When it comes to running a business, keeping a close eye on your competition is a must. Thanks to the rise of the internet, the world has become a massive global market where people have access to countless information and an enormous amount of possibilities when it comes to choosing a product or service.
This is why it’s important not only to analyze your customers’ behavior but also to keep a close eye on the behavior of your competitors to stay at the top of your industry.
Whether you’re just starting your e-commerce business or you already run an established company but are not quite sure how to keep track of your competition, e-commerce competitor analysis is the solution to your problems.
This guide will give you all the needed information about the basics of eCommerce competitive analysis and show you the right strategies that will take your business to the next level.
What is competitive analysis?
Before talking about the needed steps when making an e-commerce competitive analysis, it’s essential to understand what competitive analysis is and why it’s so necessary to run a successful business.
A competitive analysis is a process that involves researching and identifying competitors in your industry. It relies on detailed research and data that helps you understand the weaknesses and strengths of the competitors in a particular business industry.
Identifying and evaluating businesses that offer similar services or products helps understand your competition better. Your insight on competition enables you to upgrade and improve your current business strategies so you can retain existing customers, build trust with new potential customers and increase your profits.
Why is competitive analysis important for e-commerce?
Competitive research is critical to any growth strategy. Although it’s not always the case, competitor analysis should be a key element of the marketing strategy of every successful e-commerce business.
Including as much (relevant) information as possible about your competition leads to an accurate assessment of your business’s position in the market compared to your major competitors.
It will also help you to :
- Identify a USP (unique selling proposition) and differentiate your e-commerce business from your competitors;
- Research the functional features of your competitors’ websites to identify how to improve and develop your site for better user and customer experience;
- Capitalize on opportunities by analyzing their weaknesses and strengths;
- Learn how to position your brand in the market;
- Determine marketing strategies of your competitors and learn more about their main traffic sources;
- Create advertising campaigns that focus on the tools and channels that your competition is paying special attention to;
- Stay competitive when it comes to your pricing policy.
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How to do a competitive analysis?
When it comes to conducting a competitive analysis, there are six proven steps that will bring you the results you are expecting. Here’s what you need to do.
Define your e-commerce business and your goals
Before you start researching your competition, you need to define your own business first and understand your position in the market.
- Are you a marketing leader, follower, challenger, or nicher?
- Have you already built an established brand, or you’re a startup?
- What are your mission and vision?
- Who are your target customers?
Even if you collect tons of data about your competition, if you don’t understand your own business and your customers’ needs, you’ll never be able to highlight the areas that can make your brand and business stand out.
Once you have a clear picture of your own e-commerce business, the next step is defining the goals you want to achieve with the competitor analysis.
- Do you want to improve your USP?
- Are you trying to improve your branding strategies?
- Do you want to generate more followers on your social media sites?
- Do you want to improve your current conversion rates?
By precisely defining your goals, you’ll know what to do with the data and how to incorporate the analysis results into your business.
Identify your competitors
After you have precisely defined your own e-commerce business, it’s time to take a close look at who your competition is. When it comes to gathering information, only the sky is the limit!
- Google the keywords and terms that your potential customers would use when searching for your products and check out the pages (especially the ones who have the highest ranking on Google as they will be the first ones that most of your potential customers will click on)
- Dig through social media and find out more about the way your competitors are positioning and branding themselves
- Use Amazon as a database of businesses offering the same or similar products and services to yours.
After you identify your competitors, create a list on a spreadsheet, including the basic info about each competitor, and organize them as follows:
- Your primary competitors – these are your main competitors who offer the same or similar products and services to yours and target the same audience;
- Your secondary competitors – these would be the companies that offer a similar product to yours but don’t share the same target audience (they can, for example, be offering a low-end or high-end version of your product);
- Your tertiary competitors – these are the companies that offer products or services that are in some way related to yours. For example, you may be selling sportswear in general, but they may only be selling running shoes.
> Discover Ann Stanley’s advice on how to conquer eCommerce competition with know-how
Define what information and data you need to collect
Let’s pretend you are a bakery owner. If you wanted to learn more about how your competition is doing business, you would walk straight into their bakeries. When it comes to e-commerce businesses, the website is the bakery!
Everything you can find out about your competition’s brand, customer experience, and way of interacting with customers is often just one click away. By doing proper research of your competitors’ websites and social media sites, you can get an enormous amount of valuable information.
According to a study, the most important determinants of online purchasing are online visualization and product description in the e-shop, e-shop certification, the lower price of products and services, and web design. This is why analyzing your competitors’ websites, products, prices, and online activities is essential for running a successful e-commerce business.
