How to Conduct a Competitive Analysis for Your Business (Plus a Free Template)
In order to predict changes in the market, you need to closely observe your opponent to point out new fashions and tendencies. Along with prosperous schemes, find out what is workable in your place while staying at the threshold.
However, just keeping an eye on your opponents’ social media accounts and subscribing to their email list isn’t adequate. You need to be sure of the changing trends in the competitive panorama for operative censoring.
Competitive analysis is a document that provides us a clear and profound understanding of the participants in your market.
So, for your convenience we are providing you a framework to conduct competitive analysis of your own to tackle your ecommerce businesses.
Whether you already own a store and want to gauge the current market values, or you are bringing your first product to the market, some steps, equipment and even a prototype are provided here for your ease to create your own competitive analysis.
What is a competitive analysis?
Let’s begin with the basic understanding of competitive analysis.
A competitive analysis is an assessment based on your competitors’ tactics that can be used to assess the strengths and weaknesses of diverse marketing tactics within an industry. It has certain advantages such as it helps in identifying the latent advantages and hurdles within a market around their product or services and how different competitors are using direct and indirect strategies like marketing, pricing and circulation.
What should you cover in a competitive analysis?
Competitive analysis changes on the basis of your wish that which aspect of business do you want to learn about your competitor. You might do a competitive analysis of their website or their marketing strategy as a whole.
In order to structure competitive analysis different types of information is needed. Let’s see what kind of information is required in such researches.
For high level of competitive analysis you need to know following things around your competitors:
- Whom they focus(target customers)
- What is the unique factor of their business and products
- Benefits they highlight in their sales products
- Price of their products in different areas
- What is their delivery methodology
- Whether they have received any funding
These questions will help you out to find the unique points that make these businesses to stand out in the market place.
In order to find out particular elements of your competitors strategy, you might follow the following aspects as well:
- Website descriptions (such as search tools, product images, design/layout, etc.)
- Customer involvement elements (cart abandonment strategy, customer support, mobile UX, etc.)
- Social media strategies (channels used, frequency of posting, engagement, etc.)
- Content marketing approaches (blogging, topics, content, etc.)
- Marketing strategies (promotions, number of discounts, etc.)
- Email marketing approach (Newsletter, promo codes, etc.)
- Customer reviews/engagement (language used around products, frequent complaints, etc.)
Hence, we can say that competitive analysis takes different shapes and forms depending on what you want to evaluate, so add up sections to evaluate your desired strategies and information.
Why Competitive Analysis Matters For Ecommerce business?
Until now you mind must be buzzing with the question that why competitive analysis affects me, an ecommerce business owner?”
The answer is very simple. You can’t beat your competitors if you don’t know them and to be unique you need to do something different from your competitors.
Competitive analysis in e-commerce can also help:
- In making informed and clear decisions
- Identify main current and trends
- Create targets and standards for yourself
- Fix your pricing strategy
- New way to interact with the customers and make them speak with you
- Finding what is missing and to fill that place
Such type of analysis is not only for the beginners, it is an evolving document that helps your company to grow with the passage of time.
Hence, it is an extremely important method to compete with your rivals in the market and works as a map to show you the right direction to excel in future.
How to Conduct a Competitive Analysis?
If you have taken the wise decision of competitive analysis of your own, follow the outline provided here so that your research will be kept structured and organized adequately.
Step 1: Create a List of 7-10 Competitors
For the identification of relevant competitors, search on Google, Amazon, and Alexa for competitors around your product and business idea. Relevant competitors are those who:
- Sell similar products and services
- Have a similar business principle
- Same or slightly similar target audience
- Both are new in the market and have more experience
You should create a list of 7-10 relevant competitors and then select one you want to analyze.
Step 2: Create a Spreadsheet
Collect the data of competitors in a spreadsheet which you can easily share and update. Write down different criteria with which you want to compare and contrast. For example:
- Price selection/range
- Product subscriptions
- Social media engagement
- Content used for principal generation
- First time visitor deals
Step 3: Identify Primary/Secondary Competitors
Categorize your competitors into primary, secondary, or tertiary competitor. This will help you to understand how they are relatable to your business.
- Primary competitors are those in direct competition with your business. They sell similar products to the same target audience; therefore, people compare these two businesses frequently. Example: Nike and Adidas are primary competitors.
- Secondary competitors own similar sales, products and services, but they don’t have the same target audience. Example: Victoria’s Secret and Wal-Mart are secondary competitors.
