This article explores what is the definition of a competitive analysis, why it’s so important to e-commerce businesses, and how to conduct one, step by step. Plus, we’ve included a free competitor analysis template to help you on your way.
Competitor analysis – why is it important?
With online shoppers accustomed to navigating multiple web stores at the click of a button, it can be a huge challenge to win their attention. No matter how specialized or niche the product your e-commerce business is selling it will always be competing with the hundreds (if not thousands) of similar e-tailers the web has to offer. And every one of these online competitors is a threat to your profitability. In fact, 90% of Fortune 500 companies utilize competitive intelligence to gain an edge1 with research showing it can accelerate decision-making by up to five times.
Conducting a thorough competitor analysis should be a crucial part of your business strategy. By proactively understanding your competitors, you can anticipate their moves and stay one step ahead, and a successful competitor analysis will help your business:
- Learn best practices to market and sell more effectively
- Identify gaps in the market where customer demand is not being met – demand you can develop your e-commerce business to meet
- Uncover market trends that can influence your business strategies moving forward
All of which means more sales for your business!
What to cover in a competitive analysis
A comprehensive competitive analysis should examine each of the following elements for competitors, allowing you to identify their strengths and weaknesses in relation to your business:
- Primary offering: What products or services do your competitors offer? How does it overlap with your e-commerce business?
- Target market: Who are your competitors' ideal customers? Are they exactly the same as yours? Is there any customer segment you (or both of you) are missing out on?
- Pricing: How do your competitors’ prices compare to yours? If their price offering is more than your business but still turning a profit, what value-adds are customers paying for that your e-commerce business could be offering too?
- Positioning: How do competitors position themselves in the market? How can you better differentiate your brand and stake your own unique claim?
- Current and projected market share, sales, and revenues: What is their current market presence, and where are they headed? How does this compare to your own projections? How might their growth (or stagnation, or shrinkage) impact you?
How to conduct a competitor analysis – step-by-step guide
1. Identify your competitors
Successful competitor comparison comes down to research. First stop: Google.
Try Googling different keywords related to your product or service and look at the first three or four website results. In Google's world, page ranking is everything, so the e-commerce businesses and brands who have landed one of these golden top spots are your biggest competition for new customers.
Identify both your direct competitors (those offering similar products or services to the same target market) and indirect competitors (those offering different products or services that could satisfy the same customer need). This will help your e-commerce business understand the full spectrum of competition you face.
2. Analyze your business’s market positioning
Once you’ve identified your competitors, evaluate how they position their brands and their current market share:
● What are these competitors offering?
● Who are their target customers?
● Where are there overlaps with your business?
Analyze their messaging, brand voice, and target audience to understand their unique selling proposition and how they differentiate themselves in the market.
3. Product comparison
Conduct a detailed competitor comparison by examining every aspect of their products or services. Compare everything including features, pricing, ease of use, design, and pre- and post-sales support:
● What are their strengths? Does their product have a USP that gives it a competitive edge?
● What are their weaknesses? Where can you improve on their offering?
● How are their products priced? Are they selling something similar to you but for much less? or are they offering a more premium price that you can safely undercut?
● What delivery options do they offer? Is free delivery an option? You may be surprised at how significant this is. In a recent consumer survey, 35% of e-commerce shoppers ranked the cost of delivery as the number one feature they look out for when online shopping(2). Efficient and affordable shipping can be a key differentiator in the e-commerce world, especially for businesses looking to expand globally. Consider how DHL Express' extensive international network and range of shipping options could give you a competitive edge.
Identify areas where you can outperform your competitors and capitalize on their weaknesses.
4. Marketing strategy analysis
Delve into your competitors' marketing strategies:
● What social media presence do they have?
● Do they have an omnichannel strategy driving traffic to their website?
● How do they promote themselves on social? Do they vary their strategy based on the platform used?
Take a scroll through their channel selection, content strategies, brand voice, and the stories they tell. Understanding their approach can inspire your own marketing efforts and help you identify untapped channels or opportunities for differentiation.
5. Conduct a SWOT analysis
Eventually you’ll need to compare your findings with your own e-commerce business to see how you measure up – what you’re doing well, and where you need to up your game.
A SWOT analysis provides a structured framework to help you do just that. By evaluating your Strengths, Weaknesses, Opportunities, and Threats in relation to your competitors, you can develop a strategic roadmap for success:
● Strengths: Where does your business have an advantage over your competitors? These are the things you need to exploit!
● Weaknesses: What are the areas that require improvement and investment?
● Opportunities: Where is each competitor weak – and are those places an opportunity for your business to grow? Are there opportunities competitors have identified? How can you reach new customers and increase your market share?
● Threats: Are there new trends emerging? What are the external factors that threaten your profitability and how can you mitigate them?
By the end of your analysis you should be able to establish priorities for action which you can integrate into your e-commerce business strategy going forward.
Competitor analysis tools
Google browsing aside, to really understand your online competitors you’ll have to take a deeper dive into their performance analytics. Luckily, there are plenty of competitive analysis tools to help, which will allow you to improve your SERPs (Search Engine Results Pages) position.
Free tools
Google search
An analysis by SEO specialist Backlinko3 found the top result in Google’s organic search results has an average Click Through Rate of 31.7%4 , however only 0.78% of searchers clicked on something from the wilderness of the second page. To your business’s advantage, there is a whole SEO-focused industry dedicated to helping e-commerce businesses land a prized position at the top of the first page.
