Competitor Intelligence For eCommerce Businesses
Can you keep up with all the eCommerce industry changes? What about announced trends for the coming year? Have you already realized the importance of business process automation?
What is constant is the continuous growth of competition and the possibility of rapid development in business. The current state of the eCommerce industry seems challenging and intimidating.
According to statista.com, online retail sales amounted to 4.9 Trillion U.S dollars worldwide. And it’s forecast to grow by over 50% within the next four years.
Luckily, the eCommerce software solutions choice is endless. Anyhow, before starting the search for an ideal software, you should understand the process and know the goal.
Competitive intelligence (CI) is one of the crucial processes to ensure your competitiveness and creates an opportunity to outsmart competitors if you make data-driven decisions.
CI is the process of gathering, analyzing, and using information about the competitive environment in which your business operates. It involves systematically collecting data about competitors, industry trends, market conditions, and various external factors that can affect your performance and strategic decisions.
What is Competitor Intelligence for eCommerce?
Competitor intelligence for eCommerce, often referred to as competitive intelligence (CI) or eCommerce competitive analysis, is the process of gathering and analyzing information about your competitors in the online retail space. The goal is to gain insights into their strategies, performance, strengths, and weaknesses to make informed decisions and improve your own eCommerce business.
Don’t get confused by similar terms, as the difference lies in their primary focus and purpose. Business intelligence (BI), competitive intelligence (CI), and market intelligence (MI) are related but distinct concepts that focus on different aspects of information and analysis within an organization. Here are the key differences between these three types of intelligence:
Business Intelligence (BI)
- BI primarily concentrates on internal data and processes within an organization.
- The main purpose of BI is to gather, analyze, and visualize historical and current data to support business operations and decision-making. It helps organizations understand their own performance and operations.
- BI relies on internal data sources, such as sales figures, financial data, operational metrics, and customer data.
- BI is used for reporting, dashboards, data mining, and trend analysis to improve internal processes, optimize performance, and enhance overall efficiency.
Market Intelligence (MI)
- MI is a broader concept that encompasses both internal and external data related to the market.
- The main purpose of MI is to provide a comprehensive view of the market, including competitors, customers, industry trends, and market conditions. It helps organizations understand market dynamics and make informed market-related decisions.
- MI combines internal and external data, such as competitor information, market research, customer insights, and economic data.
- MI is used for market segmentation, customer targeting, product development, and pricing strategies, as well as for assessing overall market opportunities.
Competitive Intelligence (CI)
- CI is primarily concerned with external factors and the competitive landscape in which an organization operates.
- The primary purpose of CI is to gather and analyze information about competitors, industry trends, and market conditions. It helps organizations understand their position in the market and make informed strategic decisions.
- CI sources data from external and public sources, such as competitor websites, market reports, industry news, and customer feedback about competitors.
- CI is used to assess the strengths and weaknesses of competitors, identify market opportunities and threats, and support strategic planning.
Businesses often use all intelligence types discussed above in combination to drive the best performance. However, let’s focus here on competitor intelligence.
Competitor intelligence can be gathered from various sources, including public data, market research reports, social media, and your own experiences as a customer. The goal is to use this information to refine your eCommerce strategy, make data-driven decisions, and ultimately gain a competitive advantage.
Key Aspects of Competitor Intelligence in eCommerce:
Competitor Identification
Start by identifying who your competitors are in the eCommerce space. Make sure to differentiate your direct and indirect competitors
Direct competitors are businesses that offer products or services that are very similar to yours and often target the same customer segments. If you are selling athletic shoes, another online retailer that sells the same brands and types of athletic shoes would be your direct competitor.
Some of the techniques for direct competitor identification would be market research, social media research, and soliciting customer feedback.
Pro tip: Strategies for dealing with direct competitors typically involve differentiating your products or services, optimizing pricing, and offering superior customer service to gain a competitive edge.
Indirect competitors offer products or services that may be related to or serve as alternatives to your offerings, but they are not identical. There is a degree of differentiation. This could be in terms of product features, customer base, or purpose. Again, if you sell athletic shoes, your indirect competitor might be a company that sells athletic apparel like sportswear or accessories, as they serve customers with related needs but don’t sell the same core product.
