Commercetools — a “headless commerce” platform that gives APIs to corporations constructing on-line storefronts — noticed a significant increase in its enterprise only a few years in the past, elevating cash at whopping $1.9 billion valuation because the world went procuring 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 to be somewhat totally different for e-commerce, and for Commercetools.
TechCrunch has realized and confirmed that Commercetools has laid off dozens of staff over the previous few weeks, together with round 10% of employees earlier Wednesday, after failing to satisfy its gross sales development targets. It’s additionally making various govt adjustments, 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, during the last a number of quarters we haven’t totally achieved our aggressive income development targets,” CEO Andrew Burton mentioned 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 take a look at the place we fell quick, the place we confirmed power, and what wants to vary to construct a stronger future.”
“Important” restructuring will likely be carried out in advertising, gross sales, and inner operations reminiscent of HR and finance, in line with the memo. Choose employees in buyer and product growth will even be minimize “after reviewing efficiency and affect.”
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, mentioned that round 10% of the corporate’s staff have been affected right now, however declined to offer a precise quantity. A supply, who spoke to TechCrunch on situation of anonymity, mentioned right now’s layoffs whole greater than 70 individuals and, together with the smaller layoffs of the previous few weeks, make as much as 20% of employees. 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 available in the market. 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, and so 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 procuring of every kind went digital. Lower than three years after the spin-out funding, it was in a position to elevate $140 million at a $1.9 billion valuation led by Accel.
By way of all of this, Commercetools’ founder Dirk Hörig led the corporate as CEO. He stepped away from the highest place in July 2024, to get replaced by Burton. (Hörig 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 right now on an IPO or different future plans.
The memo cites, at a excessive degree, that Commercetools was lacking its development targets, however there have been different extra particular shifts available in the market.
Whereas Commercetools was a really early mover within the area of “headless commerce” — a time period first coined by Hörig — various opponents 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.
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 right now, 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 formidable targets that we had not reset to replicate the macro-economic uncertainty,” Burton informed TechCrunch right now.
Lastly, 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 in opposition to a brand new wave of marketplaces. Temu, Instagram, and TikTok all signify a brand new type of social commerce that after once more may change the sport.
The ball’s within the court docket for corporations like Commercetools to anticipate and construct for wherever and nonetheless individuals might wish to store sooner or later.
Memo under:
Topic: Vital 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, during the last 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 take a look at the place we fell quick, the place we confirmed power, and what wants to vary to construct a stronger future.
As a part of this, we made the tough choice to restructure a couple of groups, implement focused reductions in particular areas, and remove some roles. This choice isn’t a mirrored image on particular person commercetoolers, their expertise, dedication, or affect, however as a substitute a needed step to sharpen our focus and re-position commercetools to be in a stronger place to navigate and succeed on this turbulent market.
Lots of you’ve got constructed robust relationships with the colleagues who’re leaving right now. They’ve formed commercetools in methods massive and small, and we’re actually grateful. We’re offering all impacted staff with severance and continued advantages above the market normal. Moreover, we’re persevering with their entry to OpenUp, our on-line platform providing numerous psychological well being assist assets, to assist them on this transition.
I do know that is laborious information to course of. Change brings uncertainty, and we’re dedicated to offering as a lot readability, assist, and course as doable. To assist reply frequent questions, we’ve put collectively an Worker FAQ that outlines key particulars concerning the restructuring, assets out there, and what’s subsequent.
To offer 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 right now 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 function won’t be backfilled; Finance, Digital Options, and Authorized will report back to Matt Tuel (COO).
- Denis Werner (Chief Info Safety & Compliance Officer) – Shifting to a compliance-focused function below Dirk Hörig. IT Ops transferring to Digital Options below Matt Tuel, Info Safety transferring to Product below Hajo Eichler, and Workplace Administration transferring to Folks below 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 assist and give attention to high markets/clients.
- Enablement Capabilities (Finance, Folks, and so on.) – Consolidating groups for higher operational effectivity.
- Different Impacted Areas – Choose cuts in Buyer and Product Improvement after reviewing efficiency and affect.
Change isn’t straightforward, however it’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 Palms tomorrow, we are going to stroll by these adjustments 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
