Shopify Sees Merchant Exodus Amid Decline in Consumer Spending

Businesses dealing with high costs and a decline in consumer spending have begun to move away from eCommerce platform Shopify.

As Reuters reported Monday (Aug. 8), Shopify added 71,000 net merchants in the first half of the year, according to YipitData’s research shared with the news organization. The company added 680,000 at the peak height of the pandemic in 2020 and 314,000 last year.

Those merchants use Shopify to establish online stores and payment systems in return for subscription fees. However, the company has been hurt this year by a decline in digital commerce, with Shopify acknowledging recently it had wrongly wagered the inline shopping boom would go on.

Read more: Shopify Cutting 10% of Global Workforce

“Unless Shopify adds roughly twice as many merchants in the second half of 2022 as the first half, we estimate they could be on pace for the lowest net merchant additions in a year since at least 2018,” YipitData analysts told Reuters.

The news comes weeks after reports that Shopify was cutting 10% of its global workforce or about 1,000 people.

Shopify Founder and CEO Tobi Lütke told workers in a memo that the company’s growth had declined as shoppers returned to buying things in stores.

Lütke said in the message to staff that he had expected that the increase in eCommerce sales would last well beyond the pandemic, but “I got this wrong,” Lütke said.

Based in Ottawa, Shopify said the cuts would happen across every division with most happening in recruiting, support and sales departments.

“We’re also eliminating over-specialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” Lütke said.