Technics for identifying indirect competitors would be keyword research, analyzing Google’s SERP, and paid data.
Pro tip: To deal with indirect competitors you may consider diversifying your product range, cross-selling or bundling related products, and identifying opportunities to expand your customer base by targeting overlapping customer segments.
Market Research
Analyze the market and industry trends. Understand the overall market size, growth potential, and emerging opportunities or threats. Market research in the eCommerce industry is an iterative process that should be regularly updated to stay informed about changing market conditions and customer preferences.
Here are the steps to take, advised by HubSpot, to do market research:
- Define your buyer persona
- Identify a persona group to engage
- Prepare research questions for your market research participants
- List your primary competitors
- Summarize your findings
Product and Pricing Analysis
Competitive pricing intelligence examines your competitors’ product offerings and pricing and allows you to grow your business with well-informed pricing decisions. Go to competitors’ websites and take note of the following:
- Product Range: Identify the types of products they sell, the categories they cover, and any niche or specialty products.
- Product Features: Look at their products’ features, specifications, and variations. Note any unique selling points or value-added features.
- Pricing: Document the prices of their products. Pay attention to any discounts, promotions, or price tiers. Look for patterns in their pricing strategy.
- Bundling and Upselling: Check if they bundle products together or offer upsells. This can give you insights into how they maximize their average order value.
- Product Descriptions: Analyze the quality of their product descriptions, including how they present product benefits and use keywords.
Website Analysis
Competitor website analysis examines and evaluates your competitors’ websites to gain insights into their online presence, digital marketing strategies, user experience, and overall performance. This analysis is essential to competitive intelligence as it provides valuable information for improving your website and online strategies. Pay attention to the following if applicable:
- Navigation and user experience
- Content
- Product or service pages
- eCommerce functionality
- SEO and keywords
- CTAs
- Performance metrics
- eCommerce sales funnel
- Blog
- Social media
- Website technology stack
- Mobile-friendliness
Customer Reviews and Feedback
As it is important to establish your online reputation, continuous monitoring of your and your competitors’ online presence is crucial. Online reputation management (ORM) is the practice of monitoring, influencing, and maintaining an organization’s reputation on the Internet. Online reputation influences customer decisions, impacts brand image, and plays a critical role in shaping online identity. Monitoring customer reviews and feedback for your competitors’ products can provide insights into what customers like or dislike about competition offerings, competitor’s loyalty programs, and the quality of customer service. This way you will be able to analyze competitor image and how they acquire and retain customers.
Sales and Supply Chain
In the business world overall, it is of great importance to be aware of competitors’ sales and performance metrics as well as their supply chain and logistics. To gather information on competitors’ sales performance, revenue, and growth trends usually requires some estimation or use of industry benchmarks. As efficient logistics, especially in eCommerce, can be a significant competitive advantage, make sure to investigate how competitors handle inventory, order fulfillment, shipping, and returns.
SWOT Analysis
Performing a SWOT analysis as part of your competitive intelligence process helps you gain insights into your competitors’ positions and identify areas where you can outperform them. Here’s how to conduct a SWOT analysis:
- Strengths (Internal) – Identify the competitor’s internal strengths that give them a competitive advantage. This might include product quality, brand recognition, innovative technology, an efficient supply chain, or a loyal customer base.
- Weaknesses (Internal) – Determine the competitor’s internal weaknesses or vulnerabilities. This could be poor customer service, outdated technology, low customer retention rates, or limited financial resources.
- Opportunities (External) – Explore external opportunities that the competitor can leverage for growth. Consider factors like market trends, emerging technologies, new market segments, or changes in customer behavior.
- Threats (External) – Identify external threats that could impact the competitor’s business negatively such as increased competition, economic downturns, regulatory changes, or supply chain disruptions.
A final pro tip: When conducting competitor intelligence, ensure that you adhere to ethical and legal standards. Avoid unethical or illegal means of gathering information about your competitors, such as corporate espionage or hacking.
As already emphasized, competitor intelligence is an ongoing process. Continuously monitor your competitor’s actions and adapt your strategies accordingly.
