Carrying out a competitor analysis for ecommerce that works properly and generates the expected results requires an in-depth study of the main factors that impact on the performance, revenue and image of any online store: competition, markets, sector and product offerings.
The evolution and constant changes in the ecommerce world are a reality. So any retailer who is considering the growth of their online business and wants to maximize their revenues and conversions for the future, can not ignore the importance of the competitor analysis for ecommerce we mentioned earlier.
Determine the positioning of your online store with a competitor analysis for ecommerce
Before getting started with your competitor analysis for ecommerce, it is necessary to establish in a clear and detailed way what are the characteristics of the sector and see how the specific ecommerce business fits into it.
There are certain points that should be considered at this point in the analysis:
- Target audience or customer profile: It is essential to have a profile of the customer who will purchase the items and know what they are looking for and expect from their purchase, as well as the attention and experience they want to receive from the online store.
- Determining product range: What field does the store belong to? Will it specialize in a single vertical or in several within the same sector? It is interesting to have this clear from the beginning and over time weigh whether you want to continue adding verticals.
- Type of product, catalog coverage: Product analysis is very relevant, as it will define whether it is a business with an offer of specialised products or of a more general type.
- Differential elements: It is very important to be clear on what will make the online store different to its competitors. Will it be a purely competitive strategy or will additional tactics be developed to attract the target audience?
Competitor analysis as a fundamental strategic element
Analyzing the competition is a fundamental aspect and on which any good ecommerce strategy is based. There are certain steps that cannot be omitted at this stage.
- The use of platforms such as Google Shopping and Amazon to quickly detect major competitors in the sector. It will be easy to establish which stores in the search results can be considered direct competitors, as they will share a business model and catalog similar to your online store.
- Of all the rivals you’ve encountered, you’ll have to divide them by those who have a strategy similar to yours or the one you’d like to develop, and those who are industry leaders and have a different strategy.
- With this first list, you can create a spreadsheet that includes competitor information regarding names, websites, strengths and weaknesses, social media, appearance on platforms such as Shopping and Amazon, customer reviews, etc.
With all this information, the next step would be to classify the analysed rivals in one of the following two areas:
They target the same customer and have the same types of items in their catalog.
They offer a similar type of product, but in its low or high price version.
Price as a decisive factor in the purchasing process
Price is a central factor in competitive analysis and can be used as a lever to improve the competitive advantage of any online store and increase store conversions.
It could be said that 60% of users who buy online base their purchasing decisions on price. This is why it is so important to monitor the activity of rival stores to detect changes and patterns in their pricing.
Detect opportunities and threats through market analysis
Daily monitoring of the positioning of the most direct competitors provides relevant data about the state of the market, as well as the opportunities and risks arising from their strategic changes. For this reason, it is worth having certain critical aspects under control:
- Competitive price history: have rival stores made recurring price changes at specific times? Is there a recurring downward price trend? Answering these and other questions can help detect patterns and anticipate rivals’ movements.
- Stock status: the stock status can be used as a lever for maximizing conversions and widening margins. Consumers have a certain sense of urgency, so they will always shop in those stores that can deliver more immediately the product they want to buy.
- Positioning or PI against rivals: it is extremely important to know if you are aligned with the competition.
- Minimum margins: profit margins should never be put at risk.
Develop and reinforce your ecommerce strategy through ecommerce pricing engines
As can be extracted from all of the above, a competitor analysis for ecommerce is an indispensable tool in the strategy of any online business, as this study will lay the foundations to make business decisions. Such decisions and strategy changes will have a great impact on the performance and profitability of the online store, especially in terms of pricing.