Competitive analysis is an essential tool in any e-commerce business's arsenal. It doesn't just help you understand your competitors — it also gives you valuable insight into how to successfully position your own business.
What is competitive analysis?
Competitive analysis is the process of gaining a thorough overview of the competitors operating in your field. Good analysis is based on a large amount of data that helps you understand competitors' strengths and weaknesses within the context of a specific business sector.
In e-commerce, this means analyzing competitors' online presence, product range, pricing and marketing strategies.
Why does competitive analysis matter in e-commerce?
Assessing competitors' strengths, weaknesses and strategies lets businesses gain a strategic advantage, adapt to market dynamics, and make informed decisions to maximize their company's growth.
It also helps identify your own business's unique strengths and weaknesses. Knowing your strengths is essential for building a solid market position and helps shape outside opinions about your product. Clearly demonstrating your goods' or services' advantages compared to competitors helps win customers and build their loyalty.
Thorough competitive analysis also helps you understand gaps in the market. Analyzing competing offers can help identify underserved areas of the market. Taking advantage of these opportunities lets you grow your product range and expand your business. ESTO Head of Baltics Edward Räim emphasizes:
It's important to know who your core customers are and what your competitive advantages are. Good results happen when you have a strong product and you know exactly who to target it at.
ESTO was the Baltics' first fully digitalized fintech company and the first provider of "buy now, pay later" solutions. Today, such services are essential for almost every e-shop looking to grow its business and win new customers.
Edward Räim">Edward RäimHead of Baltics
How do you carry out competitive analysis in e-commerce?
Below, we lay out the concrete steps you can follow to carry out a thorough competitive analysis, to get to know your field and grow your business.
Use the right tools
Successful competitive analysis in e-commerce requires a few basic tools. Use common channels such as Google search, social media networks, YouTube, and keyword research tools like Moz and SEMrush. These will help you gather important information about your competitors and their marketing strategies.
Define your e-commerce business and goals
Understand your own business and your customers' needs. Ask yourself: Do you prefer to be an innovator, a follower, or a challenger? What are your main goals? With clearly defined goals, you'll get the most out of your competitive analysis.
Define your competitors
It's important to map out both direct and indirect competitors — that is, both companies offering the same product or service to the same market, and those competing for the same target group with a different product or service.
Build a competitor matrix
Build a table containing data on your competitors. This helps you compare their strategies and market position. List out each competitor's product range, pricing and marketing techniques.
Compare brand positioning
Analyze your competitors' branding and marketing strategies by examining their websites, social media channels, press releases and sponsored ads. This helps you understand their key messages and points of differentiation.
Define target audiences
Understand which customer group your competitors are targeting their products or services at. Study their mission, messaging, communication channels and tone. The goal is to get a better picture of how they operate in the market and interact with their customers, so you can better understand market dynamics and adjust your own strategy accordingly.
Compare products and prices
Analyze your competitors' products and pricing strategies. Understand their products' features, distinguishing traits and added value, as well as their discounts.
Analyze marketing tactics and social media presence
How do your competitors promote their business? Study their campaigns and social media activity to understand their marketing strategies and customer relationships.
Carry out a SWOT analysis of your competitors
Do a SWOT analysis (strengths, weaknesses, opportunities, threats) for each competitor. This helps you assess their market position and find opportunities to develop your own business.
Apply the results of your competitive analysis to your business strategy
Now that you have a precise overview of your competitors and what's happening in the market, you can start refining your business strategies.
Think about how you can use what you've learned to improve your unique selling proposition, refine your branding techniques, or develop new products.
Competitive analysis is a powerful guide to achieving success in e-commerce. It doesn't just help you understand your competitors — it also gives you valuable insight for positioning your own business.
ESTO's Pay Later solutions are a great example of how thorough competitive analysis helped us stand out in the e-commerce payment solutions market and succeed in a highly competitive space.
Read more on our blog: Branding strategies in the digital world — how to build a recognized and beloved brand?