Shopify Inc announced that it will reduce its workforce by about 20 percent and sell its logistics business to Flexport, a supply chain management company.

The e-commerce giant, headquartered in the Canadian capital Ottawa, announced these moves on Thursday morning as a means to help it focus on its main pursuit: making commerce easier.
 

But achieving this strong work means reducing the "side tasks" that CEO Tobi Lütke described as "always a distraction because the company has to divide its focus."

Explaining, "Technological progress always trends toward simplicity, and entrepreneurs succeed more when we simplify."

Adding, "But now we are at the dawn of the age of artificial intelligence, and the new capabilities have made that unprecedented."

Explaining, "Our main pursuit requires us to build the best possible thing now, and that has changed completely."

Lütke's memo did not specify the number of employees who will leave the company, but previously, Shopify laid off about 1,000 workers last summer, when it had nearly 10,000 employees.

Lütke wrote, "I recognize the overwhelming impact of this decision on some of you, and I have not taken this decision lightly."

The 20% of remaining employees will amount to about 1,800 people.

In February, Shopify President Harley Finkelstein said there would be no more cuts in the business.

On the other hand, Lütke promised departing employees at least 16 weeks of severance pay plus one paid week for each year of service at Shopify.

Medical benefits and the employee assistance program will also cover departing employees for the same period.

Also, those leaving will be able to keep their office furniture, and although they will return their laptops, Lütke said Shopify will help cover the cost of new devices.

In addition to the employee departures, his memo announced the sale of Shopify Logistics, which was marketed as a way for merchants to get products "from port to porch."

Under the terms of the agreement, Shopify will receive shares representing 13 percent of the stock in Flexport and the ability to appoint a director to Flexport’s board.

Flexport will become Shopify’s official logistics partner.

The deal is expected to be completed in the second quarter of 2023, but it is subject to certain conditions and regulatory approvals.

These announcements came as Shopify revealed it made $68 million in the first quarter of the year.

Compared to a net loss of $1.4 billion in the same period last year.

The company’s net income, reported in U.S. dollars, was five cents per share compared to a loss of $1.17 per share a year earlier.

Revenue for the period ending March 31 rose 25 percent year-over-year to $1.5 billion.