Competition continues to heat up! Equip yourself with your Competitive Analysis!
Why Should You Read This to The Last Line?
In today’s highly competitive market, competitive analysis is your survival pack! It is no longer enough to understand your customers, you must pay more attention to the competition. No matter how big or small your eCommerce business is, competitive analysis is a must, in order for you to have a proactive business plan and strategy for staying ahead of your competition.
In response to this need, we provide you with this article that includes a ready-to-use website competitive analysis template. The article also outlines the following:
- how to conduct a competitive analysis for your eCommerce business,
- what kind of data do you need to collect and how,
- what aspects of your competitors you need to consider,
- which tools can help you put together your own competitive analysis,
- and how to write your competitor analysis report. By the end of the article, you’ll find a free, downloadable competitor analysis report template to ease the mission for you.
Download the free Competitive Analysis Template Worksheet to use along with this guide.
Let’s dive right in…
What is Competitor Analysis in eCommerce?
In general, a competitor analysis (or competitive analysis) is the process of helping brands identify and evaluate their competitors to build a full picture of competitors’ performance and their strengths and weaknesses to gain insights that give them a competitive advantage.
competitor analysis spreadsheet is not limited to your competitors in the market only but it is much further afield as it comes to analyzing your shareholders — buyers, suppliers, government, technology, etc. — they all impact how well you can compete.
Now, What Is eCommerce Competitive Analysis?
Competitive analysis in the eCommerce field is not fundamentally different. However, it requires a different approach to identify, collect, and evaluate data.
The process of e-commerce competitive analysis usually involves online metrics such as digital shelf analytics, keywords search performance, and online product reviews and ratings.
What Is the Purpose of a Competitive Analysis for eCommerce?
Competitive analysis forms a critical part of any business strategy or marketing plan.
The main purpose of a competitive analysis is to provide an offensive and defensive strategic context to identify market opportunities and threats relative to your own business to quickly exploit opportunities, avoid threats, and capitalize on strengths.
Competitive analysis can also help your eCommerce business to:
- Study the market landscape.
- Make well-informed business decisions about your marketing strategy.
- Predict your competitor’s next move.
- Predict market trends and patterns.
- Predict market supply and demand.
Who Conducts Competitive Analysis?
You have 2 main options:
- To do it internally, the sales and marketing departments are responsible to be in charge of collecting data from third parties and your competitors’ websites, asking questions to current and potential customers, and analyzing the market.
- You can also hire an analyst firm to conduct competitive intelligence research, but this is not the recommended option because it costs a lot, and firms might not focus on the key factors that really drive buying decisions.
Maybe at this point, you’re thinking, “Okay, but what if I’m a startup or I own a small-sized business?”
This guide is for you. Just keep on reading…
How to Be Prepared for Your Competitive Analysis?
On the face of it, conducting a successful competitive analysis is hard but it’s not. Following the steps outlined here will make it easy to conduct your research and keep it structured and organized appropriately.
Your beliefs aren’t necessarily true, so the fundamental prerequisite to conducting a successful competitive analysis is to get rid of your old beliefs about your “3Cs”:
- Your Company,
- Your Customers,
- Your Competitors.
In addition, it is vital to be clear and understand what are your goals for the business? Why are you conducting an analysis? What are your goals for this analysis?
That’s all for this stage. “Just be clear.”
What Should Be Included in an eCommerce Competitive Analysis?
If you conduct an eCommerce competitive analysis around a specific aspect of your competitors’ business, it can vary depending on what you’re trying to know about that, but high-level or comprehensive competitive analysis templates in most cases contain a few basic sections, such as:
1. A list of your direct and indirect competitors
2. A list of what you want to know about them, such as:
- Their target customers
- Their products or services
- Their currently owned market share
- Their unique value proposition and effectiveness
- Their pricing strategies
- Their shipping approach
- Their current and past marketing strategies
- Media they use for marketing
3. A list of all of the strengths and weaknesses of your competitors
4. A list of all of the strengths and weaknesses of your company
5. An overview of the market and projections for the future
How to Conduct an eCommerce Competitive Analysis?
