The ecommerce industry is becoming increasingly competitive. By the end of 2023, one in every five retail sales will be made online. As a business owner, beating your competitors and dominating the market are your primary goals—but how can you achieve that? This is where conducting an ecommerce competitive analysis comes into play.
By understanding your closest competitors, their positioning strategies, and their overall business approach, you can effectively secure and maintain your own position in the ecommerce market.
In this article, I'll explain what competitor analysis is, the benefits of conducting it, and how to perform a competitive analysis for your ecommerce business.
Why Is Competitor Analysis Important For Ecommerce?
Competitor analysis is the secret sauce for ecommerce success. By evaluating competitors' strengths, weaknesses, and strategies, businesses can gain a strategic advantage, adapt to market dynamics, and make informed decisions to maximize growth and profitability.
Identify your business’s strengths and weaknesses
An ecommerce competitive analysis acts as a mirror that reveals your business's unique strengths and weaknesses.
Knowing your company's strengths is essential for establishing a strong market position. The goal is to change customers' perceptions of your product. By clearly demonstrating the benefits of your goods or services over those of your competitors, you can win customers over and foster loyalty.
Learn about your market and its gaps
Picture yourself in a bustling marketplace, trying to sell your product. To outshine the competition, you need to understand the market like a seasoned marketeer. Competitor analysis provides an opportunity to eavesdrop on your competitors’ conversations with customers.
Moreover, analyzing the offerings of your competitors can help you identify underserved areas of your market. Seizing these opportunities allows you to expand your offerings, meet customer needs, and drive business growth.
Ride the wave of industry trends
Identifying ecommerce trends is like peering into a crystal ball that provides insights into the future of an entire sector. It enables you to anticipate changes in consumer habits, market upheavals, and emerging business models.
Using this hidden weapon, you can stay ahead of the competition and explore new avenues before anyone else. Hence, you'll be seen as an innovator and a leader in your industry.
Set your future growth goals
When conducting a competitor analysis, don't just focus on companies that are bigger than yours. Expand your horizon! Take a peek at those smaller players too. Why? Researching new entrants into your industry provides insights into potential threats that may rock the boat of your market share down the line.
How Do You Conduct An Ecommerce Competitive Analysis?
Conducting a competitor analysis for your ecommerce store involves several steps to gather information and insights about your competitors. Here's a general guideline on how to conduct a competitor analysis:
1. Access essential tools and websites
You need a few key resources, such as software and websites, to perform comprehensive research on your ecommerce competitors.
Let's examine a few of the most crucial ones:
Google is the best tool for discovering information on any subject. Conduct keyword searches to find relevant data and insights about your competitors.
The new standard for advertising has shifted from television to social media. Competitor research relies heavily on a solid understanding of the intricacies of various social media platforms.
YouTube is another crucial platform that you need to get a hold of for competitor analysis. It can provide insights that you won't find anywhere else, such as how your competitors are presenting their products visually.
Indeed or similar job sites
Job sites like Indeed or LinkedIn can be an unexpected but valuable tool for competitor analysis. You may learn a lot about the recruiting practices of the competitors by perusing their job ads.
Quora is a great place to learn about new goods and trends, as well as find potential competitors. By asking specific questions, you can tap into a vast amount of data and insights.
Marketing research tools
Marketing research tools enable savvy entrepreneurs to gain a deeper understanding of their target audience and their competitors' strengths and shortcomings. These tools include several capabilities, such as market segmentation analysis, web change audits, competitor benchmarking, keyword analysis, and social media monitoring.
These tools empower businesses with far more intelligence when refining their services or optimizing campaigns—ultimately giving them that all-important edge over competitors.
2. Define your ecommerce business and goals
Remember, having tons of information about the competition is useless if you don't understand your own firm and your consumers' wants and needs.
Here are some questions you can ask yourself to clarify the focus of your ecommerce company:
- As a marketer, do you prefer to be an innovator, a follower, or a challenger?
- Have you been in the field for a long time, or are you just starting out?
