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Insightful SWOT Analysis of Shopify- An E-commerce Platform for People

by | Case Studies | 0 comments

In our previous interesting blog, we had discussed the SWOT analysis of one of the worlds largest publicly traded companies, SAP. In this blog, we will focus on the SWOT analysis of Shopify in detail. 

Shopify Inc. is an MNC e-commerce company that offers people a platform to set up their businesses online and throughout the globe. It includes services such as payments, marketing, and shipping of the products.

Over 7000+ employees work in this organization. This company has two main sources of revenues one being subscription solutions and the other being merchant solutions. And since it has a good merchant base, the company has flourished with a sharp rise in its revenue from the merchant solutions. 

As we know that the new era is digital and Shopify has very smartly made use of digital marketing to get hold of the international market with ease and if you are interested in knowing the latest skills– check out our Free MasterClass on Digital Marketing 101 by the CEO and Founder of IIDE, Karan Shah.

Before we start learning about the SWOT analysis of Shopify, let us first know about Shopify as a company, its services, competitors’ financial standings, and more.

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About Shopify

SWOT Analysis of Shopify - Shopify Headquarters in Ottawa - IIDE 

(Shopify Headquarters in Ottawa, Source: Bloomberg)

Founded in 2006, Shopify Inc. is a Canadian multinational e-commerce company headquartered in Ottawa, Ontario. It provides worldwide services and its headquarters are in Ottawa, Canada. It services currently in approx 125 countries and has a total revenue of US$2.929 billion (the year 2020). 

Shopify is a popular e-commerce website among people who wish to launch an online store. It provides services to a range of products sold on its platform through the sellers. It focuses on a good merchant experience and is quite a reliable source for people having a small business and willing to set up their business online and on an international level. 

                          Quick Stats About Shopify

Founder Tobias Lutke, Daniel Weinand, Scott lake
Year Founded 2006
Origin Ottawa, Canada
No. of Employees 7000+
Company Type Public
Market Cap $ 212.08 Billion (2021)
Annual Revenue $ 2.93 Billion (2020)
Net Income/ Profit $ 320 Million (2020)

           

Service By Shopify

An Ecommerce website building platform, it provides the following services to its users:

  • Payments
  • Marketing Tools
  • Shipping
  • Customer Engagement Tools


Competitors of Shopify

E-commerce backend is a large industry with high competition, here are the major competitors:

  • BigCommerce
  • Salesforce
  • Oracle
  • SAP
  • eComchain
  • Commerce Guys

Now that we know more about the company’s core business and existence, let us start with the SWOT Analysis of Shopify.


SWOT Analysis of Shopify

According to SWOT Analysis, “Strengths and Opportunities” are positive factors, and “Weaknesses and Threats” are negative factors. SWOT Analysis of Shopify helps it to prepare a unique strategic plan by showing it an overview of the current business environment. Let us now see the SWOT Analysis of Shopify one by one by starting with the Strengths of Shopify.

SWOT Analysis of Shopify - SWOT Infographics of Shopify


Strengths of Shopify

These are positive factors that affect the company’s overall growth. It reflects the current update of the internal strength. 

  • Marketing Strategies: Shopify uses content marketing for its growth of the brand. The website content has several strengths to increase its market reach as well as growth in general.

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  • Large Merchant Base: It usually provides a merchant loan and merchant cash advance which provides advance money to the bank account of a merchant from the capital of the brand and then allows the repayment from future sales revenues. 
  • Strong Distribution Network: Over these years it has strongly worked on its potential network and its growth all over the market base. 
  • Strong Customer Care Services: It has 24*7 customer care services and has a strong customer relationship management department. 
  • Sturdy Brand Portfolio: It is among the most highlighted and strongest pros of the company that it has developed a huge portfolio which helps the company in numerous ways. 
  • High Skilled Workforce: The highly skilled workers of the company are due to the training and learning departments of Shopify as it invests more into that to ensure employees are motivated to achieve more. 


Weakness of Shopify

These are the points on which Shopify needs to work upon to improve its place in the market against the competitors. 

  • Need for Investment in New Technologies: Since it’s a diversified company across the globe, it should have new technologies to set as the expansion and the market base is huge. 
  • Investments for the Betterment of the R&D Division: The investment for the R&D department of the company is not up to the industry level to compete with the competitors. 
  • Gaps in Product Categories: The product range of Shopify has a bit of a lack of choice and there is a range to be completed to increase the foothold of the brand. 
  • Limited Reach for Other Than Core Business: The company faces issues with moving to other product segments other than the core ones.


Opportunities for Shopify

It includes the opportunities provided by Shopify for faster growth. It also includes the external factors that can affect the business but in a positive way.

  • Growing Shift Towards E-commerce: Due to the pandemic, there is a significant increase in the digital e-commerce industry. Shopify also had experienced a hike in the number of merchants in the industry. You should also not miss out on this opportunity for your business, so do learn e-commerce management from IIDE online e-commerce management course before it gets too late.      
  • Diversification Available: It helps to build up new commercial revenues channels and offers an addition to the growth pace and profitability of the company. 
  • Marketing Partnerships: It has great marketing partnerships from sales materials to educational material for the brand. Such partnerships with huge brands can help the market penetration of the company.
  • Interest Rate: Lower interest rate can be an opportunity for Shopify to expand the business with loans too at cheaper interest rates. 


Threats to Shopify
 

Threats involve external factors which can affect the company’s business in the future. Few threats concerning Shopify that can cause these issues includes:

  • New Entrants: Numerous entrants have been gaining an increase in the market shares. 
  • Privacy Laws: The evolution of privacy laws is a major challenge faced by companies worldwide especially in the digital commerce industry. Restrictions like cross-border data transfer, transactions, and information overseas to be protected become an issue that can cause limitations to a company. 
  • Cyber Security and Issues: Digital businesses are highly facing problems such as hacking of the network, transactions, etc leading to monetary loss as well as lessening the credibility of a site. 
  • Exchange Rates: Since the exchange rate keeps fluctuating and Shopify is a brand serving internationally it causes issues for the company. 
  • Changes in Demand/ Taste/ Trend: Like the taste and demand of the consumer change from time to time, taking care of these many products and ranges becomes difficult. 
  • Regulations in International Trade: Since it keeps fluctuating it needs compliance of the companies to operate the business globally. 
  • Technological Development by Competitors: New technological advances can attract people and such advances and developments from the competitors of Shopify can pose a threat to the company. 


This ends our insightful SWOT analysis of Shopify. Let us conclude our learnings below.

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To Conclude

Shopify is a merchant-friendly website and provides services like shipping, marketing, etc. It has a worldwide established market but lacks innovations and needs to work on its R&D department. 

It has experienced huge growth over the last year because of Covid-19. Thus Shopify’s market value and stock prices have exponentially increased these last couple of years and are developing more and more market base and working on the SWOT factors.

Since most people are on digital platforms the company can market their products using digital marketing and increase their sales. If you are interested in learning more and upskilling, check out IIDE’s 3 Month Advanced Online Digital Marketing Course to know more. 

If you would like to read such detailed analyses of companies just like the SWOT analysis of Shopify, find more such insightful case studies on our IIDE Knowledge portal.

Thank you for taking the time to read this, and do share your thoughts on this case study of the SWOT analysis of Shopify in the comments section below.

Lead Trainer & Head of Learning & Development at IIDE

Leads the Learning & Development segment at IIDE. He is a Content Marketing Expert and has trained 6000+ students and working professionals on various topics of Digital Marketing. He has been a guest speaker at prominent colleges in India including IIMs......[Read full bio]

Aditya Shastri

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