Commercetools — a “headless commerce” platform that gives APIs to firms constructing on-line storefronts — noticed a serious increase in its enterprise just some years in the past, elevating cash at a whopping $1.9 billion valuation because the world went purchasing on-line within the wake of the COVID-19 pandemic, and companies rushed to enhance their e-commerce operations.
Right this moment, the playbook seems a little bit totally different for e-commerce, and for Commercetools.
TechCrunch has discovered and confirmed that Commercetools has laid off dozens of staff over the previous couple of weeks, together with round 10% of workers earlier Wednesday, after failing to fulfill its gross sales development targets. It’s additionally making plenty of govt modifications, together with parting methods with its chief income officer and CFO, and reassigning the roles beforehand held by its chief data safety and compliance officer.
“Whereas we’ve made significant progress and our enterprise continues to develop, over the past a number of quarters we haven’t totally achieved our aggressive income development targets,” CEO Andrew Burton stated in a memo to the corporate, which TechCrunch has considered. “That actuality has required me, our govt crew, and our Board to take a tough, in-depth have a look at the place we fell quick, the place we confirmed energy, and what wants to vary to construct a stronger future.”
“Important” restructuring will probably be carried out in advertising and marketing, gross sales, and inside operations reminiscent of HR and finance, in response to the memo. Choose workers in buyer and product growth may even be lower “after reviewing efficiency and influence.”
The total memo, shared by a supply and confirmed as genuine by the corporate, is printed under.
Burton, talking to TechCrunch after we contacted the corporate concerning the memo, stated that round 10% of the corporate’s staff had been affected at this time, however declined to offer an actual quantity. A supply, who spoke to TechCrunch on situation of anonymity, stated Wednesday’s layoffs complete greater than 70 individuals and, together with selective reductions he claimed occurred over a interval of a number of weeks, make as much as 20% of workers. The corporate disputes that there have been any layoffs past these introduced Wednesday. Burton additionally added the corporate has 25-30 open roles it’s trying to fill.
It’s a tough bump within the street for an organization that seems to have had a robust run out there.
Initially based in 2006 in Munich, Germany, Commercetools raised simply $30 million in outdoors funding earlier than it was acquired by retail large REWE in 2015. By 2019, it was seeing its revenues rising at 110% yearly. REWE spun it out as a startup once more, backed with $145 million in funding from Perception Companions at a $300 million valuation.
After COVID-19 hit, Commercetools’ enterprise boomed as purchasing of every kind went digital. Lower than three years after that Perception spherical, it was in a position to increase $140 million at a $1.9 billion valuation led by Accel.
By all of this, Commercetools’ founder Dirk Hoerig led the corporate as CEO. He stepped away from the highest place in July 2024, to get replaced by Burton. (Hoerig has retained a seat on the board and is the corporate’s chief innovation officer.)
On the time, the corporate was making “far past” $100 million in annual recurring income, and Burton’s arrival was seen as a precursor to the corporate going public, reportedly in 2025 or 2026. Burton declined to remark at this time on an IPO or different future plans.
The memo cites, at a excessive stage, that Commercetools was lacking its development targets. There have been different extra particular shifts out there.
Whereas Commercetools was a really early mover within the area of “headless commerce” — a time period first coined by Hoerig — plenty of rivals have emerged in more moderen years. Chief amongst them is Shopify, which initially pitched itself to smaller retailers and has step by step grown into working with the identical bigger retailers that Commercetools targets.
On the identical time, e-commerce has continued to develop, however not on the breakneck tempo seen between 2020 and 2022. The newest U.S. Census Bureau figures famous that U.S. retail e-commerce grew simply 2.7% from the third to the fourth quarter of 2024, totaling $308.9 billion and accounting for 16.4% of all retail gross sales. Earlier at this time, eBay famous that its This autumn gross sales grew simply 1%.
Burton additionally cited query marks over how tariffs would play out as one other issue impacting e-commerce firms, and the knock-on impact that has on suppliers like Commercetools.
