What Is a Competitive Analysis and How Do You Conduct One?
What Is a Business Competitive Analysis?
A business competitive analysis is the comparison of competitor strategies against your own. When you start a Shopify store, evaluating the strengths and weaknesses of your competitors finds potential advantages and guides you in ways to grow. A competitive analysis both acknowledges a business’ current barriers, and allows for plans for overcoming them. Ultimately, a comparison like this can guide marketing, product pricing, and distribution tactics.
What Goes Into Competitive Analysis?
Competitive analyses are pretty straightforward, but can vary based on industry and the company itself. Competitive analyses may be more specific to certain aspects — say just your competitor’s landing pages or product pages — or comprehensive. It all depends on what you’re trying to learn and where you’re hoping to improve.
One major element of a competitive analysis is marketing. It includes looking at the target demographic, unique value proposition, sales materials, discounts, promotions, shipping policies, and funding. Another is design. The design aspect of a competitive analysis looks at web layout, UI/UX, copywriting, social media, content marketing, email campaigns, and even customer reviews.
Why Competitive Analysis Is Necessary For E-Commerce Businesses
The importance of a competitive analysis is simple: you cannot compete against your competitors if you do not know who they are. Moreover, it’s especially hard to win out against the competition if you don’t know their strengths. A competitive analysis allows you to differentiate your business from other e-commerce stores by identifying what makes other stores stand out. It’s a chance to improve your company in areas where you’re currently falling short — while also taking advantage of competitors’ pitfalls.
With the help of a competitive analysis, your business can benefit from better-informed marketing decisions, spurred creativity, identified industry trends, and more. Your company's growth will affect how an analysis functions, so changes in size and scale should be accompanied with fresh competitive analyses.
How to Perform a Competitive Analysis
In order to perform a competitive analysis, select up to ten competitors. Be varied in your approach, choosing some companies that sell similar products, some with a similar marketing premise, some with alike demographics, and some both new and old.
From there, begin documenting criteria in a compare-and-contrast format. Organise prices, products, advertising efforts, lead generation, social media platforms used, social media engagement rates, offers and promos, and anything industry-specific that feels like it needs including.
There are three types of competitors, and they can be determined by level. Direct competitors sell the same type of product to the same audience. Indirect competitors sell to the same audience, but sell a higher or lower-end version of the product. Tertiary competitors also sell to the same audience, but sell different products. Tertiary competitors are unique in that analysing them shows how they can be potential partners or future competitors should they decide to expand their product line.
Once you’ve gathered your list, you’ll want to identify competitors positioning and competitive advantages. Their positioning relates to how they display themselves as a brand; think tone, voice, values, story, and supported social efforts. Their competitive advantages would be what customers value most about their brand and what makes their selling proposition unique. It can be helpful to read competitors’ reviews to see what they praise the most for this section.
Marketing is the next thing to analyse. See what your competitors are promoting, how they distribute online content, and how they market on a grand scale. This is a more hands-on process, and may involve following them on social media, subscribing to their email list, or even purchasing their product.
Lastly, you’ll want to use the information gathered to perform a SWOT analysis on your business. SWOT stands for strengths, weaknesses, opportunities, and threats. The strengths and weaknesses tend to focus on the present positives of your company. Opportunities and threats focus on competitors’ current and future strengths, which you should lean into as areas of improvement.
Going Beyond a Competitive Analysis
While a competitive analysis is helpful, don’t think visiting these topics is a one-time thing! Competitive analyses are not all-inclusive; you’ll need to revisit them as either your business or your competitors evolve. Keep in mind that you shouldn’t just gather numbers either. This information should spur action, allowing you to execute from unique e-commerce angles backed by data support. Study these numbers over time, account for seasonal changes, and modify quantifiable factors as industry trends change. Most of all, try your best to avoid confirmation bias. It’s not how you think competitors stack up; data should do all of the talking.
Full Fat Commerce’s Marketing Know-How
Competitive analyses can be more complicated than they seem, but there’s no need to go at your next one alone. At Full Fat Commerce, we help scaling brands revise their sites and marketing presence for optimal conversion. Our growth partnerships allow successful businesses to gain momentum faster than they imagined, achieving better customer satisfaction alongside heightened sales. Put your company first by getting in touch with our team of Shopify Plus experts today!