A competitor analysis is one of the most precise ways to pinpoint your business’ strengths and weaknesses and compare them to your main competitors.
A competitor analysis doesn’t necessarily have to be a complex process, especially if you’re running a small eCommerce store.
How Is a Competitor Analysis Performed?
To perform a competitor analysis for your eCommerce store, start with a simple SWOT analysis of your business and each competitor. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats — hence the acronym.
Points of interest may include target audiences, products, services, geographic location, advertising, mission statements, etc. Much of the intel is freely available through target businesses’ websites, social media pages, company reports, marketing, and industry news, to name a few sources.
It is important to note that not every business within the same industry is a competitor; rivals are, basically, businesses operating within the same industry as your business that target the same/similar audiences or offer similar products/services.
When deciding on potential competitors, consider the size of the business (it should be similar to yours), the offer (it should be the same or similar to yours), the location (unless you’re targeting global audiences), and the audiences it targets (again, same or similar as yours).
Benefits of a Competitor Analysis
A competitor analysis, when done right, will render a whole slew of useful insights, which will help you plan for the future and adjust your present and upcoming marketing efforts.
As mentioned below, you’ll find a brief explanation of the chief benefits of a competitor analysis.
Identifying the Gaps in the Market
If you manage to identify the gaps in the market (e.g., product offerings, a specific geo-location, pricing, audiences, etc.), you’ll be able to hop right in!
For example, your main competitors may be targeting certain demographics. In that case, reach out to other demographics that may be interested in your products/services.
Identifying the Gaps in Your and Competitor’s Business
Launching a successful online business is not easy feat; in fact, not many get to stand out, especially when the competition is fierce.
With the rise of new tech and, especially, dropshipping, a great many people are looking to establish a successful online shop that will enable them to live an easygoing life. While there’s nothing wrong with this approach, for a dropshipping business to outshine the competition, it needs to be SEO-optimized, offer either different or cheaper products of the same type, have stellar customer support, and employ people who know exactly what they’re doing.
The latter is where a competitor analysis can be especially handy. Look for the kind of roles your competitors are looking for. This parameter will tell you two things: whether the competitor is preparing for a change in the industry (which is an invaluable insight in itself) and whether a crucial role has been overlooked.
Growing Industry Knowledge
A competitor analysis will help you grow your industry knowledge without a fail. This can be used in multiple ways later on.
Not only will it help your business perform better, but it will also help you establish yourself as an expert in the field. Why not share your knowledge with your colleagues or use it to build a better relationship with your clients and customers?
Identifying Your Unique Selling Proposition
Another invaluable insight a competitor analysis grants is your Unique Selling Proposition (USP). In plain words, analyzing will help you identify the differences between your and your competitors’ offer.
Basically, put yourself in customers’ shoes. Will they buy the same product from your business or from competitors and why?
Work on the USPs to attract new customers and build trust in the long run.
Setting Up Benchmarks
Have you heard of benchmarking? This process portends building points of reference against which to measure growth.
Needless to say, growth is exactly what a business should aim for, so use a competitor analysis to help you get started with more complex plans.
To perform this specific process, pick a product both your and competitor’s business is offering and compare the metrics of the competitor’s social media posts (say, Facebook). Find an average and aim for your social media posts to surpass it.
Target notable benchmarks (impressions, social media reach, overall engagement, etc.). Pace your posts in accordance with the findings (the aim is to surpass competitor’s metrics).
Formulating Your Marketing Campaigns
Lastly, we come to the complex issue of marketing, which can be a real headache for people who aren’t too versed in online sales. A competitor analysis can help you identify how much the competition is spending to attract new customers. Research the keywords competitors are using and compare the costs. This will tell you whether to compete for the same keywords or look for more affordable ones.
Key Takeaways
Overall, a competitor analysis is a useful approach capable of helping businesses get off on the right foot. Everything from target audiences, advertising costs, industry trends, to Unique Selling Propositions will become clearer.
It’s all right to start small and expand your search as you’re getting more versed. However, for starters, make sure to familiarize yourself with the SWOT analysis as it is the basic business term.
