Keeping track of your competitors helps you anticipate market shifts, spot new trends and successful tactics, and stay on the cutting edge of working within your niche.
But it’s not enough to just spy on your competitors’ social media accounts and subscribe to their email lists. You need a strategy behind your efforts to constantly monitor your competitors and update your view of the competitive landscape as it changes.
Enter Competition Analysis: A document that gives you both a bird’s eye view and an in-depth understanding of the key players in your market.
In this post, we will describe how to conduct your own ecommerce competitive analysis.
Whether you are an experienced store owner re-evaluating your current market view or preparing to market your product for the first time, here are steps, tools, and even a template (skip to template) to help you compile your own competitive analysis.
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What is competitive analysis?
Competitiveness analysis is the analysis of your competitors and the comparison of your business. By assessing the strengths and weaknesses of your competition, you can begin to formulate how to give your company the edge.
Competitive analysis assists the company in identifying the potential benefits and obstacles within the target market around a product or service, and typically helps brands monitor direct and indirect competitors by performing tactics such as marketing, pricing, and distribution.
What should you cover in your competition analysis?
Your competition analysis can vary greatly depending on what you are trying to find out about your competitors. You can do a competition analysis about a specific aspect of your competitors’ business – for example, their website – or you can look at their marketing approach as a whole.
There are many different ways you can structure competitive analysis, so let’s consider the types of information that are often seen in this type of research.
If we perform a high-level competitor analysis, there are several main elements that we want to make sure include competitive positioning in the market, such as:
- Who their target customers are
- What market share they currently have
- Their main differentiator or unique added value for business and products
- Key features / benefits they highlight in sales materials
- Price points for products, even in different markets
- How they approach shipping
- If they received any financing or venture capital
These sections will help you narrow down what sets these businesses apart and how they stand out from the competition within the niche.
If you want to look at more specific elements of your competitors’ approach, consider adding these sections to your competitive analysis:
- Features on competitors’ websites (such as search tools, product images, designs / layouts, etc.)
- Elements of user experience (abandonment strategy, customer support, mobile UX, etc.)
- Access to social media (channels used, frequency of posting, engagement, etc.)
- Content marketing tactics (blog topics, content types, etc.)
- Marketing tactics (types of promotions, discount rates, etc.)
- Access to email marketing (newsletter, promotional codes, etc.)
- Customer reviews (language used around the product, recurring complaints, etc.)
Generally, competitive analysis can take different forms and forms depending on what the company wants to evaluate about its competitors, but this should give you a rough idea of what could be included in different sections.
Why competitive analysis is important for e-commerce
Maybe at this point worth thinking about, “Okay, but why is competition analysis important to me as a business owner?“
The main reason why this activity is important is because you compete successfully without knowing your direct competitors – and you differ if you know what really sets you apart.
Specifically for ecommerce companies, competitive analysis can also help:
- Make more informed decisions about your marketing strategy
- Determine industry trends
- Create benchmarks for yourself
- Define a pricing strategy
- Do you have new ways of speaking with customers or even new clients to talk to
- Finding a gap in the market, but also maintaining a “gap market”
This type of analysis is not just for first-time business owners. Competitive analysis can be a living document that is constantly evolving as a company grows and matures over time.
Maintaining resources like this is a powerful way of measuring how your brand is currently positioning itself in relation to the competition – but it can also help provide clear guidance on how to proceed with the best results in the future.
How to Conduct a Competitive Analysis
When you are ready to dive into your own competitive analysis, you can follow the steps outlined here to structure and organize your research appropriately.
Step 1: Make a list of 7-10 competitors
To identify relevant competitors that will be included in your analysis, start with searches on Google, Amazon, and Alexa around your product and business idea. You want a combination of competitors who:
- Sales of similar types of products
- Have a similar business premise
- A market for the like and slightly different audience demographics
- Both are new to the market and more experienced
Compile a list of different competitors that will give you a good view of a competitive landscape that is not too small and not too big, it is a good idea to create a list of 7-10 relevant competitors, before deciding which ones you want. analyze.
Step 2: Create a spreadsheet
As you collect information about this competitor group, keep it organized within a spreadsheet or spreadsheet that can be easily shared and updated over time. Inside this document, write down the various criteria you want to compare and compare, such as:
- Price range
- Product Offer
- Engaging on social media
- Content used to create lead
- The first offers for visitors
- Other traits worth exploring
Step 3: Identify primary / secondary competitors
Starting with a list of competitors, start your spreadsheet by categorizing each one as a primary, secondary, or tertiary competitor. This will help you better determine how they relate to your business:
- Primary competitors whether they are direct competitors of your business, it sells a similar product / service to a targeted audience. These are the brands your customers can compare you to. Example: Nike and Adidas are primary competitors.
- Secondary competitors sell similar products or services, but to different audiences (e.g., focus on the market or downgrade products). Example: Victoria’s Secret and Wal-Mart are secondary competitors.
