Competitor Analysis reveals that many products are already being sold by others. This has both good and bad sides. The upside is that competing generally indicates consumer demand for the goods. Consider the row around Pepsi and Coca-Cola.
The problem is that you may yourself with others for the same clients if you provide something comparable to theirs. Thus, how can your store differentiate itself without being unique?
One smart move is to do a competitor analysis. This means checking out what your rivals are doing. Take a look at the places they sell their items and how they promote them. You can identify what functions well and what cannot by doing this. After that, you can apply that information to improve your store.
In short, while there are lots of others selling what you sell, knowing your competition can help you find your edge.
What is a Competitor Analysis?
Competitor analysis is a careful plan that looks closely at what your main competitors are doing. It’s not just about knowing what products they have. You also need to understand how they sell, how they market, and what values their brand represents.
The Benefits of an Online Shopping Competitive Analysis:
In 2020, global internet sales topped $4.2 trillion, a 27.6% rise. This surge happened while overall retail sales worldwide dropped by 3%.
The big boost in online shopping was mainly because of the pandemic. People who used to prefer shopping in stores switched to online buying. This trend made many retailers start or expand their online stores. But on the flip side, some retailers had to declare bankruptcy.
However, companies that specialized in selling online had an alarming rise in sales. Businesses selling on Amazon generated around $4.8 billion in sales from Black Friday to the Monday afterward in the 2020 holiday season. That is a staggering 60% rise over the prior year.
What does this data indicate, then? It shows that the retail market went through a major shake-up, with a lot of profits moving online. But it’s not clear yet if this shift will stick around for long. Market predictions suggest that online retail growth will slow down in 2021, expected to increase by 14.3%.
So, in this rapidly changing and competitive market, knowing how to analyze your competitors is key to entering the scene effectively.
Crystalize your market positioning in terms of value proposition and differentiators
- Estimate the entry barrier into the target market/niche
- Identify baseline consumer expectations, set by others
- Find market gaps and opportunities for improvement
- Uncover potential risks and weaknesses in your marketing plans.
How to Analyze a Rivals:
Finding useful data about your rivals might help you with the creation of products and advertising strategies. To find these insightful details, take the actions listed here.
Identify your competitors:
Choosing which mountain to climb is like deciding which market to enter. Just like hiking up a marked hill differs from scaling Kilimanjaro, analyzing competitors in various categories helps gauge the challenge ahead.
Direct competition refers to e-commerce businesses offering similar products to the same target market, both geographically and demographically, at similar prices.
Analyzing direct competitors is crucial for two reasons:
- Assessing product viability: If someone else is selling a similar product, it’s likely in demand.
- Estimating entry barriers: Direct competitors set the standard for entering the market. For instance, if a competitor sells a product for $10, you probably can’t charge $25 unless you add something unique.
Here’s how to identify direct competition:
- Analyze search engine results (SERPs) for similar product queries
- Look at market share statistics using Statista or a similar source
- See who’s sourcing products from the same suppliers/wholesalers as you plan to use
- Note the brands your target buyers use or mention the most during interviews
While direct competitors are easy to spot, it’s important not to overlook indirect competitors.
Indirect competition refers to online sellers offering products that differ in some aspects but could still meet the same customer needs.
Researching indirect competitors is particularly valuable for established e-commerce brands exploring new product ideas or entering new markets.
For instance, suppose a skincare brand plans to introduce a new CBD product line. In that case, it should analyze what other CBD businesses are doing to identify intangible assets it can leverage to compete effectively.
Then, there’s replacement competition, represented by disruptive brands that have the potential to replace your product entirely with something different. These brands aim to capture market share from established competitors by offering superior products or experiences.
For example, you might recognize a couple of disruptive brands shaking up their respective industries.
- Uber replaced standard taxis.
- Airbnb eroded the hotel market.
Opting for the “replacement” approach can be tough, especially when competing against larger rivals. There’s a risk of investing in a product that may not gain traction if its viability isn’t validated beforehand.
However, despite the greater risks involved, pursuing this route can lead to significant rewards. Displacing a dominant competitor, especially one with a market monopoly, can result in rapid growth for your business.
