What is a Competitive Analysis?
A competitive analysis is the process of identifying your competitors and evaluating their strategies to determine their strengths and weaknesses relative to your own business, product, and service. The goal of the competitive analysis is to gather the intelligence necessary to find a line of attack and develop your go-to-market strategy.
Why competitive analysis matters for ecommerce?
The main reason this activity is important is because you can’t effectively compete without knowing your direct competitors—and you can’t differentiate yourself if you don’t know what actually makes you different.
For ecommerce businesses in particular, a competitive analysis can also help:
Make more informed decisions about your marketing strategy
- Identify industry trends
- Create benchmarks for yourself
- Determine your pricing strategies
- Unearth new ways of speaking to customers, or even new customers to speak to
- Finding a gap in the market, but also ensuring there’s a “market in the gap”
This type of analysis is not just for first-time business owners, either. A competitive analysis can be a living document that’s constantly evolving as your company grows and matures over time.
Maintaining a resource like this is a powerful way to measure how your brand stacks up against the competition right now—but it also can help provide clear direction on how you’ll continue to excel in the future.
How to conduct a competitive analysis?
Now that we have our list of competitors, it’s time to start the actual competitive analysis. Not all of these steps will be useful or relevant to you, but each one should at least be explored.
Each step is broken down so that you’ll get a description, how to conduct this part of a competitive analysis, and then some guiding questions or ideas to lead the analysis.
When you’ve got all the data together, you can then start comparing yourself in a useful way to your competitors and discover areas to improve, as well as how your rivals might start taking business from you.
It’s a good idea to build out a spreadsheet where you can keep all this info in one place. Consider setting up multiple tables, one for your main direct competitors, one for your main indirect competitors, and then a list of any competitors you want to keep an eye on. The third spreadsheet will end up being quite extensive, but use it more as an index and data resource than something you check and update regularly.