Knowing what your competitors are doing and anticipating market shifts helps you stay on the leading edge of what's working in your industry. However, simply following your competitors on social media and subscribing to their email list isn't enough. If you want to keep up with the ever-changing e-commerce business landscape, you'll need to have a plan in place to keep track of your competitors. This is where the time-honored competitive analysis comes into play.
What is Competitive Analysis?
The competitive analysis involves analyzing how other companies in a given industry market their products and handle their customers. With this data as a benchmark, you may assess your company's relative strengths and shortcomings against those of your main competition. Conducting a successful competitive analysis campaign requires forethought, investigation, tools, skills, and reflection. Take it one step at a time, and you might be surprised by what you learn about the market conditions in your region.
Carrying Out a Competitive Analysis
While conducting a competitive analysis may seem intimidating at first, here are some tips to get you started:
- Identify your competitors. Start by compiling a list of your primary local competitors. Do additional research on Google and LinkedIn platforms. Use keywords associated with your business niche to find competitors.
- Analyze available products and services: After you figure out who your competitors are, the next step is to look at what they offer. They probably have the same products as your small business, and this is the time to look at the slight differences between the two.
- Monitor site traffic and user feedback: A website's traffic influx and feedback are critical factors to consider when conducting a competitive analysis. For instance, this information can reveal how many customers interact with competitors, which brands are most popular with your target market, and what you must do to stay ahead of the pack.
- Compare the market positions: Also, remember to look at your competitor's market position to see if their policies are worth modeling after. Identifying your competitor's strengths and weaknesses and how your target audience interacts with them is an excellent place to start. Once you've researched your competitors, you can make a comparison matrix to see how you measure up to them.
- Differentiate your content strategies: It's important to compare your blog content to your competitors' and see how it stacks up. By effectively talking about your industry, you demonstrate that you have enough knowledge and expertise in your field to your target market. Investigate your competitor's content strategy and its effectiveness in conversion rates and brand awareness.
- Analyze the prices: Another essential factor to consider is pricing. An easy way to see if your pricing structure is suitable for your target market is to look at how your competitors price their goods and services. Find out how much your competitors charge for similar products or services.
Who Benefits from Competitive Analysis?
Are you familiar with your industry's leading players? Competitive analysis may be for you if the answer to this question is "no." Businesses of all sizes can use competitive analysis to devise long-term growth and expansion plans. By conducting a competitor analysis, you can gain valuable information about your company's competition. An in-depth look at how your competitors are doing in the market can help you figure out how your small business is positioned concerning competitors, products, customers, service offerings, and so on.
How to Use Competitive Analysis to Your Benefit on Shopify
Developing growth strategies and securing a competitive advantage on Shopify requires thorough research into your industry's competitors. There are many ways to gain a competitive advantage in the marketplace, and below are some tips on using competitive analysis to your advantage on Shopify.
- Identify Market Gaps: By analyzing your competitive market, you can discover market segments that are underserved or wholly ignored. A lack of customization options, a substandard product, or an unwillingness to cater to a specific market segment are all possible reasons why your competition may be an inferior option. Competitive analysis is the only way to discover this information.
- Develop New Products: Competitors are always trying to develop the next thing to change how the industry works. Through competitor analysis, it's possible to gain a competitive advantage by learning what your rivals are working on. If you know where your competitors are headed, you can direct your efforts in the same direction and compete with them based on price, quality, or functionality.
- Monitor Market trends: In this month, people can't get enough of 'this.' In the next month, they don't want to be associated with it at all. It's difficult for consumers to know what they want because their needs and tastes constantly change. With competitor analysis, you can compare your products and services to those of your competitors and identify market trends that can help you stand out from the crowd and increase profit margins.
- Modern Marketing: Instead of selling the product or service itself, the modern marketer tries to sell the value and benefits of the product. With competitor analysis, you can learn a lot about your competitors' product development and their value proposition to customers by following their marketing strategies on Shopify.