Perform a competitor SWOT analysis:
This is a great tool for seeing how your company stacks up against its rivals. Following the discovery of many direct rivals, conduct a SWOT analysis of each company to determine its benefits, drawbacks, possibilities, and dangers.
Your analysis should cover the following areas:
- Brand positioning
- E-commerce website
- Customer experience
- Sales strategy
- Pricing strategy
- Marketing strategy
- Content strategy
- Shipping Strategy
- Discounts/Promo strategy
To get answers for each section, ask the following questions:
- In which areas does this brand excel?
- Can you identify any intangible assets (e.g., memorable branding) that give them an advantage?
- Which processes or experiences need improvements (i.e., in terms of online shopping experience)?
- What areas do they neglect/miss (e.g., do they invest enough in search engine optimization to get organic traffic)?
- What can your company do better, based on your resources (e.g., can you come up with better messaging for or new types of content for your website)?
- Can this competitor substitute you? Can they threaten you in another way (e.g., by offering faster shipping)?
Compare the weaknesses of your competitors with your strengths. Take note of any opportunities they may be overlooking. Can you take advantage of these opportunities?
On the other hand, analyzing your strengths and threats will give you a clearer understanding of the market conditions and entry barriers, helping you prepare to overcome them.
Examine your competitors’ websites and customer experiences:
Customer experience plays a critical role in e-commerce success. According to studies, 59% of US consumers will ditch a brand after multiple bad experiences, with 17% willing to tolerate just one misstep.
View competitor research as a chance to improve your e-commerce website design. To evaluate your competitors’ user experience (UX) and customer experience (CX) effectively, follow this five-step UX research framework developed by Erin Sanders from the Research Learning Spiral:
Set the objectives:
At a fundamental level, you should gather information on your competitors’ website navigation, product offerings, product presentation, checkout process, shipping policies, and on-site marketing tools like discounts, coupons, and upsells.
Create research hypotheses:
Based on your previous observations of competitors’ strengths and weaknesses, make assumptions about their customers. For instance, does the competitor’s content effectively assist shoppers in making product decisions?
Select your research methods:
Your approach will vary based on your resources. Utilize both quantitative methods (such as benchmarks, user testing data, and performance metrics) and qualitative methods (like surveys, focus group interviews, and customer reviews) to assess their UX/CX.
Conduct the evaluation:
Gather as much data as possible within the designated research timeframe.
Synthesize the findings:
Utilize the gathered information to address any knowledge gaps, test and validate your assumptions, and explore different design possibilities.
Determine your competitors’ market positioning:
Competitive positioning sets you apart from others. When analyzing indirect competition, you’ll notice differences in their solutions compared to yours. These differences represent their unique value propositions, which attract new customers. Having a unique value proposition is crucial for every brand aiming for success.
To map which position competitive brands hold on the market, do the following:
- Identify the primary group of customer needs that you plan to address.
- Choose a geographic region you want to study.
- Decide if you want to track the entire market for a product or only a specific segment.
- Select a price range you want to analyze (cheap/low-end products, mid-market, luxury).
- Identify what primary benefit the customer receives at different price points.
- Organize competitors by product price and its level of primary benefit on the map.
Look at your competitors’ pricing and current offers:
Perceptual mapping assists in understanding competitors’ pricing strategies and finding your position in the market. It provides baseline figures on consumers’ willingness to pay for various goods from different brands.
However, consumers’ price sensitivity isn’t solely influenced by objective factors like quality or features.
For example:
- 43% of all consumers are ready to pay more for greater convenience such as faster shipping or low-hassle delivery.
- 71% are ready to pay a premium for brands that provide full product traceability.
While analyzing competitors’ prices, focus on any additional offerings they provide. Consider how they add extra value to their prices to avoid competing solely based on price.
Learn about the technology your competitors are using:
Technology is often viewed as something tangible that any brand can obtain. However, it’s essential to remember that technology serves as an enabler. What matters more is not the technology itself, but how it’s utilized.
Competing businesses might utilize the same e-commerce platform but customize and expand it to craft a distinctive brand experience, which acts as an intangible asset.
Thus, when doing your analysis pay attention to the following:
- What type of e-commerce solution does the company use — open source, SaaS, or headless commerce?
