Just like before opening a brick-and-mortar store, if you want to succeed in the ever-growing online market, you need to know who you will be competing with when you open a webshop. Statistics show that more than 2 billion people bought something online in 2020, and eCommerce stores made more than $4.2 trillion. This shows that there is a lot of buying power around the world and a large number of customers you can try to get. An eCommerce competitor analysis is the best way to learn about your competitors on the market.
Since the eCommerce market is always changing and new online stores open every day, this shouldn’t be a one-time thing. Doing an eCommerce competitor analysis on a regular basis is the best way to compare your business to your competitors and find ways to improve it. This article will help you figure out where to start and how to best look at your eCommerce competition.
What does eCommerce competitor analysis mean?
Competitor analysis in eCommerce is pretty much the same as any other kind of competitor analysis, which means judging your competitors based on a number of factors. The most common type of analysis is figuring out how much of the market your competitors have, what products they have, and what their strengths and weaknesses are. This can be taken even further to include things like sales channels, marketing strategies, tone of voice, and so on. Also, you can choose to focus on just one area. For example, when comparing your social media presence to that of your competitors, you can only look at their social media strengths and weaknesses.
Why is it important for your business to look at your eCommerce competitors?
ECommerce competitor analysis helps you learn about your competitors and gives you an idea of who you are up against for the attention of customers. By doing your research, you can avoid making mistakes that will cost you a lot of money and make your business stand out. This way, you can find the quickest way to success and the places where you can be different from your competitors and do better. There are some examples of people who did well on the eCommerce market by analyzing their competitors and finding their niche.
How to look at your competitors in eCommerce?
As we mentioned above, there are many ways to look at your competition. In this section, we’ll look at a top-line approach that most eCommerce businesses, no matter what niche they’re in, can use to their advantage.
Find out who your competitors are.
The first step is to figure out who your competitors are. This might seem easy, but you need to think about your choices all the way through to make sure you’re comparing yourself to the right businesses. When figuring out who your competitors are, you need to think about the people you want to reach and the businesses you need or want to beat to get the attention of that audience.
Figure out who your competitors are.
You should start by putting your competitors in order based on different aspects of their business. This will help you figure out who your main, secondary, and even tertiary competitors are. This will let you learn more about your direct competitors and keep an eye on the market as a whole. To finish the ranking, you must define what you mean by “primary,” “secondary,” and “tertiary” competitors. You should use the following definitions:
- First, those who sell similar products in the same niche;
- Secondary: Those with a medium overlap of products and niches, so they either compete in the same niche with different products or with similar products in a different niche;
- Tertiary customers are those who have the least in common with your business.
In the end, you should pay attention to your main and secondary competitors and learn more about how they do business. When you want to grow your business even more, your third and fourth competitors can become interesting. Now let’s look at how you can sort your customers into these three groups.
When doing an eCommerce competitor analysis, there are a few things to look at.
Once you’ve decided on the three groups you want to put your competitors in, here are the things you need to look at to judge them:
- Size and sales: you should only pay attention to businesses that are making money.
- Recognition and market share: if you want your business to grow, you should look at the biggest and most well-known players on the market.
- Targeted niche: The more your target audience overlaps, the more likely it is that you will have to watch out for a competitor;
- Again, you should keep an eye on how your competitors market products that are similar to the ones you sell.
- Price points: You should base your advertising on competitors who have prices that are similar to yours.
Now that you’ve put each competitor in order based on the above criteria, it’s clear who your direct competitors are and who are only secondary or tertiary ones.
Find out what your competitors do best and what they do worst.
When doing an eCommerce competitor analysis, the next step is to figure out what your competitors do well and what they could do better. You can do this by thinking like your customers and making a list of at least five strengths and weaknesses for each. Think about what your audience would like and what they wouldn’t like. You can also use a strategic planning tool called the SWOT analysis to help you evaluate this. SWOT is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats. It can give you a lot of great information. You can also make a list of the things you want in an eCommerce setting by answering the questions below:
- What do your competitors’ online stores do well and where do they fall short?
- What are the good things about their social media presence and what are the bad things?
- How do your competitors show off their products on social media and on their websites?
- What do they think about SEO, and how do they do with it?
- How strong is their copy when you take into account the tone of voice, the structure of the headlines, the flow and structure of the page content, and the CTAs?
Make sure your products are always on hand.
When you do an eCommerce competitor analysis, it’s also important to look at how many products are available on the webshops of your competitors. If a product on your website is out of stock, you will lose a sale to a competitor. So, if you run an eCommerce business, having products available is very important. If you run out of an item and won’t be able to get more for at least a couple of days, make sure you link it to other items in your store that are similar. This way, even if a product is out of stock, you might still be able to sell it.
Review and rating of customers
When a customer wants to buy something online, reviews of the product and the seller will have a big impact on their decision. Before buying from you for the first time, make sure your potential customers read the reviews they can find online. When doing an eCommerce competitor analysis, reading online reviews can give you a good idea of how good your competitors’ products and services are. Their online store and products might look great and have high-quality pictures, but the truth is always in what customers say. By reading these, you can get a good idea of how good the products are and where you might be able to beat the competition. If a competitor has a lot of bad reviews, especially if it’s the main one, you have a great chance to win their customers over by just giving them a better service or product.
Service to customers
Customer service should be your top priority when you’re running an eCommerce store, because you want to not only get people’s attention once, but also get them to come back and become loyal customers. If you look at how an eCommerce business handles bad reviews and feedback, you can learn a lot about how they treat their customers. Also, check to see if they have FAQ pages and all the information potential customers might need. Having a chat feature for customers on their website can also be a plus. If you want to learn more about how they handle customer service, you should also learn how to deal with unhappy customers and make a plan that will help you do better in this area than your competitors.
Plan, keep track, and get better.
When you are done looking at your eCommerce competitor analysis, it is time to start your business or make it better. As we’ve already said, you can’t just do a competitor analysis once. You always need to keep an eye on your competition, so it’s best to do it again and again. Keep comparing your results to those of your competitors to make sure you’re on the right track or figure out where you can improve. Also, if you keep an eye on what your competitors are doing, you might find ways to beat them and even get their customers to come to your store instead.
To sum up
No matter what market your business is in, you need to do a competitor analysis to be successful. So, don’t waste any time and find out where you can grow or where you can do better than your competitors. If you find them, make sure to use them and look for other ways to grow your business even more.