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Commercetools<\/a> \u2014 a \u201cheadless commerce\u201d platform that provides APIs to companies building online storefronts \u2014 saw a major boost in its business just a few years ago, raising money at whopping $1.9 billion valuation<\/a> as the world went shopping online in the wake of the Covid-19 pandemic, and businesses rushed to improve their e-commerce operations.<\/p>\n Today, the playbook looks a little different for e-commerce, and for Commercetools.\u00a0<\/p>\n TechCrunch has learned and confirmed that Commercetools has laid off dozens of employees over the last few weeks, including around 10% of staff earlier Wednesday, after failing to meet its sales growth targets. It\u2019s also making a number of executive changes, including parting ways with its chief revenue officer and CFO, and reassigning the roles previously held by its chief information security and compliance officer.\u00a0<\/p>\n \u201cWhile we\u2019ve made meaningful progress and our business continues to grow, over the last several quarters we haven\u2019t fully achieved our aggressive revenue growth targets,\u201d CEO Andrew Burton said in a memo to the company, which TechCrunch has viewed. \u201cThat reality has required me, our executive team, and our Board to take a hard, in-depth look at where we fell short, where we showed strength, and what needs to change to build a stronger future.\u201d<\/p>\n \u201cSignificant\u201d restructuring will be carried out in marketing, sales, and internal operations such as HR and finance, according to the memo. Select staff in customer and product development will also be cut \u201cafter reviewing performance and impact.\u201d<\/p>\n The full memo, shared by a source and confirmed as authentic by the company, is published below.\u00a0<\/p>\n Burton, speaking to TechCrunch after we contacted the company about the memo, said that around 10% of the company\u2019s employees were affected today, but declined to give an exact number. A source, who spoke to TechCrunch on condition of anonymity, said today\u2019s layoffs total more than 70 people and, including the smaller layoffs of the last few weeks, make up to 20% of staff. Burton also added the company has 25-30 open roles it\u2019s looking to fill. <\/p>\n It\u2019s a difficult bump in the road for a company that appears to have\u00a0had a strong run in the market. Originally founded in 2006 in Munich, Germany, Commercetools raised just $30 million in outside funding before it was acquired by retail giant REWE in 2015. By 2019, it was seeing its revenues growing at 110% annually, and so REWE spun it out as a startup again, backed with $145 million<\/a> in funding from Insight Partners at a $300 million valuation.<\/p>\n After Covid-19 hit, Commercetools\u2019 business boomed as shopping of all kinds went digital. Less than three years after the spin-out investment, it was able to raise $140 million<\/a> at a $1.9 billion valuation led by Accel.<\/p>\n Through all of this, Commercetools\u2019 founder Dirk H\u00f6rig led the company as CEO. He stepped away from the top position in July 2024, to be replaced by Burton. (H\u00f6rig has retained a seat on the board and is the company\u2019s Chief Innovation Officer.)\u00a0<\/p>\n At the time, the company was making \u201cfar beyond<\/a>\u201d $100 million in annual recurring revenue, and Burton\u2019s arrival was seen as a precursor to the company going public, reportedly in 2025 or 2026. Burton declined to comment today on an IPO or other future plans. <\/p>\n The memo cites, at a high level, that Commercetools was missing its growth targets, but there have been other more specific shifts in the market.\u00a0<\/p>\n While Commercetools was a very early mover in the space of \u201cheadless commerce\u201d \u2014 a term first coined by H\u00f6rig \u2014 a number of competitors have emerged in more recent years. Chief among them is Shopify, which originally pitched itself to smaller merchants and has gradually grown into working with the same larger retailers that Commercetools targets.\u00a0<\/p>\n E-commerce has continued to grow, but not at the breakneck pace seen between 2020 and 2022. The most recent U.S. Census Bureau figures<\/a> noted that U.S. retail e-commerce grew just 2.7% from the third to the fourth quarter of 2024, totaling $308.9 billion and accounting for 16.4% of all retail sales. Earlier today, eBay noted that its Q4 sales grew just 1%<\/a>.\u00a0<\/p>\n Burton also cited question marks over how tariffs would play out as another factor impacting e-commerce companies, and the knock-on effect that has on suppliers like Commercetools.<\/p>\n \u201cWe had really ambitious goals that we had not reset to reflect the macro-economic uncertainty,\u201d Burton told TechCrunch today.<\/p>\n Finally, while brand-owned storefronts \u2014 a mainstay business for companies like Commercetools \u2014 continue to make up a giant part of the e-commerce market, they\u2019re also competing against a new wave of marketplaces. Temu, Instagram, and TikTok all represent a new kind of social commerce that once again could change the game.<\/p>\n The ball\u2019s in the court for companies like Commercetools to anticipate and build for wherever and however people may want to shop in the future.<\/p>\n Memo below:<\/em><\/p>\n Subject:<\/strong>\u00a0Important Update<\/p>\n Hi team,<\/p>\n Over the past few years, we set ambitious goals, anticipating strong market growth. While we\u2019ve made meaningful progress and our business continues to grow, over the last several quarters we haven\u2019t fully achieved our aggressive revenue growth targets. That reality has required me, our executive team, and our Board to take a hard, in-depth look at where we fell short, where we showed strength, and what needs to change to build a stronger future.<\/p>\n As part of this, we made the difficult decision to restructure a few teams, implement targeted reductions in specific areas, and eliminate some roles. This decision is not a reflection on individual commercetoolers, their talent, dedication, or impact, but instead a necessary step to sharpen our focus and re-position\u00a0commercetools\u00a0to be in a stronger position to navigate and succeed in this turbulent market.<\/p>\n Many of you have built strong relationships with the colleagues who are leaving today. They have shaped\u00a0commercetools\u00a0in ways big and small, and we are truly grateful. We are providing all impacted employees with severance and continued benefits above the market standard. Additionally, we are continuing their access to OpenUp, our online platform offering diverse mental health support resources, to support them in this transition.<\/p>\n I know this is hard news to process. Change brings uncertainty, and we are committed to providing as much clarity, support, and direction as possible. To help answer common questions, we\u2019ve put together an Employee FAQ that outlines key details about the restructuring, resources available, and what\u2019s next.<\/p>\n To give everyone space to reflect, we are giving all employees this Friday, February 28th as a day off.<\/p>\n Your executive leader will meet with your department later today or tomorrow to discuss what this means for you and your team.<\/p>\n What\u2019s Changing<\/strong><\/p>\n C-level Updates:<\/strong><\/p>\n Teams with Significant Restructuring:<\/strong><\/p>\n Change is never easy, but it\u2019s at the core of what we do \u2014 helping businesses adapt to new realities. Now, we\u2019re doing the same. In our\u00a0Company All Hands tomorrow<\/strong>, we will walk through these changes in more detail \u2014 the why, what, and how we move forward together \u2014 staying true to our belief in adapting boldly to build what\u2019s next.<\/p>\n\n
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