What is a competitive analysis and how to conduct it (with examples & free template)

This article explores why competitor analysis is so important to e-commerce businesses, and how to perform 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 flipping between multiple web stores at the click of a button, it can be a huge challenge to win their attention. No matter how specialised or niche the product you’re selling may be, you’ll 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.

Conducting a thorough competitor analysis should be a crucial part of your business strategy. In fact, most Fortune 500 companies have been reported to leverage competitive intelligence to gain an advantage1. 

A successful competitor analysis will help you:

• 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 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 competitor analysis should delve into various aspects of your competitors' businesses to provide a holistic view of their operations and strategies. Here are some key areas to consider:

• Target audience: Identify the specific customer segments your competitors are targeting. Understand their demographics, psychographics, and buying behaviours. This will help you identify potential overlaps and opportunities to differentiate your offerings.

• Products and services: Analyse your competitors' product portfolios and service offerings. Compare their features, pricing, and value propositions to your own. Identify any gaps in the market that you could potentially fill.

• Marketing strategies: Evaluate your competitors' marketing channels and tactics. Analyse their website design, content marketing efforts, social media presence, and advertising campaigns. Identify best practices and areas where you can improve your own marketing strategies.

• Pricing: Compare your pricing strategy to your competitors'. Are you offering competitive prices? Are there opportunities to adjust your pricing to gain a competitive advantage?

• Strengths and weaknesses: Conduct a SWOT analysis to identify your competitors' strengths and weaknesses. This will help you understand their competitive advantages and potential vulnerabilities.

• Differentiators: What sets your competitors apart from the competition? Identify their unique selling propositions (USPs) and how they position themselves in the market. This will help you develop your own differentiation strategy.

Thoroughly examining these areas can grant you valuable insights into your competitors' strategies, helping you identify opportunities to improve your own business performance.

How to conduct a competitor analysis – a step-by-step guide

1. Identify Your Competitors

Before diving into analysis, you need to know who you're up against. There are two main types of competitors to consider:

• Direct competitors: These are businesses offering products or services similar to yours, targeting the same customer base. Think of them as your rivals in the same lane. For example, if you sell handmade jewellery online, your direct competitors would be other online retailers selling similar jewellery pieces.

• Indirect competitors: These businesses might offer different products or services, but they still fulfil the same customer needs. They might not be your direct rivals, but they can still influence your market share. For example, if you sell handmade jewellery, an indirect competitor could be a clothing boutique that also sells fashion accessories, or even an online marketplace like Etsy where customers can find a variety of handmade goods.

2. Analyse Market Positioning

Once you've identified your key competitors, it's crucial to understand how they position themselves in the market. This involves analysing their brand messaging, marketing materials, and overall value proposition.

• What image are they projecting? Are they positioning themselves as the budget-friendly option, the premium choice, or the innovative disruptor?

• Who is their target audience? Do they cater to a specific niche or a broader market?

• What are their key messages? What benefits do they emphasise in their marketing?

By understanding your competitors' market positioning, you can identify opportunities to differentiate your own brand and carve out a unique space in the market.

3. Product Comparison

Now it's time to take a closer look at your competitors' products or services.

• What features do they offer? How do their offerings compare to yours in terms of functionality, quality, and price?

• What are their strengths and weaknesses? Are there any areas where they excel or fall short?

• What delivery options do they offer? Delivery speed and convenience can be a significant factor for online shoppers.

Don't just focus on the products themselves. Also, consider the customer experience they offer. How easy is it to navigate their website? How responsive is their customer service?

4. Synthesise Everything with a SWOT Analysis

Once you've gathered information about your competitors, it's time to synthesise your findings with a SWOT analysis:

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 can your business grow? How can you reach new customers and increase your market share? THREATS – what are the external factors that threaten your profitability and how can you mitigate them?

Competitor analysis tools

To gain a deeper understanding of your competitors, you can leverage various tools that provide valuable insights into their online presence, marketing strategies, and overall performance. Here are some options to consider:

Free tools

Google search

The easiest place to start is with a good old-fashioned browse on the search-engine. 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 brands who have landed one of these golden top spots are your biggest competition for new customers’ business.  

Customer reviews

Browsing on customer review websites such as Trustpilot2 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 Search3 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 trends4

Google Trends is a valuable resource for understanding trending keywords and topics within your industry. By analysing search trends, you can gain insights into evolving customer interests, identify potential content gaps, and stay ahead of emerging market trends. This can inform your content strategy and product development efforts. 

