In ecommerce, no matter how niche you go, someone else has probably already done it before you.
The industry is becoming more congested as more businesses switch their focus to growing their online presence.
This makes it tougher for brands to build audiences, as it is more challenging to nurture customer loyalty when consumers have so many options to choose from.
Ironically, the best way to tackle the problem of increasing competition is to embrace your competitors and learn from them.
The Importance of Competitor Analysis in Ecommerce
We all want to do things our own way, however, there is a lot to learn in digital marketing. Chances are you don’t know it all.
Ecommerce is evolving quickly, with projections from Statista estimating the industry will be worth $4.5 trillion by 2021.
If you want your business to remain competitive, you need to remain agile. You must continue to adapt and innovate, just as your competitors are.
By conducting competitor analysis, you can:
- Capitalise on opportunities and exploit their weaknesses.
- Learn from their strengths.
- Gain a deeper understanding of the current landscape to aid brand positioning.
- Become aware of your competition so you will be prepared for future challenges from them.
This entire process is better known as competitive intelligence gathering.
If you don’t do it, you’ll fall behind sooner rather than later.
How To Do A Competitors Analysis
So, how can you do a competitor analysis for your e-commerce business?
Let’s dive in.
1. Define your E-commerce Business
Before you get into the thick of it with your competitors, you need to define your own business first. Are you an enterprise or a startup? How will you stand out from the pack? What is your mission?
Here are three key aspects to consider at this phase:
- Inventory– List your skills and the capabilities of your business.
- Customer needs– With your skillset as a guide, identify customer pain points and potential ways you can provide solutions.
- Differentiate – Highlight the areas that make your brand and business different. You need to be different to what is already available.
2. Categorise your Main Competitors
Your competitive intelligence gathering starts here.
Here are the basic steps:
- Use Google and Amazon to find companies that have similar business models and products.
- Dig through social media to find more information about their brand and style.
- Organize your competitor list on a spreadsheet, including basic info like their store name, website, mission, strengths, weaknesses, social following etc.
- Ideally, you should gather 5-10 competitors – some that are similar to yours in strategy, and a few market leaders that are a little different.
Once you have a good foundation of information on this group, you can categorise them as follows:
- Primary Competition– Your direct competitors that target the same audience or have similar products and services
- Secondary Competition – Companies that offer a similar product to a different audience, or a low-end or high-end version of your products
- Tertiary Competition– Businesses that have trending products or services that are somewhat related. For example, you may sell jewellery, while a tertiary competitor sells gemstones.
3. Examine Your Competitors’ Websites and the Customer Experience
The next step is to analyse the website of each competitor so you can glean some insights about the customer experience they offer.
You should consider multiple aspects here, including the following:
- Products– How are the product descriptions? What info do they provide? What photos are used and how is everything displayed?
- Blog – How often do they post? What content is included? What voice is used?
- CTAs – How do they use calls-to-action? Are they strong and clear?
- Email– Are they attempting to build a mailing list?
- Contact – What customer service options are present? Do they offer live chat or phone support?
This is just the tip of the iceberg – you need to dig deep to really get a clear picture of who your competitors are targeting, and how they are trying to do that.
Your goal is to identify your competitors’ strengths and their weaknesses and then look for opportunities to take advantage of them. You can use a SWOT analysis to make it easier.
4. Identify the Market Positioning Of Your Competitor
When you look into the positioning strategy of your nearest competitors, you can get a sense of the market, and the expectations of your target audience.
By looking at their websites, you can review their brand messaging and determine the following:
- What do customers buy? What attracts them – price, products, or experience?
- How does this company differentiate from the rest?
- What key benefits do they focus on with their marketing copy?
- How are they differentiating their product from their competition? What features and benefits do they highlight the most in their marketing copy?
- What is the USP (Unique Selling Point)?
Answering these questions will give you guidance on where your competitors are in the market, and it will help you position your own brand alongside them.
To really take your analysis to the next level, join their mailing list and follow their blog and social media channels. You can even buy a product, or leave an abandoned cart to see how they respond. This will allow you to gather more information and see how they speak to their customers.
5. Consider their Pricing Strategy
This is one of the core components of any e-commerce business, and you can leverage it to get the edge on similar competitors.
Over 60% of online consumers consider the price of products as the top priority in making purchasing decisions.
Look at your rivals to see how they have priced products similar to yours. You can learn what the target market expects, and what they are willing to pay.
This allows you to craft marketing campaigns that are aligned with customer perceptions about your products and prices.
Let Competitor Analysis Lead Your Digital Marketing Strategy
Once you have got this far, your e-commerce business will have a strong foundation to build on. Going forward, you can use competitor analysis to guide your overarching strategy.
From shipping policies to social media marketing, you can study competitors, and read reviews from their customers to gain valuable insights on how to position your brand as the one people gravitate towards.
Competition makes life harder, but with struggle comes growth.