Guide to eCommerce Competitor Analysis in 2023
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In the 1990s, Apple had an industry-changing idea. When others were selling uncharged devices, it began selling fully charged ones, ready to use straight from the box. This new approach was a step jump improvement in customer experience, inspired by deep understanding of the consumer and competition.
The eCommerce market is getting crowded. The industry is expected to grow at a CAGR of 22.9% between 2020 and 2027 to reach USD 16,215.6 billion. As of today, there are around 10 million online brands globally. And the number of digital buyers, as of 2021, stands at 2.14 billion, which accounts for more than a quarter of the world’s population.
In such a crowded marketplace, to stay profitable, businesses need to do competitive analysis that is more detailed, data-driven, and attuned to customers’ needs.
But what exactly is eCommerce competitor analysis? Why is it important? How do you do it? And how does it set your business apart?
Let’s find out.
Competitor Analysis in eCommerce
Imagine you work for a mobile phone company. You are deeply familiar with your product’s benefits, features, and user experience. You are also aware of different mobile phone brands competing with your product and have a sense of how they are positioned. Today, this knowledge is table stakes.
You also need to consider multiple other aspects to complete your 360 degree understanding of your market. Such factors include marketing channels, the demand for personalization and rules concerning zero-party data, your customers' short attention span, and the reasons behind their purchases. How do these layers and complexity inform your strategy?
Competitor analysis is the path to work with these layers. It is a multi-pronged and strategic research process to evaluate and identify your competitors’ products, growth, and marketing strategy. With this information, you can develop and implement data-driven business strategies to get a leg up on the competition.
Here are a few more benefits for your organization.
Advantages of eCommerce Competitor Analysis
Just like Apple, you too can compete effectively and find your niche in the marketplace only when you know what others are doing. For eCommerce businesses specifically, such an analysis helps in:
- Making informed marketing and product-related decisions
- Identifying industry trends
- Creating benchmarks
- Determining your pricing strategy
- Finding new ways of engaging with existing and new customers
- Determining gaps in the market that are financially viable
Competitor analysis is not just for startups or first-time business owners. It is a powerful resource to see how your brand stacks up against the competition and gives you a clear advantage on how to plan your strategy in the future.
So, what aspects or features constitute a competitive analysis? And what tools do you use? The next section elaborates on these.
Aspects of eCommerce Competitive Analysis
There are many methods of eCommerce competitive analysis based on what you are trying to gauge and learn. When you look at a business website, for example, you look at/around a specific aspect of their business.
When you create a macrocosmic view of their marketing and sales strategy it is often called a high-level competitor analysis.
High-Level Competitive Analysis
Structure your high-level competitor analysis differently depending on the kind of information you seek. Major elements about your competitors that form part of this research are:
- Identifying their target customers
- Knowing their market share
- Recognizing the unique value-add of their business and products
- Determining the key features/benefits in their sales materials
- Knowing the price points of their products across different marketing channels
- Finding out their shipping method
- Investigating whether they have received any funding
These sections give a panoramic view of how your competitors’ businesses distinguish themselves from each other and establish a niche in the market.
The other approach is when you focus on the nitty-gritty aspects, the little details that make up the competition. This is known as an in-depth competitive analysis.
In-Depth Competitive Analysis
In-depth competitive analysis, as the name suggests, is a detailed view of what your competitors are doing. When you conduct it, you must include all the information that will help you improve your product and increase sales.
Company Overview: This summarizes information about your competitors – who they are, their resources, number of customers. Further, when you look at their Careers page, you get an idea about their future plans and strategy.
Product Features: An in-depth competitor product analysis helps recognize your product's shortcomings. So when you build your product, you identify features that improve it and make it unique.
Product Pricing: Check their product's market price and model of sale (one-time purchase or subscription). Determine whether their pricing model leaves a specific segment of customers dissatisfied. That will be a gap in the market for you to fill and penetrate.
Perks: Do your competitors provide any perks like an additional product or service? That way, you will know how they engage their customer base.