Freemium tools

Ahrefs5

Ahrefs is a powerful SEO tool that provides a wealth of data on your competitors' backlink profiles, keyword rankings, and content performance. Use it to identify high-quality backlink opportunities, uncover content gaps, and gain a deeper understanding of your competitors' SEO strategies. This information can help you improve your own website's organic search visibility and drive more traffic. 

SEMrush6

Similar to Ahrefs, SEMrush is an all-in-one digital marketing suite, impressive due to the sheer scale of data it can source. SEMrush’s software analyses 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 listing ads.

SpyFu7

SpyFu is a search tool that will show you competitor analysis keywords and what terms these sites have invested in on Google AdWords, alongside every ad test they’ve run. It reveals the keywords they’re ranking for, so you can work backwards to see which of their backlinks and content are bringing them the ranking, and use those findings to influence your advertising. It's sneaky, but that's half the fun! 

BuiltWith8

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’re performing. So, if you're building an e-commerce website for the first time, these insights will serve as a best practice guide. And that’s not all. BuiltWith will also provide you with competitor sales intelligence and analytics reports. You can use these insights to build lists of your competitors and identify key market segments that your brand may be missing out on.

SimilarWeb9

A market intelligence tool regularly used by DHL Express to help e-commerce businesses identify and qualify new customers. SimilarWeb’s 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

Hootsuite10

Hootsuite is a social media management platform that offers a range of features for competitor analysis. It allows you to track your competitors' social media activity across multiple platforms, analyse their content performance, and identify trending hashtags. Use Hootsuite to monitor your competitors' social media strategies, identify best practices, and find opportunities to engage with their audience.

Market Research Reports

Market research reports from providers like Euromonitor11 and Statista12 offer in-depth analysis of specific industries and markets. These reports can provide valuable insights into market trends, competitor landscapes, and consumer behaviour. Use them to gain a deeper understanding of your industry, identify potential opportunities and threats, and inform your business strategies.

DHL Express

Last, but by no means least, is the unrivalled industry knowledge of DHL. As experts in shipping internationally, we can help your e-commerce business sell to markets where your competitors aren’t. Our E-commerce Health Check will analyse your business in a few simple steps and identify opportunities where it can grow its exports. Get started now!

We can also help you implement checkout options that are proven to improve sales13 – such as Express delivery or international currency options. Don’t let a potential customer choose a competitor’s product over yours just because theirs would arrive quicker!

Competitive analysis example

Let's say you're running an online store that sells artisan coffee beans. Here's how you can get the inside scoop on your competition:

1. Identify your competitors

First things first, who are you up against? Jump on Google and search for keywords like ‘artisan coffee beans’ or ‘specialty coffee online’. The top results? Those are likely to be your direct competitors – the ones vying for the same caffeine-loving customers as you.

But don't forget about your indirect competitors. These could be local cafes, supermarkets with their own coffee selections, or even online tea retailers offering a caffeine fix of a different kind.

2. Analyse market positioning

Now, put on your detective hat and delve into how your competitors present themselves. Are they all about that ethically sourced, single-origin buzz? Or are they the go-to for budget-friendly blends?

Tools like SimilarWeb can give you the lowdown on their website traffic and audience demographics, helping you understand who they're targeting and how.

3. Product comparison

Time for a coffee tasting! (Well, not literally.) Compare your coffee beans to your competitors'. What varieties do they offer? How does their pricing stack up? And what about those all-important delivery options?

Check out customer reviews on Trustpilot to see what people are saying. Are there any grumbles about slow shipping or broken packaging? This is where DHL Express can help you shine – with speedy, reliable delivery and top-notch customer service.

4. Synthesise everything with a SWOT analysis

Gather all your intel and create a SWOT analysis for each competitor. What are their strengths and weaknesses? Are there any opportunities they're missing out on? Tools like Ahrefs can help you dig deeper into their website traffic and SEO performance.

By following these steps, you'll have a clear picture of your competitive landscape, allowing you to brew up a winning strategy for your own coffee business.

Take action: Download your free competitor analysis template

Ready to put your competitor analysis skills to the test? Download our free template below to streamline your research and gain valuable insights into your rivals' strategies.

This template provides a structured framework for gathering information about your competitors, enabling you to identify opportunities and threats.

DHL Express offers a range of solutions to support your e-commerce business, from international shipping to expert advice. Sign up for a DHL Express Business Account today.