- Tertiary competitors are related brands who have same target audience but they have different products to sell. However, they compete with you anyway and can either be the potential partners or future competitors if they expand their business. Example: Gatorade and Under Armour.
Step 4: Collect Data via Tools
After finalizing the competitors you want to study, start your research and collect the required date and information. Don’t worry, you can do it more easily now. Here is good news for you. There are many different tools available that can make data collection for your competitive analysis simpler, well-organized, and more precise.
Powerful tools such as Ahrefs and SEMrush can be used for competitive analysis which demands a huge investment. In this post we will use some of the accessible tools.
SimilarWeb provides comprehensive monthly visits and key traffic sources for a website. This can help you to predict where your competitors are focusing. This way you can come across websites like yours and learn much from them.
Mailcharts offer a comprehensive understanding of your competitors’ email marketing, from the frequency of email sends, their subject line tactics, and more.
You can plug your competitor’s domain into Buzzsumo to get insight of their top-performing content, as well as total social shares and where that content has been shared. In this way you will find different website with similar content as yours.
Alex offers the demographic services, information related to your target audience as well as some of the sites that are linking to and mentioning your competitors to get a handle on their PR and SEO strategy.
Facebook Audience Insights
Facebook Audience Insights (access through your Facebook Business Manager) can give you a wider range of information about your audience as Facebook is the largest social network. Through Facebook pages, you can easily get to know the age, gender and geography of the audience.
The above resources can be used to collect the information to fill the competitive analysis spreadsheet
Step 5: Do Some Hands-on Research
Apart from the research you’re doing through software and tools, do another thing too i.e. hands-on with your competitive research. Act as a potential customer and see what your competitors are up to in the marketing department.
For doing it:
- Subscribe to their blog
- Follow them on social media
- Abandoning a product in your shopping cart
- Even buy a product and evaluate the customer experience
While you act as their potential customer, note down their reaction to product abandonment and how they reach out to customers in social media to attract customers.
Industry-specific trends and economic indicators will further enhance your understanding of the current trends and the inclination of customers.
Consider doing a SWOT analysis provide information about the Strengths, Weaknesses, Opportunities, and Threats around your business and your competitor’s. By learning these all you can take smarter strategies in future to nurture your business.
Competitive Analysis Template
If you’re still not confident to start laying out your template for a competitive analysis, here’s a free competitive analysis template to kick start it. You need to copy it to your own Google Drive, or you can download the spreadsheet to work through. Go to File > Make a Copy… OR Download as.
An Example of a Competitive Analysis
Suppose you sell make-up brushes, then this is how you could use this template to compare competitors’ approaches to your own (and identify what you could do to stand out):
Remember that it is up to you that how many sections you want for your analysis. However, to ensure a focused and relevant research keep your list of competitors 10 at maximum.
Common Pitfalls to Avoid
Since, you have got insights of competitive analysis, now you need to avoid the pitfalls that would make your research ugly and unworthy.
1. Competitive Analysis Is Not A One-And-Done Exercise
Businesses continuously evolve over time, so it is important to re-visit the data and update it. If don’t visit the original data again and again, it would lead to faulty data and poor decisions. Don’t forget to spy on your competitors.
2. Ignoring Your Own Biases
As humans, we have the ability to assume things and jump to conclusions. This is known as confirmation bias. In your competitive analysis, it’s important to test your assumptions with the data obtained. Don’t rely on your assumption considering them true.
3. Data Without Action is Useless
After you obtain findings, make sure to work on it. Make a distinct and unique plan around your research and act upon it. Just doing competitive analysis and let it to gather virtual dust would be a waste of both time and resources. Hence, action is important.
- Creating More Work Than You Need To
With the various available resources, competitive analysis has been simplified. Don’t go for difficult paths, rather use the tools that will speed up the process and give you comprehensive directions to make a wise and informed decision.
- Starting Without a Direction
Before doing the competitive research you should have a clear objective in mind. What do you want to learn about your competitors? Hence, set your goals, otherwise, the research would be much harder than you expected.
6. Not Accounting for Market Timing
Sometimes the information that how companies have progressed over time can be more useful than examining their strategies at a specific point. So make sure you have the information about their gradual progress.
Competitive Analysis: Your Business Edge
I hope now you are better prepared to approach your own competitive analysis with the help of above tactics, strategies and resources.
We say also say that competitive analysis helps us to grow a better understanding of market, ultimately, you can stay on the top of your competitors and get insights from the as well.