- What exactly are you trying to accomplish?
- Who are your targeted clients?
Once you have a clear image of your own ecommerce setup, the next step is to define the objectives you wish to achieve using the competition analysis:
- Are you looking to refine your unique selling proposition?
- Do you want to enhance your branding techniques?
- Do you need more people to follow you on social media?
- Do you want to boost your existing conversion rates?
By starting the competitive analysis process with clear goals in mind, you can effectively focus your efforts and obtain actionable results that will benefit your ecommerce business.
3. Identify competitors of your business
Now that you understand your own company’s goals, you need to start identifying your competitors.
You can do this by typing your product name or category into Google or another search engine and seeing what comes up. Another simpler way is by surveying your existing customers to find out what alternatives they considered before choosing your product or service.
Once you’ve compiled a list of potential competitors, make sure to include a diverse range of companies. Consider businesses that fall into each of these categories:
- Direct competitors: Those who sell the same products or services as you.
- Indirect competitors: Those who offer similar products or services but aren’t direct competitors.
- Substitute competitors: Competitors who provide a different solution to the same problem.
4. Create a competitor matrix
When it comes to an ecommerce competitive analysis, a little organization can go a long way. Enter the competitor matrix, your ultimate weapon for compiling and comparing research.
Think of this as a one-stop where details about your competitors come together in a single table or spreadsheet.
This is the approach you'll take: Give each competitor their own cell in a table: this will allow you to magnify their strategies and maneuvers. Now, down the opposite axis, write down the variables or classes of interest.
It's like stockpiling intelligence, as you can learn about anything from their product line to their pricing and marketing techniques.
5. Measure their brand positioning
You may learn a lot about competitors’ branding and marketing strategies by analyzing the content they put out there—whether it's a blog, website slider, PR release, or sponsored ad.
Reviewing their communications will give you a sense of the following:
- Which keywords do your competitors emphasize the most?
- How are they drawing in new clients? Better cost, product, or overall experience?
- In which ways do you stand out from the competition?
- What would be the one statement you’ll use to describe each of your competitors?
6. Profile your competitors' target customers
Customers are the lifeblood of any company, and understanding who your competitors are targeting can provide valuable insights into their business strategies. To identify their target customers, you can employ the following tactics:
- Dive into their mission statement: Read between the lines and grasp their intended audience.
- Decode their messaging: Pay attention to the language and tone they use in their communication to get a sense of their target demographic.
- Social media sleuthing: Observe their interactions and engagements on social platforms to gain insights about their target audience.
- Spot customer features: Take note if they showcase any existing customers in their content, as it can indicate their target customer profile.
7. Research competitors' products and pricing
To be ahead of the competition, you need to study their offerings and pricing strategies. Here are some helpful hints to keep in mind while you explore the thrilling world of researching products and costs offered by competitors:
- Get out there and discover: Dig deep into several channels to learn all you can about the products that your competitors provide. Get familiar with their products by exploring their respective online stores, markets, and social media pages.
- Decode the features and specifications: Pay close attention to their products' features, specifications, and unique selling points. This will help you grasp how they position themselves in the market and the specific target audience they cater to.
- Uncover the pricing puzzle: Analyze their pricing strategies like a pro. Take note of base prices, discounts, promotions, and any pricing changes over time. Look for patterns and trends that can reveal their competitive advantages or highlight opportunities for differentiation.
- Spot the added value: Don't forget to consider any value-added services or attractive product bundles your competitors offer to attract customers. These can be valuable insights when shaping your own marketing and sales strategies.
8. Analyze competitors' advertising and social media presence
One essential part of any competitive analysis is looking at how they promote their business. By analyzing their marketing strategies and customer engagement techniques, you can gain valuable insights into their approach. Here's how you can gather information about their promotional activities:
To gain a competitive edge, it's important to analyze your competitors' advertising campaigns across various channels like print, digital, and television. By carefully examining their messaging, visuals, and target audience, you can identify their unique selling propositions and the emotions they aim to evoke. This analysis can inspire new ideas for your own campaigns, help you identify gaps in the market, and refine your messaging to differentiate your brand from your competitors.
