What is Competitor Analysis and How to Perform It?
If you are in doubt from where to begin when starting a new business, then competitor analysis should be the first thing for you to consider. There is a saying that preparation is the key to success, and in order to do so, you always have to think of new ways to stay one step ahead of your competitors. Competitor analysis is definitely one of them, so spear a few minutes reading how to gain a significant advantage over your competition.
What is the Competitor Analysis?
The more competitors there are in one industry, the more important becomes to perform the right investigation. Nowadays, when the competition is in constant growth, and especially in the eCommerce world, competitor analysis represents one of the main tools for running a successful business. This doesn’t mean that you should copy every move that your competition did, but to become more aware of what are they doing, and how to devise your own strategy according to that. In order to do so, you must always have forehand information. The important thing is that these kinds of information do not relate to the competition only, but to your business as well. Whatever you do, it is very important to be realistic and to have a good insight into what are your main strengths and weaknesses. Because standing out of the competition crowd is your number-one priority, you always need to have in mind how to show your strengths, and how to work on your weak points. In other words, you have to compare your business with the competitors by performing a competitive analysis.
Once you perform your analysis, you’ll see that you are richer with lots of new, useful information. For example, you will be aware of the upcoming trends in the industry, you’ll have a better insight of your own performance, and last but definitely not the least, you’ll get to know your competition much better.
How to perform a Competitor Analysis?
Of course, all of this is much easier said than done. Where to start from? What should be your main focus? What to do with the information that you get? These are all legit questions that one could ask themselves at the very beginning. So, let’s explain this process a bit better.
1. Explore your main competitors
Whether you want to admit it or not, the competitors are out there, and most probably their number won’t get any smaller. If you want to stay on top of the game, you have to take some actions and having a good quality product or service, unfortunately, is not enough. So, the first step of conducting a competitor analysis would be to identify who are your main competitors. When you are a huge company, this task is much easier due to the fact that you probably already know all your main competition by heart. But, if we are talking about some small/medium-size businesses, the number of potential competitors is much bigger. This is where you face your first problem. How to identify them all?
First, you need to spend more time sizing up the competition. Once you do that, you will be able to identify in which areas do you need to compete. Furthermore, you will then be able to identify the platforms which will help you differentiate your brand/service or improve the current weak sides of your company related to your brand/service. As you can see, is not necessary to start your competitor analysis with some daunting tasks. All it takes is to logically think it through.
2. Investigate your competitor’s websites
Now that you found out who your main competitors are, you can proceed to the next step in your competitor analysis – investigating their websites. This will definitely take some time, but it will pay off in the long run. You will see what is the structure and design of their site, who are they collaborating with (or who are their clients) when they were founded, where are they located, etc. Also, if they have a blog, that could be useful insight into the main topics that they are interested in. The main thing is that you get information about their products – prices, descriptions, reviews and similar facts. This also doesn’t require some special knowledge, just some time and effort and the results are multiple. By doing this step of competitor analysis you will get so much information about your competitors which will give you the possibility to determinate compare and your weaknesses and strengths.
3. The importance of social media
Social media presence is of extreme importance. The benefits of using a social channel go way beyond a simple sales channel. Researches have shown that online stores that have a social media presence have 32% more sales on average than the ones who don’t.
Another information that you will find by doing a competitor analysis is how present your competitors are on social media. Social media channels are very important for monitoring your rivals. Whether it is used for engagement with the followers, for providing customer service, promotion, or something else, by checking competitor social media you can detect what are the main points of their social presence. From there you might get some ideas which you can implement in your own strategy, or for example, you can find some mistakes in the way that they are presenting themselves and avoid them on time.
4. Customer experience
Even if the customers find you before they find some of your competitors, your job is not finished. If navigating through your site is difficult, they will leave, and all of your previous work will be in vain. While doing the competitor analysis you should also pay attention to how this problem was addressed by your rivals. Put your self in the customer’s shoes and try to give an honest opinion – would you as a customer be satisfied with that kind of website? If not, better for you, but if the answer is yes than think of ways in which you could use your competitor as a good example. Basically, the customer has two main focus points: easiness when finding and buying the wanted product and how engaging the website is. One great example of an engaging website could be Bellroy, a wallet company. You can see very minimalistic product pictures, but you can also find so much engaging content, as for example Slim your wallet.
5. Price monitoring
One of the main things to focus on while doing your competitor analysis is to learn more about your competitive pricing strategy. Knowing that the price is one of the most important aspects of your business, it is reasonable to dedicate some time to this aspect of competitor analysis. The easiest way to do so is by comparing your prices to the prices that your competitor offered. But, that’s not always so simple. Sometimes, if you have a lot of competitors, there could be a lot of information and it would be difficult to stay on top of everything by doing it manually. For those situations, there are some price monitoring tools that you could use in your competitor analysis, such as Price2Spy.
As you could see in conducting an eCommerce competitor analysis everything is based upon a well-rounded approach. You can determine what are the main focus points for your case, but you should never neglect the other aspects. This is a very dynamic and constantly changing field that requires you to be always opened for some new approaches. You could get easily caught up in a situation where you can think that you are doing the best job possible and that there is no need for so detail competitor analysis. Yet, here you could see that there are many advantages in using competitor analysis and maybe you should think of implementing some of them in your business as well.
We hope you’ll find this useful and please feel free to inform us if you have tried some of the points mentioned above. We would love to hear your impressions!