Commercetools — a “headless commerce” platform that gives APIs to corporations constructing on-line storefronts — noticed a serious enhance 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.
Today, the playbook appears a little bit totally different for e-commerce, and for Commercetools.
TechCrunch has realized 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 progress targets. It’s additionally making numerous government 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.
“While we’ve made significant progress and our enterprise continues to develop, during the last a number of quarters we haven’t totally achieved our aggressive income progress targets,” CEO Andrew Burton stated in a memo to the corporate, which TechCrunch has seen. “That actuality has required me, our government crew, and our Board to take a tough, in-depth have a look at the place we fell brief, the place we confirmed energy, and what wants to vary to construct a stronger future.”
“Significant” restructuring will probably be carried out in advertising and marketing, gross sales, and inner operations resembling HR and finance, in response to the memo. Select workers in buyer and product improvement may also be lower “after reviewing efficiency and impression.”
The full memo, shared by a supply and confirmed as genuine by the corporate, is revealed beneath.
Burton, talking to TechCrunch after we contacted the corporate concerning the memo, stated that round 10% of the corporate’s staff had been affected in the present day, however declined to provide a precise quantity. A supply, who spoke to TechCrunch on situation of anonymity, stated in the present day’s layoffs complete greater than 70 individuals and, together with the smaller layoffs of the previous couple of weeks, make as much as 20% of workers. Burton additionally added the corporate has 25-30 open roles it’s seeking to fill.
It’s a tough bump within the street for a corporation that seems to have had a powerful run out there. Originally based in 2006 in Munich, Germany, Commercetools raised simply $30 million in outdoors funding earlier than it was acquired by retail big REWE in 2015. By 2019, it was seeing its revenues rising at 110% yearly, and so REWE spun it out as a startup once more, backed with $145 million in funding from Insight Partners at a $300 million valuation.
After COVID-19 hit, Commercetools’ enterprise boomed as purchasing of all types went digital. Less than three years after the spin-out funding, it was capable of elevate $140 million at a $1.9 billion valuation led by Accel.
Through 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.)
At 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 in the present day on an Stock Launch or different future plans.
The memo cites, at a excessive stage, that Commercetools was lacking its progress targets, however there have been different extra particular shifts out there.
While Commercetools was a really early mover within the area of “headless commerce” — a time period first coined by Hoerig — numerous rivals have emerged in newer years. Chief amongst them is Shopify, which initially pitched itself to smaller retailers and has regularly grown into working with the identical bigger retailers that Commercetools targets.
Digital Commerce has continued to develop, however not on the breakneck tempo seen between 2020 and 2022. The most up-to-date 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 in the present day, eBay famous that its This fall gross sales grew simply 1%.
Burton additionally cited query marks over how tariffs would play out as one other issue impacting e-commerce corporations, and the knock-on impact that has on suppliers like Commercetools.
“We had actually bold targets that we had not reset to mirror the macro-economic uncertainty,” Burton informed TechCrunch in the present day.
Finally, whereas brand-owned storefronts — a mainstay enterprise for corporations like Commercetools — proceed to make up an enormous a part of the e-commerce market, they’re additionally competing towards a brand new wave of marketplaces. Temu, Instagram, and TikTook all characterize a brand new sort of social commerce that when once more might change the sport.
The ball’s within the courtroom for corporations like Commercetools to anticipate and construct for wherever and nevertheless individuals could wish to store sooner or later.
Memo beneath:
Subject: Important Update
Hi crew,
Over the previous few years, we set bold targets, anticipating robust market progress. While we’ve made significant progress and our enterprise continues to develop, during the last a number of quarters we haven’t totally achieved our aggressive income progress targets. That actuality has required me, our government crew, and our Board to take a tough, in-depth have a look at the place we fell brief, the place we confirmed energy, and what wants to vary to construct a stronger future.
As a part of this, we made the tough determination to restructure just a few groups, implement focused reductions in particular areas, and get rid of some roles. This determination isn’t a mirrored image on particular person commercetoolers, their expertise, dedication, or impression, however as a substitute a mandatory step to sharpen our focus and re-position commercetools to be in a stronger place to navigate and succeed on this turbulent market.
Many of you’ve gotten constructed robust relationships with the colleagues who’re leaving in the present day. They have formed commercetools in methods large and small, and we’re actually grateful. We are offering all impacted staff with severance and continued advantages above the market customary. Additionally, we’re persevering with their entry to OpenUp, our on-line platform providing numerous psychological well being help assets, to help them on this transition.
I do know that is exhausting information to course of. Change brings uncertainty, and we’re dedicated to offering as a lot readability, help, and course as attainable. To assist reply frequent questions, we’ve put collectively an Employee FAQ that outlines key particulars concerning the restructuring, assets out there, and what’s subsequent.
To give everybody area to mirror, we’re giving all staff this Friday, February twenty eighth as a time without work.
Your government chief will meet together with your division later in the present day or tomorrow to debate what this implies for you and your crew.
What’s Changing
C-level Updates:
- Bruno Teuber (CRO) – Transitioning out of the manager crew, staying as an advisor till the tip 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 tip of H1. CFO function won’t be backfilled; Finance, Digital Solutions, and Legal will report back to Matt Tuel (COO).
- Denis Werner (Chief Information Security & Compliance Officer) – Moving to a compliance-focused function beneath Dirk Hörig. IT Ops transferring to Digital Solutions beneath Matt Tuel, Information Security transferring to Product beneath Hajo Eichler, and Office Management transferring to People beneath Roxana Dobrescu.
Teams with Significant Restructuring:
- Marketing (together with BDRs) – Realignment to give attention to enterprise GTM mannequin and gross sales PODs.
- Sales & Operations – Restructuring to enhance gross sales help and give attention to high markets/clients.
- Enablement Functions (Finance, People, and so forth.) – Consolidating groups for higher operational effectivity.
- Other Impacted Areas – Select cuts in Customer and Product Development after reviewing efficiency and impression.
Change isn’t straightforward, 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 Company All Hands tomorrow, we’ll 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
