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BigCommerce became the latest ecommerce platform to announce layoffs on Thursday.
The open SaaS ecommerce platform said it will reduce its workforce by 13% across employees and contractors by the end of the calendar year as part of a restructuring plan that is designed to speed up the path to profitability. As of Dec. 31, 2021, BigCommerce had 1,337 employees, according to an SEC filing reported by Marketwatch.
On its recent earnings call, company executives signaled that they will shift sales and marketing dollars to enterprise sales, where it said it sees “the strongest unit economics and the opportunity for long-term, profitable growth.” On Thursday, the company said the reduction of non-enterprise marketing expenses is part of the restructuring plan.
“This focusing of our spending and resources, which impacts all of our teammates, was an incredibly difficult decision to make,” said CEO Brent Bellm, in a statement. “We are implementing changes that will enhance the strength of our financial profile against the backdrop of a challenging economic environment. It will also drive focus on the areas we view as having the strongest product market advantage and best long-term financial performance,” said Brent Bellm, CEO of BigCommerce. “We are sadly parting ways with some incredibly talented people whom we have grown to cherish as friends and colleagues over the years. We will do our best to support them through the transition to find their next opportunities.”
The company said the cost associated with the layoffs will range from $4.2 million to $4.6 million.
BigCommerce cast the move as necessary to achieve profitability quicker, which follows a pattern of prioritizing sustainability over growth heading into 2023. The company said the restructuring shifts its adjusted EBITDA breakeven timeline from mid to late 2024 to the fourth quarter of 2023. It also reiterated guidance for the fourth quarter and full year.
BigCommerce follows Amazon, Shopify and Meta among the platforms that provide the infrastructure for ecommerce to make layoffs this year. In their announcements, those other companies said they had over-hired during a pandemic ecommerce boom that did not see growth pull forward as expected.
For its part, BigCommerce said the enterprise focus and profitability were the main forces behind the reduction.
The move toward running ecommerce for more established brands and retailers can require longer sales cycles and could mean choppier growth month-to-month, but it also holds out the potential of more sustained revenue, with frequent opportunities to add features. In Q3, BigCommerce said its enterprise accounts were up 16% year-over-year, while annual recurring revenue (ARR) for this segment was up 35% year-over-year. Clients who launched new stores using BigCommerce in the quarter included One Kings Lane, Hungry Harvest, Music Direct and Dippin’ Dots.
“We are actively shifting our demand generation budgets, both in people costs and variable spending towards the superior economics delivered by enterprise accounts,” Bellm told analysts on the recent earnings call. “We have tested this increased spending prioritization over the past two quarters, and we are moving full speed on this now across all teams and budgets.”
Coming out of the swings of the last two years, Shopify has also voiced a priority on signing more enterprise clients. With a more difficult environment for startup brands as a result of the tightening economy and more difficult performance marketing following Apple's privacy changes, don't be surprised to see more ecommerce SaaS companies focus on bigger stores in 2023.
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Campbell Soup Company CEO Mark Clouse offered thoughts on messaging amid inflationary shifts in consumer behavior.
After months of elevated inflation and interest rate hikes that have the potential to cool demand, consumers are showing more signs of shifting behavior.
It’s showing up in retail sales data, but there’s also evidence in the observations of the brands responsible for grocery store staples.
The latest example came this week from Campbell Soup Company. CEO Mark Clouse told analysts that the consumer continues to be “resilient” despite continued price increases on food, but found that “consumers are beginning to feel that pressure” as time goes on.
This shows up in the categories they are buying. Overall, Clouse said Campbell sees a shift toward shelf-stable items, and away from more expensive prepared foods.
There is also change in when they make purchases. People are buying more at the beginning of the month. That’s because they are stretching paychecks as long as possible.
These shifts change how the company is communicating with consumers.
Clouse said the changes in behavior are an opportunity to “focus on value within our messaging without necessarily having to chase pricing all the way down.”
“No question that it's important that we protect affordability and that we make that relevant in the categories that we're in," Clouse said. "But I also think there's a lot of ways to frame value in different ways, right?”
A meal cooked with condensed soup may be cheaper than picking up a frozen item or ordering out. Consumers just need a reminder. Even within Campbell’s own portfolio, the company can elevate brands that have more value now, even if they may not always get the limelight.
The open question is whether the shift in behavior will begin to show up in the results of the companies that have raised prices. Campbell’s overall net sales grew 5% for the quarter ended April 30, while gross profit margins held steady around 30%. But the category-level results were more uneven. U.S. soup sales declined 11%, though the company said that was owed to comparisons with the quarter when supply chains reopened a year ago and expressed confidence that the category is seeing a longer-term resurgence as more people cook at home following the pandemic. Snacks, which includes Goldfish and Pepperidge Farm, were up 12% And while net sales increased overall, the amount of products people are buying is declining. Volumes were down 7%.
These are trends happening across the grocery store. Campbell is continuing to compete. It is leading with iconic brands, and a host of different ways to consume them. It is following that up with innovation that makes the products stand out. Then, it is driving home messaging that shows consumers how to fit the products into their lives, and even their tightening spending plans.
Campbell Soup is more than 150 years old, and has seen plenty of difficult economic environments. It is also a different business today, and will continue to evolve. At the end of the day, continued execution is what’s required.
“If it's good food, people are going to buy it, especially if it's a great value,” Clouse said.