- Do they rely on any custom extensions/plugins?
- Which types of additional systems, such as gateways for payments, email marketing companies, third-party logistics interfaces, etc., do they employ?
- Do they employ any modern technologies to provide an interactive purchasing experience, like AI, chatbots, AR, or VR?
- Is there any way you can offer a better online shopping experience by choosing another technology stack or implementing custom integrations?
A simple method to discover the competitor’s technology stack is by analyzing their website using BuiltWith.
Ensure you are being competitive with shipping:
One major factor affecting customer purchases is delivery. Shipping expenses are one of the main causes of shopping cart leaving, based on the Baymard Institute.
Determine what your competition is charging for:
- Same/next day delivery
- 2-day shipping
- Standard shipping
- International shipping
Next, evaluate various logistics providers to determine if you can offer comparable shipping rates. E-commerce brands often have the opportunity to negotiate bulk discounts for shipping or long-term contracts.
Alternatively, you can adjust prices slightly to cover some of the shipping expenses, especially for larger items.
Consider providing choices like curbside pickups or Buy Online, Pickup In-Store (BOPIS) if you have real retail locations. These options can help cut fulfillment costs.
Review social media feedback and performance:
You can utilize social networks as a rich source of customer feedback to guide the creation of products and establish the identity of your brand.
This is how to use social media to perform a viable analysis:
Twitter:
- Analyze how the company responds to support queries.
- Check how they respond to product questions.
- Browse mentions and hashtags to evaluate overall conversations.
Facebook:
- Read the latest reviews. These could help identify weaknesses you could improve upon.
- Use the Pages to Watch feature to monitor how similar pages engage with their audiences.
- You can also see what other brands your fans like by typing “pages liked by people who like [your page name]” in the Graph Search box.
Instagram:
- Check the competitor aesthetics and content calendar. What types of visuals do they use? Are they leveraging new Instagram features such as Reels or Shoppable posts?
- Estimate their engagement levels per post. Is it authentic? What are their comments on the like ratio?
- Are they partnering with influencers? Who are they working with? Why?
Reddit:
- Well-loved brands with devoted fan bases often have their own subreddits where fans engage with each other and the brand. Take a look at these forums to gain insight into audience preferences, needs, and areas where the brand could improve.
- You can also find active and candid discussions about various brands on general subreddits, such as those focusing on skincare or gaming. These threads offer valuable insights into competitor customer sentiment and the factors driving purchasing decisions.
Consider investing in social listening and sentiment analysis tools if your budget allows. Among the most reliable choices are Critical Mention (paid), Social Searcher (free), and Brand Watch (premium). These outside sources might offer insightful information on internet discussions around your company and its rivals.
Use tools and methods for staying aware of competitors:
To organize your competitor research effectively and ensure it’s easily accessible for future reference, consider using the following competitive analysis frameworks:
- Porter’s five forces model.
- Resource-Based View (RBV) framework
- SWOT template
- Perceptual mapping template
Additionally, to maintain continuously updated competitive intelligence, monitor their:
- Stay updated on social media by utilizing features like “Pages to Watch” or by adding competitors to your social media analytics tool.
- Monitor search engine results (SERPs) using tools like Ahrefs and Semrush. These tools help analyze the keywords your competition ranks for and how they build backlinks to their website.
- Track online coverage by setting up Google alerts for their brand name. This way, you’ll be notified when they are mentioned by the media or influencers and understand the context of those mentions.
- You can track website traffic volume and sources using SimilarWeb, which offers free analytics on website traffic and provides an overview of main referrals.
Competitor Analysis Tools:
Which instruments are available for rival analysis?
Evaluation of rivals can be carried out using a variety of methods and resources. You can track rivals with any tool that lets you keep an eye on your brand and others.
A few different types of tools include:
- Social media management tools
- Competitive monitoring and social listening tools
- Keyword tools
- Analytics tools
- AI tools
We’ve compiled a detailed list of various types of competitor analysis tools to help you begin your research:
- Competitor analysis tools for social media
- AI-powered competitor analysis tools
- Competitor analysis tools for SEO
- Competitor analysis tools for content
- Competitor analysis tools for email, ads, and industries
Competitor analysis tools for social media:
Sprout Social:
Social media is a great place to start for evaluating rivals because it’s the most efficient method to interact with customers.
