Online shopping has been a part of our lives for more than two decades at this point. And in the last couple of years, eCommerce has experienced unprecedented growth. But, of course, one of the biggest catalysts for this increased switch to online shopping was none other than the COVID-19 pandemic. As a result, it was inevitable that the competition among eCommerce businesses reached an all-time high.
The industry is becoming more congested as more businesses focus on growing their online presence. This makes it more challenging for brands to build audiences, as it is more difficult 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.
After explaining what a competitor analysis is and why you need it, this article will explain the five essential steps for detailed competitor analysis that anyone in the eCommerce industry should know about. So let’s dive right in!
What is “Competitor Analysis”?
Competitor analysis is the process of identifying and evaluating your competitors’ products and services, growth, marketing strategy, etc. Sounds simple, right? However, this strategic research is not as easy as its definition makes it sound. There isn’t a strict rulebook on how to do a proper competitive analysis. It all depends on the industry you’re in and your business type.
Why Do We Need a Competitor Analysis in eCommerce?
You could be saying to yourself, “If doing a competitor analysis is a lot of work, must we really do it? Can’t we do something better with our time and money?”. The short answer is “No.”. But let’s take a look at the long answer, shall we?
If you want your business to remain competitive, you need to stay agile. You must continue to adapt and innovate, just as your competitors are. And by conducting a competitor analysis, you can:
- Gain a deeper understanding of the current business environment, which can be helpful to you in brand positioning;
- Discover unique selling propositions (USP) and differentiate yourself;
- Learn from your competitors’ strengths;
- Capitalise on opportunities and exploit your competitors’ weaknesses;
- Get an understanding of your competitors’ marketing strategies and use this information to create your own marketing strategy; and
- Prepare a budget plan rooted in reality and focus on channels your competitors’ pay special attention to.
This entire process is better known as competitive intelligence gathering. If you don’t do it, you’ll fall behind sooner rather than later. And now that we’ve got the what and why out of the way, let’s focus on the how!
How to Do a Comprehensive Competitor Analysis in 5 Steps
Step 1: Prepare and Find the Tools You’ll Need
Before you can begin the actual research, you will need some tools to analyse your competitors. The best part is that you already know/have/use these tools. Yes, we are talking about Google, social media networks, Youtube, etc. With the right keywords, you’ll get a lot of information on your competitors. And speaking of keywords, keyword research tools such as Moz and SEMrush are great resources for competitor information.
Step 2: Identify and Categorise Your Direct and Indirect Competitors
It’s pretty simple logic: You can’t analyse your competitors without first knowing who they are. So how do you figure out who your competitors are?
- Employee surveys: Before you start using the tools mentioned above, use what’s right in front of you—your employees. Your employees are one of the best sources of information you have. The chances are that they already have some ideas about who your competitors are. Some employees will have more tenure in the industry, which means they will have more information. Just ask them. You can easily send out a company-wide survey.
- Top search results: Time to put those googling skills to use! Try googling different combinations of keywords you’ve chosen and look at the top results. The first 4-5 results are a good place to start identifying competitors. Contextual ads placed on these inquiries are also a great way to figure out your competitors.
- Social media: Using the proper keywords, you can discover the most popular accounts related to them. You can also use social media to dig deeper into the list you prepared by googling related keywords. This could be extremely fruitful in understanding your competitors’ brand positioning and target audiences.
- Industry rankings: Another simple but highly effective way in identifying your competitors is to look at industry rankings. This way, you will have some ideas on what it takes to differentiate your brand and be the industry leader.
Prepare an excel sheet to list your competitors and organise it according to information and data of your choice. For example, you can add their website rankings, keywords based on their mission statements, target audiences, strengths and weaknesses, number of products,investors, etc.
Once you have enough competitors on your list (5-10 is ideal) and enough information on them, you can categorise them as follows:
- Primary Competitors: Your direct competitors that target the same audience or have similar products and services
- Secondary Competitors: Companies that offer similar products to a different target audience or low-end or high-end version of your products or services.
- Tertiary Competitors: Businesses with trending products or services that are somewhat related to your industry/field. For example, for a jewellery company, a tertiary competitor is a business that sells gemstones.
Step 3: Analyse Your Competitors’ Content Strategy
Content is the bread and butter of any eCommerce business. It’s one of the best ways to reach out to existing and potential customers. SEO optimised content will make your website rank higher on search engines. That’s why every eCommerce business has a blog, so should you. Blogs are also a great way to create community. You should check out your competitors’ blogs and pay attention to what they’re writing about.
However, content strategy is not just about writing blogs. What social media channels are your competitors using? How are they using these platforms? What’s their tone like when talking to customers? Watch closely, take notes and brainstorm about what you can do to differentiate your brand.
Lastly, take a look at their product pages. Product pages are an essential part of the content strategy of any eCommerce business. A well-prepared product page will help customers understand what they’re looking at, but it’s also an excellent tool for SEO optimisation. In addition, product description copies will tell you a lot about their brand positioning.
Well-written product page copies are also of tremendous help when it comes to search inquiries done by customers, especially if you’re using Segmentify’s services. For example, with Segmentify Personalised Searchandising, it’s not a problem if the search term is not included in the product name. That’s because the search is done across all the information about the products, such as product descriptions, categories, brands, colours, etc. Book a demo with one of our eCommerce experts for more details about what Segmentify can do for you.
Step 4: Examine the User-Friendliness of Your Competitors’ Website
You’ve identified your competitors and gained insight into their content strategy. Now it’s time to dig deeper into their website. Take a closer look at their website design:
- How is everything arranged? How many sections, categories, subcategories, etc., do they have?
- How are the buttons on the website positioned? And what kind of call-to-action (CTA) are they using?
- What’s the overall design like? They could be using illustrations, photographs, videos, or some combination of these. What would be more suitable for your own brand?
- What are the pain points of their design? Identifying the weaknesses in your competitor’s web design will give some ideas on what to avoid and pay attention to when working on your own website design.
Some of the points raised here overlap with what was mentioned in the previous step. For example, you can’t really separate product page design and product description copies from each other. They come as a package, so to speak. Just make sure to check them all 😉
Step 5: Explore Your Competitors’ Products and Consider Their Pricing Strategy
It’s important to know as much detail on your competitors’ products as possible. Competitor product analysis can be the most time-consuming step in this list. Because depending on your industry, the number of products and product types can be pretty high. However, you shouldn’t ignore this step since the product analysis will help you a lot in deciding how to improve your products and position your products in the market.
The easiest way to do a competitor product analysis is, of course, to keep an excel sheet. Find answers to these questions:
- What are their products?
- Have they recently launched a new product? Or are they planning to do so?
- Are there any similarities between your products and theirs?
- Do their products have something yours don’t have?
- Do your products have something theirs don’t have?
- What’s the pricing of their products?
- Are they offering any discounts?
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 aligned with customer perceptions about your products and prices.
The competition in eCommerce is rising parallel to eCommerce’s popularity and growth. It’s that all familiar survival of the fittest situation. You can’t afford to lose your focus even for one second. In order to win at the eCommerce game, you need to watch your competitors’ closely. If you don’t do that, it’s only a matter of time before you start losing your customers and your place in the industry.