There are 4 key phases to follow to create a well-crafted competitive analysis template for your eCommerce business:
- Phase 1: Identify Your Competitors
- Phase 2: Select a Competitive Analysis Framework
- Phase 3: Collect Data on Your Competitors
- Phase 4: Write Your Competitive Analysis Report
Phase 1: Identify Your Competitors
The primary step to conducting a competitive analysis is to identify your competitors. This step involves two main sub-steps, which are:
- Categorizing Your Competitors
- Finding Them
Let’s delve deeper into each one…
How to Categorize Your Competitors?
There is a common classification of competitors that divides them into direct competitors, indirect competitors, and future competitors. And there is another classification that divides competitors into primary, secondary, and tertiary competitors. Both are the same.
Take a quick glance at them to better determine how they’ll relate to your eCommerce business:
- Direct Competitors or (Primary Competitors): They are companies that either sell the same product/service or target the same audience or — or both.
For example, if you own a sneaker brand, you’ll be in competition with other sneaker brands, shoe retailers, and any other brands that are creating footwear.
- Indirect Competitors or (Secondary Competitors): They are businesses that offer different products/services to fill the same need for the same target market. They may also sell a high- or low-end version of your product to a completely different audience.
For example, Hunger creates a need for eating ‘Food’ in general. So, when you feel hungry you’ll pick anything that satisfies your hunger. It may be a burger sandwich, take-out sushi, instant noodles, or a frozen pizza from the grocery store, and take it home to cook. All these products are different but they compete indirectly.
- Potential Competitors or (Tertiary Competitors): They’re businesses that are indirect competitors but will change or expand their solutions and product catalogs in the future.
For example, a traditional grocery store may offer homemade fresh juices that will compete with a cafe in the same street.
Where to Find Your Competitors and How?
What is the first thing we do when we want to look for anything?
Of course, we ask Google. Yes, and this is the initial way to find your current direct and indirect competitors.
- Begin with searches on Google.
- And for eCommerce, in particular, use Amazon, Alexa, and Ahrefs along with Google search to search around your product and business idea.
- You can also use Dun & Bradstreet to find out more about the new incorporations and some financial details of your competitors.
- Don’t ignore social media platforms and forums to find any mentions of competitors and discussions about their products or services.
Try to find competitors who sell similar types of products or offer similar types of services. Find competitors who market to similar audience demographics whether they’re new to the market or not.
Remember! As you find your current competitors, don’t miss finding your potential competitors. You have to keep an eagle eye on what’s coming around the corner. Study your market and find out:
- Will there be new entrants in your niche in the future?
- Who might start a business that would compete with yours?
- Who will have the ability to expand his business or have growth opportunities?
All you need to do in this step is to get a comprehensive overview of the competitive landscape to be able to design well-crafted competitive analysis templates.
Phase 2: Select a Competitive Analysis Framework
As part of analyzing the competitive landscape, you should book your competitor analysis framework template! Marketers consume a lot of data. And to ultimately come out with a meaningful conclusion and action items to help your team win against the competition, you need a competitive analysis framework.
What Is the Competitive Analysis Framework?
A competitive analysis framework is a model that can be used to easily map how you go about researching and analyzing your competitors by giving a structure to guide your market analysis.
There are various frameworks you can use for your competitive analysis in eCommerce. Let’s take a quick glance at the top well-known models to choose the right one for your business needs.
1. SWOT Analysis
Market SWOT Analysis is one of the most commonly addressed marketing analyses. It helps in evaluating the internal competitive factors (Strengths and Weaknesses) and the external competitive factors (Opportunities and Threats) that impact your business or course of action.
This analysis framework is often used in strategic planning and strategic management to help identify a potential competitive advantage.
- Strengths: What do your competitors do better than you and really differentiate them?
- Weaknesses: What do customers complain about the most? What do they lack? What do they fall short on?
- Opportunities: What can you exploit to your advantage?
- Threats: What could threaten your business position?
SWOT-analysis helps you take an objective look at your business considering your own products and services to make smarter, more informed choices that future-proof your brand.
2. Porter’s Five Forces Model
Porter’s Five Forces Model is an analysis framework that examines the competitive market forces in an industry or segment and provides a view beyond competitors to factors in your industry landscape that may strengthen or threaten your position.