Customer reviews
A good way to understand a brand’s success is learning its customers’ motivations. Browsing on customer review websites such as Trustpilot5 means you can monitor the conversations around your competitors’ businesses. What do they like about the product? What are the pain points? You can use these insights to improve or adapt your product. Similarly, Talkwalker’s Quick Search6 is worth a look too. The social search engine scans social networks, news sites, blogs and forums to find customers’ opinions and trends in real-time.
Google trends
Google Trends7 is vital to keeping a finger on the pulse of your industry. By tracking search trends and keyword popularity over time, you can identify emerging customer interests and adapt your strategies accordingly. Are there new product categories gaining traction? Are there specific features or benefits customers are increasingly searching for? Google Trends can provide valuable clues.
Freemium tools
Ahrefs
Ahrefs8 is a powerful SEO tool that provides a comprehensive view of your competitors' backlink profiles, organic search traffic, and keyword rankings. Uncover their most valuable backlinks, identify content that drives significant organic traffic, and discover the keywords they are targeting to rank high in search results. Armed with this knowledge, you can refine your own SEO strategy and content marketing efforts to compete more effectively.
SEMrush
SEMrush9 is an all-in-one digital marketing suite, impressive due to the sheer scale of data it can source. SEMrush’s software analyzes SEO, PPC (pay-per-click) advertising, keyword research, social media and content – to name just a few. You can tailor the tool to your specific needs, whether that is identifying competitors’ highest-ranking keywords, their strategies and budgets, or their best-performing product ads.
SpyFu
SpyFu10 is a search tool that will show you competitor comparison keywords and what terms these sites have invested in on Google AdWords, alongside every ad test run. It reveals the keywords that are being ranked, so you can work backwards to see which backlinks and content are bringing them the ranking, and use those findings to influence your advertising.
BuiltWith
With a database of 42,237+ web technologies and over a quarter of a billion websites, this business intelligence tool will show you which technologies your competitors are using on their websites – such as shopping carts – and how they are performing. So, if you're building an e-commerce website for the first time, these insights will serve as a best practice guide. BuiltWith11 will also provide you with competitor sales intelligence and analytics reports to help inform your e-commerce business of its competitors and identify key market segments that your brand may be missing out on.
SimilarWeb
A market intelligence tool regularly used by DHL Express to help e-commerce businesses identify and qualify new customers. SimilarWeb’s12 in-depth analytics reports will give you an overview of your competitors’ performance to benchmark against, including their online strategies, website visitor numbers (and bounce rate), consumer intent and customers’ demographic makeup.
Paid tools
Hootsuite
Hootsuite13 allows you to monitor and analyze your competitors' social media activities across various platforms. This tool can track their posting frequency, engagement levels, and audience sentiment. Using this information can help your e-commerce business identify successful social media tactics and develop strategies to connect with your target audience.
Market research reports (e.g. Euromonitor, Statista)
For in-depth industry analysis and market trends, consider investing in market research reports from reputable providers like Euromonitor14or Statista15. These reports offer comprehensive data on market size, growth projections, consumer behavior, and competitive landscape. Research tools can be a valuable resource for understanding the broader context in which your e-commerce business operates and help to identify potential opportunities or threats.
DHL Express
Utilize the unrivaled industry knowledge of DHL Express. In addition to its global shipping expertise, DHL Express offers valuable insights and tools for e-commerce businesses looking to sell to markets where your competitors aren’t. DHL Express’s E-commerce Health Check will analyze your business in a few simple steps and identify opportunities where it can grow its exports.
DHL Express can also help you implement checkout options that are proven to reduce cart abandonment rates such as Express delivery or international currency options, for that competitive edge.
Apply for a DHL Express business international account to help your e-commerce business reach its full potential.
Competitive analysis example
Let's consider this example: You run an e-commerce store selling handcrafted jewelry. Your direct competitors include other online jewelry stores targeting a similar audience. Your indirect competitors could be brick-and-mortar jewelry stores or even fashion retailers offering jewelry as part of their product line.
By conducting a competitive analysis, it might reveal your direct competitors are heavily investing in social media advertising, particularly on Instagram. You could also notice they offer free shipping on all orders, which seems to be a major draw for customers.Conversely, you realize that your unique selling proposition lies in your commitment to sustainability and ethical sourcing, which isn't emphasized by your competitors.
Using a SWOT analysis, can help to identify your strengths (unique designs, sustainable practices), weaknesses (limited marketing budget), opportunities (growing demand for sustainable products), and threats (increasing competition from larger retailers).
Based on this example, you decide to focus your marketing efforts on highlighting your sustainability initiatives, explore partnerships with influencers, and leverage DHL Express’ international shipping expertise to expand your reach to new markets.
Take action: download your free competitor analysis template
Understanding how to conduct a competitive analysis is crucial for any e-commerce business looking to thrive in today's evolving landscape. Identifying your competitors, and opportunities means your e-commerce business can develop effective strategies to gain a competitive advantage.
Download your FREE competitive analysis template here and start to get a lead on your competition!
Remember, knowledge is power, and a well-informed business is a successful business.
1. Evalueserve
3. Backlinko
4. Backlinko
5. Trustpilot
6. Quicksearch
8. Ahrefs
9. SEMrush
10. SpyFu
11. Builtwith
12. Similarweb
13. Hootesuite
14. Euromonitor
15. Statista
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