Shopify Inc. is an e-commerce platform and a Canadian multinational company. Scott Lake, Daniel Weinand, and Tobias Lutke founded the e-commerce platform in 2006. Today, we’ll discuss the PESTLE analysis of Shopify; it focuses on external environmental factors like; political, economic, social, technological, legal, and environmental factors.
Political Factors Impacting Shopify
Some of the main political factors in the Shopify PESTLE analysis are as follows;
I-Trade Regulations
Shopify is an e-commerce platform that operates its online store business in various countries across the globe. The trade regulations of different countries are different depending on the political government in power and its objectives. For instance, the nationalistic government doesn’t welcome external and foreign businesses and companies.
II-Regulations
Shopify needs to comply with trade regulations and other e-commerce policies of the country where they’re operating their business. Regulatory compliance helps the e-commerce brand to smoothly perform its various operations without any delays and disruption.
III-Government Instability
The political environment of different countries keeps on changing depending on various local and international factors. The political instability directly impacts the operations, customers’ orders, and product deliveries to the customers. For instance, riots, processions, and roadblocks would disrupt the supply chain and distribution operations of the brand.
Economical Factors Affecting Shopify
Some of the main economic factors in the Shopify PESTLE analysis are as follows;
I-Economic Fluctuation
Just like the political environment, the economic environment of the country also keeps on fluctuating and it directly impacts the spending patterns of customers. For instance, if the government increases the tax and interest rate, it would suddenly increase the shopping cost and they hesitate to buy anything.
II-Currency Exchange Rate
The currency exchange rate of different countries relevant to the USD keeps fluctuating depending on various political and economic factors. Shopify is operating its e-commerce business in various countries, a sudden drop in exchange would decrease the company’s revenue; an increase in exchange rate would increase the production and manufacturing material cost.
Social Factors Impacting Shopify
Some of the main social factors in the Shopify PESTEL analysis are as follows;
I-Online Shopping Trends
Online shopping trends have been increasing significantly ever since the pandemic crisis. Customers prefer to shop online; instead of visiting the retail store and spending hours there. Nowadays, they prefer to scroll over their smartphones, check out the products and goods they want, read the customer’s reviews, and place orders if they meet their requirements.
II-Timely Delivery
In order to increase the customer’s satisfaction level, Shopify and other e-commerce stores are investing a significant amount of capital resources on efficient delivery service. They offer multiple product delivery options to the customers ranging from within-a-day delivery to long-time delivery. It depends on factors like distance, cost, and urgency of the product to the customers.
Technological Factors Affecting Shopify
Some of the main technological factors in the Shopify PESTEL analysis are as follows;
I-Advanced Technology
Shopify is a tech company and e-commerce platform and the company invests a significant amount of capital resources on advanced technological tools and equipment. AI, machine learning, and cloud technology allow the company to efficiently perform various operations accurately predict customer shopping patterns, and manage inventory accordingly.
II-Over-reliance on Technology
Shopify is a technology company and the brand heavily relies on its e-commerce platform and cloud technology to protect customers data. Any type of data breach or tech glitch would negatively impact the entire company’s operation and the private data of users.
Legal Factors Impacting Shopify
Some of the main legal factors in the Shopify PESTEL analysis are as follows;
I-IPR
Shopify offers a great variety of products and services; the e-commerce platform needs to address the IPR (intellectual property rights) of different products. The company should make sure that its products are guarded and protected against any type of infringement and IPR violations.
II-Regulatory Compliance
The consumer market and the world’s governments have become highly cautious about data privacy issues. Shopify is a tech company and it deals with a vast variety of private data of individual customers. The breach in the database and the company’s firewall would attract highly expensive lawsuits along with jeopardizing the company’s reputation.
Environmental Factors Affecting Shopify
Some of the main environmental factors in the Shopify PESTEL analysis are as follows;
I-Energy Consumption
According to an estimate, Shopify consumes approximately over 200 megawatts of electricity and energy annually. The tech company needs energy for running and maintaining database centers performing various digital operations and to keep their system and devices running. However, it raises a serious question of how much of the energy the company consumes is renewable.
II-Packaging Waste
Shopify invests a significant amount of resources on packaging and it goes to waste once customers receive the product. The e-commerce platform delivers hundreds of packages daily, and the company makes sure that the packaging material is biodegradable without causing waste and negative impact on the environment.
Conclusion: Shopify PESTLE Analysis |PESTEL Analysis of Shopify |External Environmental Analysis of Shopify | Strategic Analysis of Shopify
After an in-depth study of the PESTLE analysis of Shopify; we have realized that Shopify is the world’s leading e-commerce platform. If you are learning about the Shopify PESTLE analysis; then you should keep in mind the abovementioned external environmental factors like; political, economic, social, technological, legal, and environmental.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.