Sprout Social offers insights into the social media performance of rivals from many angles and information sources.
With Sprout’s competing reports, you can assess and improve your social media approach with detailed information from Facebook, Twitter, and Instagram.
With just a click, you can view the posts made by your rivals or assess how your progress matches up against other profiles’ averages—all without laborious computer work or manual research.
Enhance your analytics with Sprout’s Premium Analytics tool, which provides deeper insights into your social platforms. Customize interactive charts and graphs to align with your goals.
Sprout also offers competitive analytics for Instagram, and you can explore further with the Advanced Listening tool. By tapping into public social conversations, you can gauge consumer sentiment toward your competitors’ products and services and analyze your share of voice in your industry.
With access to consumer sentiment, Sprout simplifies the process of identifying opportunities to differentiate your brand from competitors.
Phalanx:
The Instagram engagement calculator provided by Phlanx helps you assess the level of activity among followers of any given account. It’s a great tool for examining the Instagram visibility of your rivals and may be used to assess the legitimacy of an influencer’s fan base.
The number of followers and the regularity with which friends interact with the account’s material by posting comments, liking it, and doing other actions are the two factors that Phalanx uses to determine the involvement rate.
For instance, Trader Joe’s has an engagement rate of 2.56%, which is a reasonable score for a larger brand that maintains consistent posting.
However, when comparing this to brands like Denny’s, renowned for their passionate social following and dedicated fans:
This score isn’t the ultimate measure of a brand’s Instagram presence, but it provides valuable perspective.
Consider Adidas, one of the most followed accounts. While they receive a significant amount of engagement on their posts, it’s relatively low compared to their extensive follower count.
This highlights a crucial aspect of competitive analysis on social media: context matters. While follower counts are noteworthy, engagement is arguably a more significant metric.
Social Blade:
A useful tool for exploring larger brands is Social Blade. It evaluates follower counts on platforms like Twitter, Instagram, and YouTube, among others. While commonly used to gauge the popularity of celebrities and YouTubers, it offers valuable insights for marketers too.
For instance, its Twitter competitor analysis assigns a “grade” based on the average number of retweets and likes. Notably, Social Blade provides daily follower updates and live follower counts.
Another interesting feature is the capability to compare the social presence of different brands side by side.
AI-driven tools for rival examination:
Kompyte:
A market research platform called Kompyte collects rival updates into an easy-to-use display. It compiles news from a range of sources, including open positions, social media, websites, review sites, and more. This makes it effortless to monitor what other brands in your industry are up to online.
Additionally, Kompyte assists in creating sales battle cards based on your competitive insights. These battle cards equip your team with valuable information to help them close sales effectively.
Crayon:
Crayon is an artificial intelligence tool designed to assist with competitor analysis and competitive intelligence. It enables users to create a dashboard that automatically compiles and organizes competitor updates, ensuring brands stay informed about their competitors’ activities. Additionally, Crayon offers collaboration features, allowing teams to work together to manage and monitor competitive insights effectively. Furthermore, Crayon provides capabilities to create sales battle cards, as well as customizable reports and dashboards.
Competitor analysis tools for SEO:
SEMRush:
Between SEO tools, SEMRush stands out thanks to its extensive evaluation of rivals’ functions. You can monitor changes in your rival’s position and obtain the backlinks they have with SEMRush. This function is priceless for learning about your competitors from an SEO strategy alone. Additionally, identifying the keywords targeted by competitors directly informs your content strategy.
Ahrefs:
Another essential competitor analysis tool for SEO is Ahrefs’ Site Explorer. This tool enables you to examine the top organic keywords for any URL. Additionally, you receive an approximate estimate of the amount of traffic a competitor generates from those keywords. It’s also simple to identify a site’s top-performing content based on backlinks rather than shares. This data provides valuable insights into which products or messaging resonates best with a brand’s audience.
MozBar:
Moz’s browser extension, MozBar, offers a quick overview of a website’s authority in the eyes of Google. It uses Moz’s metric of domain authority (DA) to assign sites a score based on their likelihood to rank well in search engines, considering factors like backlinks. A higher DA score indicates better potential for search engine performance.