It helps you evaluate an industry or market according to the following five elements:
- The Threat of New Entrants: It includes barriers competitors would face trying to displace you, and how much money, time, and effort it would take for a new entrance to gain market share. Such barriers include high customer loyalty, limited access to distribution channels, the need for cumulative experience and large investments, etc.
- The Threat of Substitute Products: The availability of substitute products increases the propensity of customers to switch to alternatives. Customers might be willing to switch from a product to another cheaper substitute if they feel that prices increase too much.
- Bargaining Power of Buyers: Today’s customers have become more informed and therefore more empowered. They can easily get access to a wide variety of products and offers from other companies, and compare prices online in a blink of an eye. This means that customers are able to put the company under pressure. Thus, they can reduce buyer power by, for example, offering loyalty programs.
- Bargaining Power of Suppliers: This refers to the power of suppliers as they may raise their prices or reduce the quality of purchased products/services, which would lower a business’s profitability. The availability of substitute suppliers is an important factor in reducing supplier power.
- Rivalry among Existing Competitors: It refers to crowded markets and how intense the current competition is. Competition is fierce when the industry is growing slowly, when there are many competitors that are almost equal in size and power, and when consumers can easily switch to competitors offering lower prices.
3. Growth-Share Matrix
The Growth-Share Matrix is a strategic analysis framework that helps companies decide which products/services to invest in further and which ones to cut based on two main factors —market attractiveness and competitiveness— by classifying the products/services in your company’s portfolio against the competitive landscape of your industry.
In Growth-Share Matrix, product value depends entirely on whether or not a company is able to acquire a leading share of its market before growth slows. Products in this analysis framework fall into one of the 4 quadrants in the matrix, each with a corresponding strategy as follows:
- Stars (High Growth, High Share): This refers to products that companies should significantly invest in, as they have high future potential and are likely to achieve high growth and high market share.
- Cash Cows (Low Growth, High Share): This refers to products that bring in cash that can be used to reinvest or fund investment in your stars.
- Question Marks (High Growth, Low Share): This often refers to new products with high potential. Depending on how likely a ‘question’ product is to become a ‘star’, companies should invest in or discard these products.
- Pets (Low Share, Low Growth): This refers to loss-making products. In this case, your company should decide to liquidate, divest, or reposition these products.
Phase 3: Collect Data on Your Competitors
Once you’ve identified your current and potential competitors, it’s time now to do some online market research to collect information about almost everything about them and their business.
What Information to Collect on Your Competitors?
Try to achieve a comprehensive understanding of your competitors’ products and services to compare them to your own. To be organized in preparing one of the most informed competitive analysis templates ever, prepare a competitor analysis checklist of what kind of data you have to search for and gather about your competitors.
There are 5 main groups of data about your competitors that should be gathered.
a. Data about Products and Services
- What product categories and services do they provide?
- How is the quality in your opinion?
- What are the key features of each product/service?
- What features do you like or dislike?
- Do your competitors sell products online only or online and in-store as well?
- If they have a website, how do they display their products?
- How detailed do they describe their products/services? What information do they include and what information do they miss?
b. Data about Pricing and Sales
- What are the prices of products and services?
- What are their pricing strategies?
- What are the competitors’ past and current pricing strategies?
- If competitors sell online and in-store, do their pricing strategies differ?
- Do they bundle products for a single price?
- Do they discount their products/services?
- Do they provide volume sales or one-off purchases?
- What is each competitor’s market share?
- What are their revenues and total sales volume each year?
- What is each competitor’s financial situation? Cash flow or reserves?
- What does the sales process look like?
- Do they have partner reselling programs?
- How involved is a salesperson in the sales process?
- What are their customers’ reasons for not buying?
- Are they expanding or scaling down?
c. Data about Suppliers and Shipping
- What is their distribution system like?
- Who are their suppliers? Does it respond to consumer preferences?
- What are their marketplace models or inventory models?
d. Data about Positioning and Branding
- What is their unique selling proposition?
- What are their target markets?
- What are their customers’ needs?
- What are customers really buying from them? Are they going for lifestyle or value?
- What makes their product or service unique in their opinion?
