Imagine a market where anyone can set up shop. You don't need a physical presence to run your business in the eCommerce marketplace. It continues to attract thousands of sellers with time. Something like this was prevalent during the pre-pandemic and the post-pandemic era.
Business owners had to pivot to match the trend of the market. Even those who solely ran their business offline began learning the tricks of online trade. What is the outcome of such a shift in the eCommerce space? Intense competition among sellers.
Now, to ensure you don't become a casualty of such cut-throat competition, it is crucial for you to monitor, track, research, and analyze the competition. It will help you understand your competitor's product, market, and growth strategy so you can make wise decisions for yourself.
A competitive analysis isn't something most small businesses do regularly. But it could be one of the best things you ever invest in. A study conducted by Harvard Business Review found that companies that conduct regular competitive analyses are three times more likely to outperform their competitors over the long term.
The reason why is simple: a competitive analysis forces you to think about how your business compares against others in your industry. And when you know where you stand, you can start making decisions that will move your business forward.
In fact, a recent survey showed that nearly 80% of small businesses don't know enough about their competitors to make smart decisions. So if you want to take advantage of opportunities in your industry, you need to understand your competition better.
That's exactly what we're here to help with today. In this guide, we'll walk you through the steps of performing a competitive analysis, including:
What a competitive analysis is and why it matters
Tools you need to complete a competitive analysis
How to analyze your own brand vs. your competitors
Why Do We Need a Competitor Analysis in eCommerce?
Competitor analysis isn’t just about finding out what your competitors are doing. You need to find out why they do it. Why did they buy those items? What makes them tick? How much does each product cost? And most importantly, what are their strengths and weaknesses? If you don’t know the answers to these questions, you’ll never be able to design a strategy that works for you.
One of the primary reasons for conducting an ecommerce competitor analysis is to stay one step ahead of your competitors. And if you feel that it is way too long of a process that you wish to avoid investing time and money in, losing customers and revenue would be inevitable. A dynamic market calls for a sound marketing strategy to help you stay afloat. And this task is made easier with a competitor analysis.
It will give you an understanding of the prevailing business environment to help in effective brand positioning.
It will allow you to discover your unique selling proposition.
It will help you to figure out your competitor's weaknesses and learn about their strengths.
It will help you refine your business strategy.
It will tell the areas you can tap into to capture the customer's attention.
Competitor analysis offers a plethora of advantages for any online business owner. However, there are still some who treat it as an afterthought. If you wish to reap benefits and attain the success your competition is experiencing, do the necessary research.
"Your most dangerous competitors are those that are most like you" - Bruce Henderson, founder of Boston Consulting Group.
How to Do an eCommerce Competitor Analysis in Five Steps?
You perform a competitor analysis by identifying your competitors, analyzing their online presence, checking eCommerce customer reviews, talking to your competition's customers, and identifying your competition's strengths and weaknesses.
We've put together the five steps you need to follow for conducting a comprehensive e-commerce competitor analysis.
Step 1: Gather the Tools You Need
Before jumping into a pool, you must learn how to swim first. Similarly, you will need a set of tools before you conduct your competitor research. However, these tools are something you are already aware of.
From Google to Instagram or even YouTube, you can find a lot of information from these sites about your competitor. It is just a matter of entering the right set of keywords. Then there are other tools, more proficient ones like SEMRush or Ahrefs.
Step 2: Differentiate Your Competitors into Direct and Indirect
To analyze who your competitors are and how they function in the marketplace, you need to conduct the following:
Employee surveys: Easily the quickest way to understand who your competitors are. Usually, employees have an understanding of the same and will be reliable sources of information.
Top search results: Google a combination of keywords you have used and see what shows up. It will give you a fair idea of who your competitors are. It is safe to track the first five results for research purposes. At the same time, if any display ads appear during such a search, take them up for analysis.
Social media: By using a combination of keywords, you can see the types of social media handles that pop up. These are your potential competitors. Study their social media platforms to see how the brand interacts with its audience, who the target market is and how it has positioned itself as a brand.
Industry rankings: The goal of a business is to turn losses into gains and beat the competition. When you find who is the industry leader in your niche, you can learn a thing or two about how that business achieved that feat and operate accordingly.
To keep track of these competitors, you can maintain a sheet with all the required information. All that can help you gauge your competitors and will also help you segregate them into:
Primary Competitors: Those who target the same audience and offer the same products or services as you.
Secondary Competitors: Those who offer a similar product to a different target audience.
Tertiary Competitors: These brands pander to the same audience but don't offer products or services directly competing with your business.
Step 3: Study Your Competitors’ Content Strategy
The third step in creating a successful content strategy is analyzing your competitors' content strategies. This is important because it gives you insight into how they're doing things. If you notice something similar to what you're already doing, you'll know where to focus your efforts.
Content is one of the most important aspects of eCommerce. However, if your content is not SEO friendly, then your website is likely to land a very low rank on search engines.
To find out how your competitor uses content, research their official website and social media channels and observe how they engage with their customers. Next, look at their product pages. Does it meet the necessary standard? Like containing keywords, a product description, and images. Because a product page that is done well not only improves your ranking but also serves as a guide to your customers.
Learn more about the competition's SEO strategy. Uncover competitor keyword data, traffic estimates, and even the type of content they're producing. This information helps us understand where our sites stand compared to theirs and gives us insight into what we need to improve upon.
Step 4: Audit your Competitor’s Website
After you've researched the content strategy & their social media platforms, you need to measure the effectiveness of your competitor's website. The website design, the layout, flow of everything. Is it easy to understand or complex? Do they have an array of categories? What kind of CTA text is visible on their website?
Also, note down if there are some issues with the website. For example, the website may be text-heavy or contains few images, making it uninteresting.
This step will give you points to refine your website and help you avoid mistakes.
Step 5: Examine Your Competitors’ Product & Pricing Strategy
Pay attention to your competitor's pricing and product strategy to avoid being at a disadvantage. To understand the product strategy, you need to figure out answers to a few questions like:
Are they launching a new product?
Are your products alike?
What makes their product stand out from your product? And vice versa
How have they set the prices for their product?
Do they run any discounts?
Remember that the price of products primarily influences customers' decisions. While tracking competitors' pricing strategies is essential, you must also study the market pulse before setting the product price. When you overprice, you can lose out on customers. However, even cutting the price can have a negative impact, as people associate low prices with low quality. Therefore, you must conduct thorough research before making any decisions.
Wrapping up
Now that you know the importance of competitor analysis, get started immediately. However, it is a challenging and mammoth task for any business owner. It's why you should leave it to experts like Datahut. Our team works efficiently and effectively to get you relevant web data from eCommerce sites that can help you formulate business strategies.
We offer solutions with our structured data by giving information on competitors. You can also conduct price comparisons or monitor sellers with the data we provide. Trusted by major retailers, brands, and early-stage startups, Datahut is the go-to for all e-commerce data-related requirements. So, if you want to stay ahead in the eCommerce game, contact Datahut today!