How to Research Your eCommerce Competitors for a Competitive Analysis
A competition analysis is used by entrepreneurs to identify their competitors in the industry and to understand the strengths and weaknesses of those competitors. It helps business owners to strategize their own placement and marketing efforts in the market. There are two key elements to writing effect analyses. The first is frequency. Markets shift quickly and competitors change. For the analysis to remain effective and current, it should be redone at least twice a year. The second element is research. The best analyses are thorough, examining every facet of a competitor’s business, from statistical data to subjective observations . However, it can be hard to know where to start or what to research for those who have never written a competitive analysis before. Here are a few tips to get started:
- Understand why to write one
- Learn the types of competition
- Begin a spreadsheet
- Start Googling
- Look at the elements of their website
- Examine their SEO
- Study their promotions
- Read their customer reviews
- Find the channels they sell through
- Look for site metrics
- Do the same for your business
Understand Why to Write One
Competition analyses are time consuming and tedious and many entrepreneurs may wonder if they really need to write one, especially if they don’t understand why they’re important. Here are just a few reasons why every business should write a competitive analysis:
- Learn of New Products: To remain relevant within your industry, you need to be constantly aware of trends while innovating to stay ahead of the competition. By studying what competitors are doing, you can stay current and also learn of new products hitting the market so you can develop something similar.
- Understand Pricing: By knowing how competitors price their products, entrepreneurs can compare those prices to their own stores. Is pricing similar? Do you charge too much, thus risking the competitive edge of your business? Or maybe you can charge less than your competitors and create an opportunity for yourself? If you don’t write a competitive analysis, none of this information will be known to you.
- Launch Promotions: When you study how a competitor promotes their business, whether through sale or ad campaigns, you help identify opportunities for your own ecommerce store, as well as threats to you posed by your competitors’ campaigns.
- Learn of Keywords: Search engine optimization, or SEO, helps people find you online. The keywords they type into search engines will direct them to websites that also use those keywords. By studying your competitors, you may discover new keywords for your brand, to make sure more and more people can find you.
Learn the Types of Competition You May Discuss in Your Competitive Analysis
In most industries, there are three different types of competitors. You should look at a variety of them in your analysis. They are as follows:
- Direct Competitors: Direct competitors are the people who sell the same (or almost the same) product as you, and they do so in the same channels (for example, if you have a marketplace on Etsy, so do they). They also tend to market to the same audience as your business does.
- Indirect Competitors: An indirect competitor might sell a product in the same category as yours, but the product itself isn’t the same (for example, you sell luxury writing pens, and they sell luxury notebooks). They also typically sell on different channels and market to different audiences than you. However, they are a threat because they could easily introduce a product similar to yours if it’s in line with their brand, or move into one of your channels, so they must be monitored in your competitive analysis.
- Substitute Competitors: A substitute competitor sells a different product than you however that product solves the same problem as yours does (for example, you sell a bath bomb but they sell a liquid bubble bath).
Begin a Spreadsheet
During the researching process, you’re going to gather a mountain of data about your competitors. Set up a spreadsheet to help you keep it organized. Include things like the names of your competitors, their websites, the places they sell, their methods of advertising (sales, social media, etc.), how many social media platforms they use, etc. This will make writing your competitive analysis much easier.
The first step for competitive analyses is to identify your competitors. You likely know of some, but you can identify even more with a few Google searches. The best way to do this is to open an incognito window (this prevents the search results from being biased by your past search history), pick a product from your own ecommerce store, and search for that product using the keywords you think consumers are using. Do this for multiple products as well. When the results come back, start taking note of what comes up. A few things to pay close attention to include:
- Names: Start by listing the names of your competitors. When you do further product searches, do these names come up repeatedly? While all results might be competition to your business, a few names might stand out more.
- Links: When you click on the results of your search, where do the links take you? Are they high quality? What does their copy look like? Do they look like yours?
- Multi-Media: Do results from competitors show up as videos or product listings instead of just a text-based link? Those types of links are more likely to be clicked and therefore make that competitor more serious.