- What benefits and features do they highlight the most?
e. Data about Marketing Efforts
- How are they advertising/marketing their business?
- Do they use paid marketing strategies or depend on free options only?
- Do they have a media kit?
- Do they have a website?
- Do they have a blog?
- How do they engage with Their Customers?
- Do they publish buying guides and data sheets?
- How solid are their product photography, graphics, and design?
Download the free Competitive Analysis Template Worksheet that includes a complete in-depth checklist of what information to collect on your competitors.
Where to Find Data on Your Competitors?
Finding and gathering data on your identified competitors are very confusing steps. Here are some ways to help you.
a. Doing Some Reporting via Tools
There are great, inexpensive resources and online tools for checking up on your competitors and easing the data collection mission of your competitive audit, and making your competitive analysis templates simpler, more accurate, and more efficient.
- Alexa enables you to identify search rankings and sources as well as audience demographics.
- SimilarWeb and Ahrefs provide you with insights into the number of monthly visits for a specific website and the key traffic sources.
- Mailcharts offers insight into your competitors’ email marketing efforts.
- Buzzsumo gives insights into your competitors’ top-performing content.
- Facebook Audience Insights offers a variety of information about your competitors including their customers’ demographics.
b. Analyzing the Competitors’ Online Presence
In today’s digital era, you can learn much more about market leaders’ products and messages and pick up interesting facts about your competition by scanning their online presence.
Analyzing online business channels including Facebook posts, tweets, blogs, recommendations, and mentions on social media or on community forums like Reddit or Quora is an easy, cost-effective way to stay in tune with the public’s sentiment and in the know about your competitors.
c. Interviews and Research Surveys
It’s important to study customers who know little about your business to overcome your preconceptions about the business landscape. Conduct industry research to be able to identify your competitors, their competing products, and eCommerce marketing efforts, and create strategies to outperform them.
You can create online surveys to ask customers which products they were using or going to use. You can also depend on your sales team to ask potential customers questions about the companies they are considering doing business with and why?
d. Tracking the Industry Updates
Routinely tracking updates in your industry reported by industry analyst firms like ‘Gartner’ is a great way to know about where the industry is trending? And where are the unmet market needs that you can fill? so you can be ahead of your competitors.
Don’t overlook checking traditional marketing collateral like case studies, white papers, and datasheets and tracking news stories, news publications for ads, press releases, and awards won by your competitors.
Talk to your competitors directly: This step can often lead to a good relationship that’s beneficial for both sides.
Phase 4: Write Your Competitive Analysis Report
Competitive Analysis Report/Template is a type of strategic business report that uses data to analyze as well as evaluate the current competitive landscape analysis template and assess the strengths and weaknesses of your potential competitors.
It should be organized and well-guided. Your discussion in the report should be clear and comprehensive so that all details can be easily understood.
Competitive analysis templates help you make a detailed record of your competitors and allow you to have an overview of a business over time. Listed below are some of the most important details that you should include in a basic eCommerce competitor analysis report:
- A list of the identified competitors that you would like to observe and analyze.
- The terms, definitions, scope, and limitations of the competitor analysis.
- Business ownership, locations, history, organizational structure, management style, number of employees, etc.
- Objectives, mission statement, values, growth plans, and customer acquisition analysis.
- The product portfolio, old and new products, quality control conformance, brand loyalty, and brand awareness.
- Annual revenue, profit growth, cash flow & liquidity, etc.
- Pricing strategy, marketing strategy, marketing budgets, customer base, promotional mix, market shares, growth rate, etc.
- Direct and indirect distribution channels and exclusivity agreements.
- The activities, needs, lifestyle, demands, and expectations of the competitive market.
- Market SWOT analysis.
Ready-to-Use Competitive Analysis Templates
When it comes to conducting a comprehensive competitive analysis, it is absolutely important to approach competitive analysis strategically and conduct deep qualitative market research to put your hands on your own competitive advantage. Click To Tweet
You’re now aware of everything you need to build competitive analysis templates and you have all the tools you need to find and collect data and build a powerful marketing strategy based on that knowledge. So what are you waiting for?
Download this ready-to-use Competitive Analysis Template Worksheet to work through!