Before you start randomly collecting all information you can find, you need to define which data you’re looking for. If you’re not sure where to start and what type of data you could be useful, here are some of the things you should pay close attention to:
Products – How are they presenting their products? Are there any product descriptions, and what type of info do they provide? How are the products presented in their online store? Is it easy for the customer to navigate the site and find the products or services they’re looking for?
CTAs – How are their call-to-actions displayed? Are they strong, inviting, and clear?
Email – Is your competition building mailing lists (for example, by offering to sign up for their newsletter, or by promo codes and special deals via email)
Blog – Do they have a blog section? If yes, how often do they post, and what writing style is used? Is it professional, easy-going, entertaining?
Contact – Do they offer different options for customer services, like phone support or live chat?
Prices – Are your competitors offering similar products for a better price? How are your prices standing in the market compared to your competition? How often do they offer discounts and special deals in their online store?
E-commerce is massive, as well as the competition. A customer has an immense variety of similar products and can find the best deals. This is why you need to be constantly aware of your competitors’ prices.
The goal with this competitor research is to identify their strengths and weaknesses to get clear about the things you should change in your business. You can also use a SWOT analysis to make the gathered information as clear as possible.
Follow their blog and social media, or even join their mailing list to get an insight into the type of special deals they offer and how they interact with customers.
Extra advice: Make sure you don’t join their mailing list by using the official email of your e-commerce business.
> See why first and zero-party data represent a competitive advantage for customer-centric companies.
Collect your data
The next step is to collect the prioritized data of your competitors. The goal is to automate your data collection process as much as possible.
Although you probably won’t automate your entire data collection, analysis tools such as Google Analytics, Twitter, or Facebook Analytics will help you collect relevant data. They will allow you to automate your collection for search engines and social channels.
Analyze your data
Before you start analyzing your data, you’ll need to define the key performance indicators. For example, if your goal is to generate more organic search traffic than your competitors, your KPIs might include stats like unique backlinks, traffic volume, and page authority.
The good thing about analysis tools such as Google Analytics is that they include built-in analytics tools and give you plenty of data. The downside is that they don’t provide any information about what to do with it.
Luckily, some tools help you identify patterns and automate data insights generation for your e-commerce. Your goal is to get a clear and understandable picture of what to do with all the data you have carefully collected.
> Learn from Ton Wesseling how you can outperform your competitors by embracing evidence-based growth.
Implement the results of your competitive analysis in your business strategy
Once you have defined and analyzed all the needed data, it is time to improve your marketing and sales strategy.
Now, here’s another important thing. Knowing what you need to improve based on the activities of your competitors is just the first part of the equation. The second part is to monitor your customers’ behavior and use all the information correctly so you can bring your business ahead of your competitors.
You can use a customer data platform like REVEAL, which monitors your customers’ behavior from multiple angles, helping you understand how to acquire, retain, and delight your customers while lowering your CAC and increasing your Customer Lifetime Value.
And once you’re able to understand your competitors and your customers’ behavior, you’re on a pretty good way of becoming (or staying) one of the biggest players in your market.
We hope this article has given you the information you were looking for to make competitive analysis an essential part of your business. You’re on your way to building and maintaining a killer e-commerce brand that is always a step ahead of its competition. Good luck!
Frequently asked questions on competitive analysis in eCommerce
What is e-commerce competitive analysis?
Ecommerce competitive analysis is a process that involves researching and identifying your e-commerce competitors. It relies on detailed research and data to understand the competitors’ weaknesses and strengths. Identifying and evaluating businesses that offer similar services or products helps you improve your current business strategies and gain a competitive advantage in the e-commerce market.
How do you analyze e-commerce competitors?
You can start a SWOT analysis or an e-commerce competitive analysis. Gather data about competitors’ way of doing business, relying primarily on the information you can find on their website/online store, social media accounts, and other channels through which they communicate with their customers. Analyze their strengths and weaknesses, and use the insights to better plan your marketing and sales strategy.
What are the 6 steps of competitive analysis?
The 6 steps of competitive analysis are:
– Defining your e-commerce business and your goals
– Categorizing your competitors
– Defining what information and data you need to collect
– Collecting your data
– Analyzing your data
– Implementing the results of your competitive analysis in your business strategy
What is a competitive strategy in e-commerce?
It’s a long-term action plan that a company uses in its e-commerce strategy to get ahead of its competition. The goal of a competitive strategy in e-commerce is to get familiar with the competitors’ weaknesses and strengths and use the things they’re lacking as your competitive advantage.