How to Research Shopify Store Competitors
There are many ways you can keep an eye on what your Shopify competitors are up to, and some will be more difficult to complete than others, and others will require more time. Check out these four simple ways to keep an eye on your Shopify competitors.
- Observe and analyze their site's metrics: This is not just about the new sales they put on their homepage. A true insight into your competitor's strategy requires much more in-depth research. Analyzing this data extensively can learn a great deal about your website. This is especially useful when looking at competitors with more clients than you. If you want to see how you compare to other businesses, you can use this tip to figure out how to improve your Shopify website.
- Keep an eye on insights: When we talk about insights, we're referring to things like how many people saw a particular post and how much engagement it received. You can learn a lot about your competition's marketing strategy by looking at their social media activity. When you watch your competitors' insights, you can learn a lot about what works and what doesn't.
- Become their customer: Okay, we're not taking this literally. However, if you want to understand why customers shop at your competitors, you need to become one yourself. Or, at the very least, a different one. Use everything you learn as a customer to understand your rival better, find out why people buy from them and use that knowledge to improve your store.
- Using mentions: Mentions is an excellent tracking tool that allows you to discover who mentions your competitors and what they are saying. Even though mentions are mainly used to keep an eye on your brand's presence on blogs, social media platforms, forums, e-commerce platforms, and other websites, you can also use them to keep an eye on your biggest competitors.
What to Look for When Conducting Competitive Analysis
You should keep an eye on these five metrics and data points from your competitors. While you may already be keeping tabs on some of these items, I'm willing to bet that you'll discover at least one more thing that you need to!
- Your Alexa Rank: If you want to know how well your business is doing online, Alexa Rank is one of the metrics you can use to do so. Your site's Alexa Rank measures how well it performs compared to other websites, and your site's authority grows in direct proportion to its Alexa Rank.
- Your Number of Backlinks: Having a high number of backlinks to your site is a useful competitive metric for gauging your online authority. An SEO strategy would be incomplete without backlinks. Sites with a wide range of backlinks are more likely to be ranked highly by search engines like Google. You can track the number of backlinks to your site to see if it is becoming more authoritative and if your SEO is improving.
- Keyword Share of Voice: An additional competitive metric that allows you to gauge your online influence is your "Keyword Share of Voice." Using the "Share of Voice" metric from Alexa, you can see how much traffic your site gets from people who find it through search engines. In other words, it's a measure of how many people are finding your site by using a particular keyword in their search.
- Your Competitors' Backlinks: You and your competitors' backlink portfolios share crucial growth metrics information. Your backlinks should be as many and as powerful as those of your competitors. Because of this, it's also essential to keep tabs on your competitors' backlink portfolios and monitor their progress.
- On-site Engagement Metrics: Competitive metrics often include how people interact with the company. Search engines use these metrics to rate high-performing content like Google Ads' Quality Score, ranking ad content with the highest quality. Pay attention to these metrics and how they relate to your competitors.
Which Tools Should You Use for Competitive Analysis?
A few good tools can help you learn about your competitors' strategies across multiple marketing channels. CommerceInspector is excellent for discovering the secrets of any e-commerce site. Shopify sites with CommerceInspector compatible stores will light up when visited. The extension icon reveals a wealth of competitive information that you can use to keep tabs on the competition and keep up with the latest developments.
As e-commerce grows, so does the number of data analysis software available. However, CommerceInspector still holds a commanding lead as a beginner's competitive analysis tool. To help you understand why CommerceInspector is so valuable, here are ways this tool can simplify the analysis process.
- User-friendliness: Why does CommerceInspector rank as one of the best search tools for e-Commerce novices? This tool has an intuitive user interface, and the search function is remarkably straightforward. After clicking on the product or the extension button on Google Chrome, you will see all the information you need. The CommerceInspector will show you all the relevant details on the online store, from product trends to shop traffic or social links.
- In-depth tracking: With CommerceInspector, you can monitor the metrics of any of your competitors' online stores, including trends, catalogs, web traffic, and more. CommerceInspector also reveals information about apps, tools, and themes your competitors use on their e-commerce websites, and this is in addition to the information about products.
