft in cutting staff in the face of a slowing global economy.

In a letter to employees posted on the company's website, the company's CEO, Daniel Ek, took full responsibility for the job cuts, which he called "difficult but necessary."

"Like many other leaders, I expected to hold off the strong tailwinds of the pandemic and believed that our broad global business and the lower risk of the impact of a slowdown in announcements would insulate us. In hindsight, I was overly ambitious in investing ahead of our revenue growth," he said.

The Stockholm-based music streaming company had about 9,800 employees worldwide as of September 30.

More than 46,000 workers in U.S.-based tech companies have been laid off in mass job cuts so far in 2023, according to a Crunchbase News tally, and the year is just getting started. That number includes Microsoft's 10,000-person cut and Google parent Alphabet's 12,000-person layoff announcements this week.

Spotify layoff is part of the Big Tech crisis

As explained by Business Insider, only a year ago, at this time, the Big Tech sector was euphoric. Technology stocks were soaring. The number of employees at many large companies nearly doubled during the pandemic crisis. 

Workers were enjoying rising wages and a glut of job opportunities, leading to the phenomenon known as the 'great resignation' and a resurgence of employee empowerment. 

However, with persistent inflation and the hawkish attitude of the Federal Reserve, the economic outlook has been worsening severely. Many economists and business leaders are now predicting that a downturn is coming; the big question is how deep it will be.

Executives at the largest technology companies are in an anxious waiting game, bracing for the storm's arrival. 

"We seem to be facing a new stage: the 'big doubt,'" says Keith Hwang, a director at technology investment fund Selcouth Capital Management. "No one is entirely clear how bad the crisis will be. No one can predict the actual impact. Based on that, we see many companies trying, first and foremost, to cut costs significantly in the face of doubt," he explains.

Overall, the crisis is due to a combination of over-expending and miscalculations on how much will contract the digital economy once the Covid artificial boost of e-commerce is over. So far, no one knows how much - or how bad - things will continue to go in the Big Tech and e-commerce world. But one thing seems sure: 2023 won’t be a good year.  

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Alphabet will cut around 12,000 jobs worldwide. Google’s parent company will lay off close to 6% of the workforce to address weakening economic conditions, the group's CEO Sundar Pichai said Friday in a message to employees. 

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It is the most significant layoff in its history and brings the number of jobs cuts announced by the big tech companies to 51,000. The biggest amounts of layoffs in the industry ever. 

The cuts will affect roles across product areas and regions, CEO Sundar Pichai said in an email to employees posted on the company’s website Friday.

"We have decided to reduce our workforce by approximately 12,000 positions," Pichai said in a message made public in the early hours of Friday morning at Google's headquarters in Mountain View (California), after midday in mainland Spain. Pichai said that the company has already contacted by email with affected employees in the United States, while in other countries, "this process will take longer due to local laws and practices".

Affected US employees will remain on the company’s payroll for 60 days and receive at least 16 weeks' salary in severance, in addition to other benefits.

Alphabet grew its workforce by more than 50,000 over the past two years as booming demand for its services during the pandemic boosted profits. But in recent quarters, the company’s core digital ad business has slowed as the economic downturn, and recession fears caused advertisers to pull back their spending.

Not only Alphabet is laying off 

Microsoft announced this week that it was cutting about 10,000 jobs, and earlier this year, Amazon raised its layoff figure to about 18,000 workers. Last year, Meta announced 11,000 job cuts. Of the Big Five, only Apple has escaped massive job cuts, although it has slowed hiring and laid off some employees.

In addition to the so-called Big Tech, many other technology companies, including Salesforce, Twitter, and Netflix, have also undertaken layoffs. According to the website Layoffs.fyi, which tracks layoffs in the tech sector, some 39,000 have already been announced in the first 20 days of this year, adding to the 155,000 in 2022. That, even though the U.S. economy has the lowest unemployment figure in the last 50 years, at 3.5%.

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Amazon plans to lay off approximately 10,000 people in corporate, marketing and technology jobs starting as soon as this week. If the numbers are correct, this will be the largest layoff in the company’s history.

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The news transpired last week via multiple media outlets, to a mix of disbelief and alarm, due to the fact not even Amazon remains untouched in the midst of this massive global tech companies crisis. 

Bezos' company, so far one of the few tech companies to have relatively surfed the wave of sales reductions affecting the entire e-commerce panorama, has now joined the ranks of Twitter, Meta, Stripe, Salesforce, Microsoft, and Robinhood among many others. 

Amazon devices, human resources, and retail will be hit harder 

The cuts will focus on Amazon’s devices organization, including the voice assistant Alexa, as well as at its retail division and in human resources, said the people, who spoke on condition of anonymity to the New York Times, because they were not authorized to speak publicly.

The total number of layoffs remains to be defined, as it will most likely be run team by team, rather than all at once, as each business unit or team finishes its yearly plans and gets its results reviewed by corporate. 

But, if the number remains close to the initial figure of 10.000, these massive layoffs will represent 3% of the total Amazon corporate workforce, and less than 1 percent of its global workforce of more than 1.5 million, which is primarily composed of hourly workers.

Amazon’s planned retrenchment during the critical holiday shopping season - when the company typically has valued stability - shows how quickly the souring global economy has put pressure on it to trim businesses that have been overstaffed or underdelivering for years.

Microsoft also jumps into the ‘layoffs wagon’  

Another key indicator that the layoffs situation is not a particular issue of a few companies, is the fact that last month Microsoft also announced layoffs for nearly 1,000 employees worldwide. 

While significant, the job losses affected less than one-half of 1% of the company's 221,000 employees worldwide.

The job cuts came across different positions, levels, and geographic regions, Microsoft confirmed.

"Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly," the company told ABC News in a statement. "We will continue to invest in our business and hire in key growth areas in the year ahead."

All in all, it seems clear that the tech and e-commerce sector will be entering a global recession during 2023. 

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