- Tertiary competitors are related brands that can market to the same audience but sell the same products as you or compete directly with you in any way. They can be potential partners or future competitors if they decide to expand their business. Example: Gatorade and Under Armor.
Step 4: Gather data through tools
Once you know which competitors are studying, it’s time to start researching and collecting data to analyze your competitor. The good news is that there are many different tools available today that can make collecting data for your competitive analysis easier, more efficient and more accurate.
Depending on what stage you are moving with your business and the size of your budget, you can invest in more powerful tools like Ahrefs and SEMrush to control your competition over time. However, for the sake of this post, explore some of the more affordable options to help you explore your competition.
SimilarWeb provides insights for estimated monthly visits and key traffic sources for the site. This can help you guess where your competitors are focusing their marketing efforts. You may even discover other websites like yours and help your new competitors monitor and learn.
Email cards can give you insights into your competitors’ email marketing, from the frequency of emails sent, their line tactics, and more.
You can include your competitor’s domain in Buzzsumo to see their top performing content as well as their total social shares and where that content is divided. You can also use this to discover other sites that produce content in your space.
Alexa helps you identify audience demographics and site-specific search ratings, as well as some websites that link to your competitors and mention your competitors to get an answer to their PR and SEO strategy.
Facebook Audience Review
Facebook Audience Review (accessed through your Facebook Business Manager) can provide you with a variety of audience information on one of the largest social networks around. For many established competitors, you can even see followers of their Facebook pages, including age, gender and geography.
Using these resources, you can begin to collect data and put it in a competitive analysis spreadsheet so that all findings are stored in a single organized space.
Step 5: Some practical research
Along with research conducted by software and tools, it is a good idea to begin your competitive research. Take on the role of leads and see what your competitors are doing in the marketing department.
You can do this at:
- Subscribe to their blog
- Following them on social media
- Leaving products in your cart
- Even buying a product and evaluating a customer experience
As you complete these activities, be sure to document your findings and notes on the tactics you see. By examining their approaches to abandoning their shopping carts and seeing how they support themselves through social media (and beyond), you can spot interesting approaches that your competitors use to attract more customers and drive sales.
You can further expand your insights on competitive analysis by gathering market information, such as industry trends and economic indicators.
Consider doing a SWOT analysis with this dataset, which outlines the strengths, weaknesses, opportunities and threats around your business and your competition. Defining these areas will help you look at your business objectively and can make smarter, more informed decisions that will prove your brand in the future.
Competitive Analysis Template
If you’re still not quite sure how to get started setting up your competitive analysis template, here’s a free competition analysis template you can work on to get the ball rolling. Just copy it to your Google Drive or you can download a spreadsheet for processing. Go to File> Make Copy … OR Download As.
Get a free template
An example of competitive analysis
So let’s say sell makeup brushes, here’s one way you can use this template to compare your competition approach with your own (and identify what you could do to stand out):
Keep in mind that you can add as many parts to your analysis as you like, but rest assured that the list of competitors will be limited to less than 10 to ensure that your research is focused and highly relevant.
Common pitfalls to avoid
Now that you know how to put together a competitive analysis, go over some of the main pitfalls to be aware that this can throw off fundamental insights.
1. Competitiveness analysis is not a one-off exercise
Never reviewing the original insights (or updating them, in that case) can lead to incorrect information and bad decisions. Businesses are constantly evolving, so it’s important to remember that watching your competition is a constant process – not something you do once and then never again.
2. Ignoring your own biases
As humans, we tend to jump to conclusions around our assumptions. This is called confirmation bias. As you work through your competitive analysis, it is important to be aware of your initial assumptions and thoroughly examine them, rather than relying on what you think is true about your competitors. Let the data inform your decisions, rather than letting assumptions take the lead.
3. Data without action is useless
If you are putting your work into competitive analysis, be sure to act on the findings, not let them collect virtual dust on your computer, buried in an obscure file folder. Make a strategic plan around your breakthroughs and execute the unique angles and marketing tactics revealed in the process.
4. Creating more work than you need
With so many great resources today that simplify the process of gathering data around competing analytics, compiling a high-quality, highly accurate comparison is easier than ever. Effectively invent the wheel and do things the hard way: Use tools that speed up the process and provide the important insights you need to make informed decisions about your business.
5. Starting without direction
If you are aiming without direction while composing your competitive analysis and you do not have a clear end goal, the job will be much, much harder. Before diving into research, define your goal and what you hope to find out about your competition.
6. Not counting the time of the market
When looking at your competition data, be sure to study how businesses grow and prosper over time, and do not examine their approaches at one, fixed time. Sometimes information about how competitors developed their tactics can be even more useful than finding out what they did in the early days (or what you currently do).
Competitiveness Analysis: Your Business Significance
With the template above as a starting point, along with the resources and tools we covered, hopefully better equipped to access our own competitive analysis.
By conducting a competitive analysis and developing your understanding of the market over time, you can help yourself stay on top of your competitors and even learn from them.