eCommerce Checklist – Analyzing the Competition
The Problem/Opportunity
Ignoring the competition is one of the biggest mistakes any business owner can make. Whether you like it or not, competitors will affect your business prospects. In developing your business plan, it is important to take a closer look at the players to see how they might affect your position in the marketplace. Luckily, when it comes to ecommerce there are numerous tools to help you assess information about the competition.
The Solution:
An analysis of the competition helps you get insight into your market area so you can better formulate strategies that increase your chances for success.
- Identify your competitors
Competitors come in three different types: Direct, Indirect and Future Competitors.
a. Direct competitors are your immediate rivals in terms of product or service offering. Find seven competitors of this type and conduct an in-depth analysis of 3-5 of them.
b. Indirect competitors are businesses that offer alternatives to your products/services. For example, if you sell fitness equipment that promotes weight loss, your indirect competitors can come in the form of products like diet pills to services like gym memberships. Analyze 2-3 indirect competitors.
c. As the term suggests, future competitors are potential rivals in the market arena that you are entering. They can be brick-and-mortar businesses that decide to offer products and services online, or indirect competitors that decide to expand their offerings. Analyze 2-3 competitors of this type.
- Find your competitors
Search for top competitors on the first 3 pages of Google search results. What keywords are they using? What is their unique selling proposition (USP)? What are their marketing messages? Read their “About” pages. What are they claiming to be good at? Set up a Google news alert on your competitors and gather as much information as you can.
- Do a SWOT Analysis
An analysis of competitors’ strengths, weakness, opportunities and threats can tell you a lot about the market and how you may want to enter it. What’s the competitive advantage of these companies? What are their possible weaknesses? An analysis of a competitor’s weakness not only reveals pitfalls you can avoid, it can uncover some genuine opportunities you might want to pursue. Next, do a SWOT for your own business. Compare and contrast similarities and differences.
- Write a convincing position statement
Once you’ve studied your competitors, the next step is to focus on your competitive position. Your analysis of the competition will help you in defining the essential factors that set you apart from your competitors. Define your competitive advantage clearly to convey how you will carry out your plans and why they will work.
- Evaluate Your eCommerce Store
Review and compare your website’s design and features based on your observations of other sites. What do you have in common with them? What can you do to distinguish your store? While it’s good to follow some general best practices, don’t copy everything, since what works for them may not work for you. You’ll want to differentiate so you don’t become a “me too” entity.
In The Long Run:
A SWOT analysis helps you to take a peek into what works and what doesn’t in the industry based on competitor performance. It will also help you develop assets or skills that your competitors do not have, giving you a unique and enduring competitive advantage. This isn’t a one-time only exercise. To continually evolve and improve as the industry changes, periodically review, analyze and assess the competition to keep from becoming irrelevant. You’d better believe the competition is analyzing you, too! Stay sharp.
Getting to “eCommerce heaven” is a marathon, not a sprint – but you can get better every week.
By: Shirley Tan
eCommerce Weekly Checklist: Analyzing the Competition