“We had actually formidable targets that we had not reset to replicate the macro-economic uncertainty,” Burton instructed TechCrunch Wednesday.
Lastly, whereas brand-owned storefronts — a mainstay enterprise for firms like Commercetools — proceed to make up a large a part of the e-commerce market, they’re additionally competing towards a brand new wave of marketplaces. Temu, Instagram, and TikTok all signify a brand new sort of social commerce that after once more might change the sport. Different “headless” firms — be they centered on e-commerce or content material administration or one thing else — which have seen development with the expansion of the web now have to answer altering tides, be it a brand new technique of content material consumption or shopping for items, or AI.
The ball’s within the court docket for firms like Commercetools to anticipate and construct for wherever and nonetheless individuals might need to store sooner or later.
Memo under:
Topic: Essential Replace
Hello crew,
Over the previous few years, we set formidable targets, anticipating robust market development. Whereas we’ve made significant progress and our enterprise continues to develop, over the past a number of quarters we haven’t totally achieved our aggressive income development targets. That actuality has required me, our govt crew, and our Board to take a tough, in-depth have a look at the place we fell quick, the place we confirmed energy, and what wants to vary to construct a stronger future.
As a part of this, we made the tough resolution to restructure just a few groups, implement focused reductions in particular areas, and eradicate some roles. This resolution just isn’t a mirrored image on particular person commercetoolers, their expertise, dedication, or influence, however as a substitute a obligatory step to sharpen our focus and re-position commercetools to be in a stronger place to navigate and succeed on this turbulent market.
A lot of you could have constructed robust relationships with the colleagues who’re leaving at this time. They’ve formed commercetools in methods massive and small, and we’re really grateful. We’re offering all impacted staff with severance and continued advantages above the market customary. Moreover, we’re persevering with their entry to OpenUp, our on-line platform providing numerous psychological well being help sources, to help them on this transition.
I do know that is arduous information to course of. Change brings uncertainty, and we’re dedicated to offering as a lot readability, help, and route as potential. To assist reply frequent questions, we’ve put collectively an Worker FAQ that outlines key particulars concerning the restructuring, sources accessible, and what’s subsequent.
To present everybody area to replicate, we’re giving all staff this Friday, February twenty eighth as a day without work.
Your govt chief will meet along with your division later at this time or tomorrow to debate what this implies for you and your crew.
What’s Altering
C-level Updates:
- Bruno Teuber (CRO) – Transitioning out of the manager crew, staying as an advisor till the top of H1. A brand new CRO search has began; within the interim, gross sales will report back to me.
- Dan Murphy (CFO) – Transitioning out of the manager crew, advising till the top of H1. CFO position won’t be backfilled; Finance, Digital Options, and Authorized will report back to Matt Tuel (COO).
- Denis Werner (Chief Data Safety & Compliance Officer) – Shifting to a compliance-focused position underneath Dirk Hörig. IT Ops transferring to Digital Options underneath Matt Tuel, Data Safety transferring to Product underneath Hajo Eichler, and Workplace Administration transferring to Individuals underneath Roxana Dobrescu.
Groups with Important Restructuring:
- Advertising (together with BDRs) – Realignment to give attention to enterprise GTM mannequin and gross sales PODs.
- Gross sales & Operations – Restructuring to enhance gross sales help and give attention to prime markets/prospects.
- Enablement Features (Finance, Individuals, and so on.) – Consolidating groups for higher operational effectivity.
- Different Impacted Areas – Choose cuts in Buyer and Product Improvement after reviewing efficiency and influence.
Change isn’t simple, but it surely’s on the core of what we do — serving to companies adapt to new realities. Now, we’re doing the identical. In our Firm All Fingers tomorrow, we are going to stroll by means of these modifications in additional element — the why, what, and the way we transfer ahead collectively — staying true to our perception in adapting boldly to construct what’s subsequent.
Andrew
Up to date to notice that Commercetools disputes the full variety of layoffs claimed by a supply.