Look at the Elements of Their Website
Once you have identified a competitor, pay their website a visit. You can study this site to take note of the things your competition does well, does poorly, does the same as you, and does differently of you. A few things to take particular note of include:
- The Design: What does their home page look like? How about their product page? Do they use lists or grids? What kind of multi-media is used in their design? Do they use a side bar menu to list page categories or a banner across the page? What colours do they use? Is it overall professional and polished? Which aspects of their design work best and which are executed poorly?
- The Elements: Next, take a look at the elements included in the website. Do your competitors have blogs? Product reviews? FAQs? A page for news about their business? Ask yourself why these elements might make them more successful as a business.
- The User Experience: Take a little bit of time to pretend you’re a customer on your competitor’s website. Browse their product pages, use their search bar, add an item to your cart and walk through the checkout process with it (don’t worry, you don’t have to actually pay if you don’t want to). Write down how much time these processes took you, any problem points you experienced, and anything you particularly liked about the experience.
Examine Their SEO
SEO is the thing that will get you and your competitors seen on search engines like Google. The better a site’s SEO, the higher it will appear in the results. While you will only have an outsider’s view of how your competitors do their search engine optimization, there are a few things to take note of for your competitive analysis:
- A Blog: SEO uses keywords to generate rankings. The more text a website has, the more keywords a search engine can search for. One of the best ways to add that extra text is to use a blog. Businesses with blogs might be more competitive to you than businesses without blogs.
- Site Architecture: There are many other ways to use keywords on a website, most of which have to do with the actual design elements of the site. Write down the title of every page on a competitor’s website, study how they structure their URLs, look for internal links, and look at the alt text on images (which should appear just by hovering your cursor over the image). Decide what is done well and what isn’t and make note of that as well.
Study Their Ads and Promotions
Most companies advertise in one way or another, be it through traditional or digital media. The business who makes itself most known to consumers is likely to be the most competitive in the industry. The promotions offered by businesses are also a huge factor for consumers deciding between one company or another. If the products are almost the same but one company offers them for cheaper, chances are the consumer will go for the cheaper option. Take some time in your research to examine the following elements of your competitors’ businesses:
- Social Media: How do your competitors reach their audience online? Do they use Facebook, Twitter, Instagram? Maybe YouTube or LinkedIn are better options for them. How many followers do they have on each platform? How often do they post to it? What kind of content do they post? How many engagements do they have on each post? Do they sell products through social media (for example, Shopping on Instagram), or use sponsored posts? Write down as many relevant details as you can think of to study and compare to your own social media while you write your formal competitive analysis.
- Traditional Media: While it might be harder to gauge how a competitor uses traditional media to advertise (especially if you are in different geographic regions) do your best to learn if they produce TV or radio ads, take out ads in the local papers, or use magazines to reach their audiences.
- Google Ads: Google has an integrated advertising feature that allows businesses to pay a fee and Google will display an ad for that business every time a user makes a relevant search. Because Google is such a large search engine, these ads can get a business in front of thousands of new customers.
Read Their Customer Reviews
One of the best way to analyze a competitor is to take a look at the things their customers say about them. Take a look at any reviews on their website, as well as social media posts mentioning them. Write down the things customers praise them for so you can implement those skills in your own business, and also write down the things customers complain about so you can design policies around avoiding those same complaints.
Find the Channels They Sell Through
A competitor is especially dangerous to your business if they use the same channels to sell their product as you do, or if they use a wide variety of channels and you only use one or two. Make a list of the places your competitors sell in, including from their website, on Amazon, through eBay, with Etsy, and more. If all of your competitors use a specific channel and you don’t, you’ll know you may need to expand the locations you sell in. On the flip side, if you’re selling somewhere that few of your competitors are, that may be an advantage for your business.
Look for Site Metrics
While most businesses don’t release metric data to the public, do your best to gather metrics about your competitors’ websites. Search for things like traffic numbers, engagement, bounce rates, customer demographics, and more. There are a few online tools to help you gather such information.
Do the Same for Your Business
The point of writing a competitive analysis is to compare your business with those of competitors. Once you’ve gathered as much information on your competition as possible, repeat the process for your own business. This will help you understand how your ecommerce store compares to others so you can better strategize and adapt for the future.
Before you can write a competition analysis, you must actually research the competition. Our guide will help.
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