Share of Voice: The percentage of exposure a business gets on the web and social media is called the share of voice. Some tools help you measure your competitor's share of voice.
Sentiment Analysis: This measures customer satisfaction with a particular product or brand. It helps you determine how customers feel while using a certain product.
Geography: Find out the markets your competitors are focussing on. This way, you will know your product's existing and emerging markets.
Social media Platforms: Determine the social networks used by other businesses, the kind of posts being published, and how often. That way, you will have a fair idea of their digital marketing strategy.
SEO: Ascertain whether your competitors are conducting SEO for their products and the aspects they focus on.
Blogging: Check whether they publish blogs/articles on their websites related to their products/services. How much traffic are these getting, and what is the engagement level of the audiences?
Video Marketing: Examine whether your competitors have a video marketing strategy to promote their products. See how it is feasible for you and how you can make it unique.
Paid Ads: Salesforce gets its highest-paid traffic from certain keywords they use in their ads. You can use online tools to know if your competitors have ads. If yes, then what keywords are they targeting?
Customer Acquisition Process: Find out what strategies other businesses have created to acquire customers. These could be affiliate strategies, referral programs, and others.
Sales: To get the upper hand over others in the marketplace, find out others' sales strategies. One way of doing it is to book a demo yourself.
Net Promoter Score (NPS): NPS finds the likely chances a customer would recommend a product to others. NPS for a particular product can be determined by conducting a survey. When this score is low for your competitors' products, it means you have a larger market to target.
When you include all these aspects in your competitive analysis, you get a 360-degree perspective on your competitors' strengths, weaknesses, and opportunities in the market.
The question now is – how do you conduct such an in-depth analysis?
There are two ways to do that. First, you can perform these tasks manually, conduct research, gather data, and analyze it to reach conclusions. But that's tedious and time-consuming.
Second, you can use AI-powered tools to simplify this process.
AI-Driven Tools for Competitive Analysis
A new crop of AI-driven tools has emerged, making it easy to analyze the competition. Today, you can measure their performance by looking at commonly used phrases, finding their content, or even aggregating it.
TheReviewIndex is one such tool that makes in-depth competitive analysis a walk in the park. An AI-powered tool, TheReviewIndex helps you analyze unstructured textual customer feedback from different sources in a few minutes.
In eCommerce, TheReviewIndex helps your business arrive at data-driven actionable insights about your product and drive real business impact. It helps reduce churn and customer support costs and improves customer satisfaction based on your customers' feedback.
Some of its features that simplify crucial aspects of in-depth competitive analysis include:
Deep Feedback Analysis
You can determine more about a brand and its products and features. When TheReviewIndex examines, for example, a mobile phone, it will subcategorize its details based on product details like variants, brand, etc.
Further, it automatically discovers themes, topics, and sentiment classification of customer feedback for a product.
If this isn't enough, it drills down and reads each feedback/comment to know more about your competitor's product.
For instance, TheReviewIndex analyzes a keyword search like "heating" in customer feedback for a mobile phone based on features like battery, camera, display, gaming, etc. The recurrence of this word and a particular phone feature or brand is enumerated, and whether the feedback had a positive or a negative reference.
Categorization and Ranking
TheReviewIndex also allows you to know more about a product or a brand. It classifies each product into categories like Top, New, Rising, and Dropping. Further, you can check the CSAT scores, the number of online reviews, the average review score, and the price range for each.
You can also zoom in on a particular product using filter options based on time or a topic that is part of your competitive analysis research.
Dynamic Overview Reports
TheReviewIndex also generates overview reports essential in both high-level and in-depth competitive analysis. You can research a product, brand, group, or category across the marketplace or category levels. It also allows you to filter based on certain specifications, metadata, etc.
You can do a competitive analysis in many ways based on what you wish to evaluate. And when correctly done, it can help identify your USP by recognizing the best marketing strategies that work for your business. This way, you spend more time innovating and focusing on doing the right thing.
Sign up for a free trial for TheReviewIndex today and find out how your business can make a positive impact on customer experience.