Displayed on your browser, MozBar allows you to assess a site’s search potential instantly. When activated, it also provides comparisons of competing sites in Google searches. MozBar facilitates passive competitive analysis as you explore competing sites, providing insights into their longevity and backlink acquisition.
Competitor analysis tools for content:
Buzzsumo:
Buzzsumo enables you to explore the top-performing content relevant to your brand and specific competitors. The tool analyzes a piece of content’s engagement on social media platforms and its total shares across the web. This helps identify industry leaders in content creation and potential hot topics to explore for your content. Whether you’re seeking influential figures in your industry or inspiration for a blog post, Buzzsumo offers clear insights and answers.
Similarweb:
Similarweb is an incredibly comprehensive tool for both content and SEO analysis. It allows you to delve deeply into your competitor’s content and analyze the sources of their traffic. Similar web pages let you find exactly where people go after visiting a website and discover the sources of a site’s traffic via referrals.
Feedly:
Feedly is your answer if you’d like to monitor what your rivals are doing without always visiting their websites.
Fodder gathers and organizes information from many different sources, including your rivals, much like a large library. It lets you see what topics your competitors are covering, all in one convenient place.
Competitor analysis tools for emails, ads, and industries:
Mail charts:
Analyzing competitors through email marketing can be seen as one of the more labor-intensive tasks.
Recognizing the challenges of analyzing competitors through email marketing, Mailcharts steps in to make the process easier. By aggregating emails from rival campaigns, Mailcharts provides valuable insights to enhance your email strategy. Beyond just collecting subject lines, it also gathers data on send frequency, allowing you to compare your campaigns with those of your competitors.
Moreover, Mailcharts goes a step further by comparing your email campaigns with their extensive library of marketing emails. This ensures that your strategies align with industry best practices, covering aspects like timing, frequency, and subject line length.
Notably, Mailcharts doesn’t just stop at competitor analysis. Its website offers a wealth of email examples from major campaigns, serving as a source of inspiration for your endeavors. Through an analysis of top-of-the email campaigns, you may learn a great deal about what appeals to people in the present day.
Owletter:
This tool collects emails from your rivals automatically and displays them in a user-friendly dashboard. Owletter’s stats function helps you figure out the best time to send your emails by spotting changes in the number of emails that rivals are sending out and identifying trends. This offers a streamlined, data-driven approach compared to maintaining a dummy email account to monitor your competitors.
iSpionage:
iSpionage is a useful tool if you’re interested in learning about the sponsored advertising tactics used by your rivals. This tool looks closely at a lot of PPC campaign parts, like the amount of keywords a company targets on AdWords. Additionally, it provides insights into the specific PPC keywords your competitors are targeting. You can also identify other competitors vying for PPC ads in a particular niche, along with their projected monthly budgets. For brands venturing into PPC advertising, iSpionage is indispensable for setting realistic expectations regarding ad spend.
Owler:
Finally, this industry analysis tool leverages community data to gather relevant information and content from startups within your niche. It’s particularly useful for larger brands. You can input specific brands to generate a custom dashboard featuring industry names worth monitoring.
(FAQs) about Competitor Analysis:
What is competitor analysis?
The practice of examining the competitors’ methods, benefits, drawbacks, and standing in the market is known as the analysis of rivals.
Why is competitive analysis necessary for business organizations to know?
Businesses may make educated choices to sustain their edge in the market by using analysis of rivals to better understand customer behavior, market trends, and rival strategies.
How should I evaluate those around me?
To recognize rivals, perform comparisons, and use a variety of tools and techniques to evaluate rivals’ offerings, costs, promotions, and feedback from customers.
Which resources can I utilize to analyze my rivals?
The likes of Buzz Sumo, Owletter, SEMRush, Ahrefs, Buzzsumo, Espionage, and others are common instruments for analyzing rivals.
In what ways may the rival’s analysis help my company?
Businesses can find possibilities, enhance their offerings and tactics, measure their success, and lessen market risks by analyzing rivals.
How frequently should I study rivals?
Regular competition analysis—quarterly or every two years, for example—is advised to keep abreast of market developments and rival tactics.