CommerceTools is a “headless commerce” platform that provides APIs for businesses building online storefronts a few years ago, and raised funds at a whopping $1.9 billion valuation as the world shopped online in the wake of the Covid-19 pandemic.
Today, playbooks look a little different when it comes to e-commerce and commerce tools.
TechCrunch learned and confirmed that Commercialtools has laid off dozens of employees over the past few weeks, including around 10% of staff for the first half of Wednesday, after failing to meet its sales growth targets. It also makes many executive changes, including breaking up with Chief Revenue Officer and CFO, and reassigning previously held roles by Chief Information Security and Compliance Officer.
“We are making meaningful progress and our business continues to grow, but we have not fully achieved our aggressive revenue growth targets over the past few quarters,” CEO Andrew Burton said in a company memo seen by TechCrunch. “The reality has called for me, our management team and our board to take a rigorous and detailed look at where we stepped in, where we showed strength, and what we needed to change to build a stronger future.”
According to the memo, “significant” restructuring will take place in marketing, sales and internal operations such as HR and Finance. Customer and product development selection staff will be reduced “after checking performance and impact.”
The complete notes shared by the source and confirmed as authentic by the company are published below.
Burton spoke to TechCrunch after contacting the company about the memo, saying that about 10% of the company’s employees were affected today but refused to give them the exact number. A source who spoke to TechCrunch on condition of anonymity said Wednesday’s layoffs totaled more than 70 people, accounting for up to 20% of staff, including selective cuts that occurred over the weeks. The company disputes the layoffs that exceeded what was announced Wednesday. Burton also added that the company has an open role of 25-30, which is trying to fill.
This is a difficult bump for companies that appear to have done a strong run in the market.
Founded in Munich, Germany in 2006, CommerceTools raised just $30 million in external funding before being acquired by retail giant Rewe in 2015. By 2019, revenue had risen by 110% per year. Rewe spun it as a startup again, supporting $145 million in funding from Insight Partners at a $300 million valuation.
After the hit of Covid-19, the Commercialtools business boomed as all sorts of shopping went digital. Less than three years after that insight round, it was able to raise $140 million at an $1.9 billion valuation led by Accel.
Through all this, Commercialtools founder Dirk Hoerig led the company as CEO. He left the top position in July 2024 and was replaced by Burton. (Hoerig holds a seat on the board and is the company’s Chief Innovation Officer.)
At the time, the company had earned $100 million “a lot more” than its annual recurring revenue, and Burton’s arrival was seen as a precursor to the company that would be published in 2025 or 2026.
The memo says at a high level that commerce lacks growth targets. There have also been other concrete changes in the market.
CommerceTools was a very early invoker of the space for the term “Headless Commerce,” the first term coined by Hoerig, but many competitors have recently emerged. The main one is Shopify. This originally pitched itself to small merchants, gradually becoming involved in working with the same large retailers as their commercial targets.
At the same time, e-commerce continues to grow, but not at the fierce pace seen between 2020 and 2022. Recent US Census Bureau figures noted that US retail e-commerce totaled $30.89 billion from the fourth quarter of 2024, accounting for 16.4% of all retail sales. Today, eBay noted that its fourth quarter sales increased by just 1%.
Burton also cited question marks about how tariffs will be unfolded as another factor affecting e-commerce companies, as well as the knock-on effect that comes with suppliers like Commercial Tools.
“We had an ambitious goal of not resetting to reflect macroeconomic uncertainty,” Burton told TechCrunch on Wednesday.
Finally, brand-owned storefronts (the flagship business of companies such as Commerce Tools) continue to compensate for the huge portion of the e-commerce market, but they are also competing with the new wave of the market. Temu, Instagram, and Tiktok all represent a new kind of social commerce that can change the game. Other “headless” companies – whether they focus on e-commerce or content management, growing with the growth of the Internet will need to meet the changing tides, such as new ways to consume content and purchase products.
Balls are on the court for companies like Commercials to predict and build everywhere, and people may want to shop in the future.
Notes below:
Subject: Important Updates
Hello team,
Over the past few years, we have set ambitious targets and anticipated strong market growth. We have made meaningful progress and our business continues to grow, but over the past few quarters we have not fully met our aggressive revenue growth targets. That reality called for me, our executive team, and our board to take a rigorous and detailed look at where we fell, where we showed strength, and what we needed to change to build a stronger future.
As part of that, we made the difficult decision to rebuild several teams, implement targeted reductions in certain areas, and eliminate some roles. This decision does not reflect individual commercialists, talent, commitment or influence, but is the necessary step to reduce and reposition focus to be in a stronger position to navigate and succeed in this disrupted market.
Many of you have developed strong relationships with colleagues who are leaving today. They shape commerce in a variety of ways, big and small, and we are truly grateful. We provide all affected employees with retirements and continued benefits beyond market standards. Additionally, to support this transition, we continue to access OpenUp, an online platform that provides diverse mental health support resources.
I know this is hard news to handle. Change brings uncertainty and we are committed to providing as clear as possible, support and direction. To answer general questions, we have compiled employee FAQs that outline important details about reorganizations, available resources, and what:
To provide a space that everyone can reflect, we are offering it to all employees this Friday as a day off.
Your executive leader will meet with your department today or later tomorrow to discuss what this means to you and your team.
What’s changing?
Updates to C level:
Bruno Teuber (CRO) – transitioning from the executive team and staying as an advisor until the end of H1. A new CRO search has begun. On a temporary basis, the sale will be reported to me. Dan Murphy (CFO) – transitioning from the executive team and advises until the end of H1. The role of the CFO is not backfilled. Financial, digital solutions and legal report to Matt Tuel (COO). Denis Werner (Chief Information Security & Compliance Director) – Moves to a compliance-focused role under Dirkhörig. Move to digital solutions under Matt Tule, then to Information Security, moving to products under Hajo Eichler, and to Office Administrators, moving to people under Roxana Dobrescu.
Teams with important restructuring:
Marketing (including BDR) – Reorganization to focus on enterprise GTM models and sales pods. Sales and Operations – Restructuring to improve sales support and focus on top markets/customers. Enabling Functions (Finance, People, etc.) – Integrate teams to improve operational efficiency. Other impacted areas – After reviewing performance and impact, choose customer and product development.
Change is never easy, but that’s the heart of what we do. It helps your business adapt to new reality. Now we’re doing the same thing. Tomorrow, with all our company hands, we will explain these changes in greater detail – why, what, how to move forward together – stay true to our belief in boldly adapting the following.
Andrew
Note that updated, CommerceTools challenges the total number of layoffs that the source claims.
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