- Product niches: Using CommerceInspector, you can conduct a deep dive into a specific product category or market. Categories and sub-categories are available for searching for products. Toys, health and beauty, family, and pets are among the sub-categories. The tool will match the sub-categories to your niche.
- Product insights: It's easy to get ideas for new products with CommerceInspector's powerful product insights feature. This feature gives you access to sales data from popular e-commerce sites like AliExpress, Alibaba, Amazon, and eBay. The product-level data include sales volume, new product launches, and product category information. Across all stores, you can conduct keyword searches to find specific products.
- Sorting products: The tool helps you find the best products possible. It's also easy to find those product categories when you export them. As long as you use the free version, you'll see that some products have been locked because they are unique goods and are only available to people who pay for the premium version.
If you're looking for a great all-around tool, look no further than CommerceInspector! Even though CommerceInspector started as a relatively minor player in the market, it has quickly become a household name.
Avoid These 5 Common Competitive Analysis Mistakes
Because of a lack of expertise and resources, most companies today make many mistakes regarding their competitor analysis. Below are some of the typical competitor analysis mistakes to avoid.
- Uncertainty: Trying to find out something about your customers through market research can be a waste of time. An excellent place to start is by knowing what information you need from your competitors and how you intend to use that information.
- Overspending on competitor analysis: If you know what you're doing, competitor analysis doesn't have to cost a fortune. Regrettably, most business owners rush to hire the first market research company that promises to give them all the information they need about their competitors. However, it's worth doing some research before hiring a third-party company.
- Not doing proper research on the competition: Another issue is not thoroughly researching your competition. You can get a head start on your competitors by learning about their business practices, pricing strategies, strengths, and weaknesses.
- Choosing the wrong sources: Using the Internet is an excellent place to begin your research, and visits to corporate libraries are also highly recommended. However, you must consider where you are getting your information from. This is especially problematic on the Web, where sites may contain outdated or biased information. To avoid using obsolete and false data, you should thoroughly check your research sources.
- Disregarding the competitor analysis results: The worst-case scenario involves investing money in competitor research and failing to act on the findings. It's not uncommon for business owners to throw away good research if it doesn't support their desired outcomes.
How to Use Shopify Competitor Data
You can use Shopify competitor data to your advantage in the following ways.
- Enhance your clients' shopping experience: You can use Shopify competitor data to predict how customers will act in the future. Shopify websites track clicks per page, the average number of items added to shopping carts before checkout, and the time between homepage visits and purchases. You can also look at socioeconomic and demographic data based on rewards or subscription programs.
- Enhance personalization: Shopify competitor data can personalize the shopping experience. A Study by Infosys found that product personalization is essential to 86% of consumers. Millennials love to buy things online, and they expect to get suggestions based on their preferences.
- Increase sales by improving pricing: Consumers value discounts, loyalty programs, and seamless shopping experiences. E-commerce companies use Shopify Competitor Data to increase online sales and determine the best price for specific customers. Long-time customers may get early access to offers, and prices vary depending on where you live and work.
- Offer dynamic customer service: A company's ability to retain customers hinges on its ability to satisfy its customers. Customer service can make or break a business, even one with the best products and prices in the industry. According to research by Business.com, new customer acquisition costs 5–10 times more than recent customer sales. On the other hand, loyal customers spend an average of 67% more than new clients.
- Forecast demand and trends: Providing for the wants and needs of a customer is a long-term concern. The future of e-commerce relies on having the right stock on hand at all times. In the future, businesses could use competitor data from Shopify to figure out what new trends are coming, which seasons are slow, and how to advertise around significant events.
Strategic management of competitive analysis allows you to minimize market risks, identify new growth opportunities, develop business strategies, and increase revenue for your business. Make the most of your competitive analysis by utilizing a powerful tool like CommerceInspector. It simplifies the process of gathering competitive intelligence to the point where you can easily monitor your direct and indirect competitors' ad campaigns, products, apps, and so on. Its complementary extensions will save you a lot of time that you can spend on your product pages, your social network, or your marketing efforts.