Social media presence
You can’t win if you don’t study the presence of your competitors on social media. It is one of the most crucial platforms which can help you take a peek into how your competitors interact with their followers online.
To achieve that goal, you need to study the content of their posts, how often they post, and how much engagement they manage to create. You must also explore social media tactics, influencer partnerships, and user-generated material—like reviews—to understand how they’re creating a narrative around their brand.
9. Conduct a SWOT analysis of your competitors
After gaining insights into your competitors, it's important to conduct a SWOT analysis for each of them. SWOT stands for strengths, weaknesses, opportunities, and threats. This tool can help you evaluate your competitors' market positions, and here's what each aspect means:
- Strengths: Identify what your competitors are doing exceptionally well or what makes them a threat to your business. Understanding their strengths helps you devise strategies to outperform them and maintain a competitive edge.
- Weaknesses: Pinpoint the areas where your competitors fall short or face vulnerabilities. Identifying their weaknesses presents an opportunity for you to capitalize on and leverage against them.
- Opportunities: Explore your competitors' potential growth avenues that they are pursuing. Understanding their opportunities can inspire you to uncover similar avenues for growth within your own business.
- Threats: Consider the external factors that pose threats to your competitors. These could range from emerging competitors entering the market to supply chain disruptions or changing consumer preferences. Recognizing the threats they face can guide you on potential challenges you may encounter as well.
10. Create a competitor analysis framework
If you want to make sense of all the information you find out about your competitors, a Competitor Analysis framework may help you do so.
By adopting a well-designed framework, you can organize and present your findings effectively. Moreover, this gives you an advantage over the competition, helps you make smarter business choices, and improves your company’s overall performance.
Who Should Conduct An Ecommerce Competitive Analysis?
Conducting a competitor analysis is beneficial for businesses across different industries. Here's a brief explanation of who benefits from conducting a competitor analysis and why:
Business owners and entrepreneurs
Competitor analysis is a valuable tool for company owners and entrepreneurs to gain deeper insights into their industry. It allows them to identify competitors, study their strategies, and pinpoint opportunities to differentiate themselves.
Marketers may use competition analysis to learn more about their target audience and market trends. They may improve their own marketing plans, fill in the gaps in their coverage, and create more compelling campaigns by studying the strategies, messages, and consumer interaction approaches of their competitors.
Product managers may use competitive analysis to detect market product gaps, assess emerging trends, and acquire information on competing products. Having this data allows businesses to enhance their product development plans, add desirable features, and meet the needs of their target audience.
For sales teams, competitor analysis provides a competitive edge by understanding competitors' strengths, weaknesses, and pricing strategies. This knowledge enables them to position their products effectively, address customer concerns, and highlight unique selling points.
Startups and new market entrants
Startups and new market entrants can gain valuable insights from competitor analysis to understand the competitive landscape, evaluate market viability, and develop strategies to penetrate the market effectively.
Is It Ethical To Conduct Competitor Analysis In Ecommerce?
Yes, conducting competitor analysis in ecommerce is ethical as long as it is done within legal boundaries and respects the principles. Here's why:
- It’s a common business practice.
- It promotes fair competition.
- It benefits consumers.
- It drives innovation.
Competitive Analysis Template
Here's a template for conducting competitor analysis in ecommerce.
Empower Your Ecommerce Business Through Competitive Analysis
Conducting a competitive analysis is crucial for ecommerce success. It empowers businesses with valuable insights to make informed decisions and gain a competitive edge.
By analyzing competitors' strategies, products, pricing, and customer engagement, businesses can identify market gaps and customer preferences, refine their offerings, and stay ahead of emerging trends. Furthermore, competitor analysis helps businesses set realistic benchmarks, optimize performance, and achieve sustained growth.
For more tips and insights to give your ecommerce business an edge, subscribe to The Ecomm Manager newsletter today.
More great ECM content: