How to conduct effective competitive analysis for your eCommerce business

December 26, 2024

*This article was written by Chouese Z, co-founder of BigSpy.

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Have you ever wondered why some online stores manage to stand out in just a few months, while your store seems stuck in place?

The answer might lie in competitive analysis.

Whether you’re just starting your eCommerce journey or aiming to expand your market share, competitive analysis is a crucial step you can’t afford to skip.

In this blog we’ll guide you, step by step, through the process of conducting effective eCommerce competitive analysis. From understanding the basic concept of competitive analysis to choosing the right tools and following actionable steps, our guide will help you master the art of optimizing your strategy to outpace competitors.

Ready to dive in? Let’s explore how you can leverage competitive analysis to stand out in the digital era!

What is eCommerce competitive analysis?

Imagine you’re a runner in a race. You’re not just focused on your own speed – you’re also watching the competition. Who’s the fastest? What techniques are they using? What are their strengths? That’s essentially what competitive analysis in eCommerce is all about.

In simple terms, eCommerce competitive analysis is the process of understanding your ‘opponents.’ It helps you see what other brands in the market are doing, their strengths, and their weaknesses. With this insight, you can craft better strategies and find opportunities to outpace them.

You might ask, ‘what does that actually involve?’ Great question. Competitive analysis covers several key areas, such as:

How much do you need?

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Products and services: What are they selling? How are their offerings different from yours?
Pricing strategies: How do they price their products? Are there discounts or promotions?
Market positioning: Who are their target customers? Are they the same as yours?
Website experience: How is their site designed? Is it easy for customers to find and buy products?
Advertising and marketing: Where are their ads appearing? Are their messages engaging?

Why does this matter?

Understanding your competitors’ actions is like having a map. It shows you where the market trends are headed and highlights areas where your brand can improve. This insight not only helps you avoid pitfalls but also positions you to seize new opportunities.

In short, eCommerce competitive analysis helps you ‘know your rivals and improve yourself,’ so you can thrive in this fast-moving, opportunity-filled market.

Why is eCommerce competitive analysis so important?

You might think, ‘is competitive analysis really that essential? Isn’t having good products enough?’ The truth is, good products alone aren’t enough.

In the world of eCommerce, your competitors might also have great products – along with lower prices, better services, or more appealing ads. If you don’t know what they’re doing, how can you expect to win this ‘game?’

The importance of competitive analysis boils down to three key reasons:

1. Identify your unique selling point (USP)

Imagine a market with a dozen stores selling similar products. If you’re doing the same thing as everyone else, why would customers choose you?

Competitive analysis helps you spot areas where others are falling short, so you can create your unique edge.

Pro tip

If a competitor has slow shipping, you can improve your logistics.
If other stores are ignoring a niche market, you can focus on meeting those specific customer needs.

2. Avoid wasting time and resources

Without competitive analysis, it’s like wandering in the dark; unsure where your competitors are or what the market actually wants. This can lead to wasting precious time and resources on the wrong strategies.

By analyzing the competition, you can clearly see:

Which strategies are working and worth adopting
Which failed attempts to avoid
What untapped opportunities you can take advantage of

3. Create more targeted marketing plans

Competitive analysis doesn’t just help you understand your competitors – it also gives you better insights into your target audience. For example, you might discover:

Which platforms your customers prefer to shop on
Whether they care more about price, quality, or brand reputation

With this knowledge, you can craft more effective ads and offer services that truly resonate with your audience.

In short, competitive analysis is your ‘navigation system.’ In the highly competitive and disruptive eCommerce market, it guides you in the right direction, helps you avoid costly mistakes, and gets you to your goals faster.

But where should you start?

Don’t worry – it’s simpler than it sounds. At its core, eCommerce competitive analysis is about truly understanding your competitors and the market landscape.

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What are the key elements of eCommerce competitive analysis?

The key elements of eCommerce competitive analysis are like pieces of a puzzle. By examining target markets, products, pricing, marketing, user experience, and more, you can create a complete picture of the market. This allows you to develop more effective strategies for your eCommerce business.

Target market and audience

First, identify who your competitors are serving. Who are their target customers? What are their characteristics: age, gender, income, interests? Do they prefer premium products or budget-friendly options?

Understanding your competitor’s audience can reveal gaps in the market. For instance, if they only target younger shoppers, you could focus on attracting older customers.

Products and services

Examine what your competitors are selling. Do they offer a wide variety of products? How unique or high-quality are their offerings? Are there additional services, like free shipping or extended return periods, that give them an edge?

Analyzing their products can show you whether they meet market demands or leave room for improvement. For example, if their packaging is plain, you could stand out with more creative designs.

Pricing strategies

Pricing is a critical factor in consumer decisions. What is their price range? Do they offer regular promotions or discounts? How do they balance price and value?

If your prices are too high, you may lose customers; if they’re too low, your profits might suffer. Analyzing competitors’ pricing helps you find the right balance for your business.

Marketing and advertising

Look at how competitors promote their brand: which platforms do they use (social media, search engines, email campaigns)? What types of ads do they create (videos, images, text)? Do their messages effectively engage their audience?

Understanding competitors’ marketing strategies can help you refine your own. For instance, if a specific ad campaign resonates with their audience, you can draw inspiration to create similar, brand-appropriate content.

Website experience

A user-friendly website is crucial for eCommerce success. Are your competitors’ sites easy to navigate? Do they load quickly? Do they offer a smooth checkout process? Do they provide strong customer support, like live chat?

If your website is faster, more visually appealing, and easier to use than your competitors’ – customers are more likely to choose you.

Customer reviews and feedback

Don’t overlook what customers are saying: What do reviews reveal about what customers like and dislike? Are there common complaints or recurring issues? Do customers provide suggestions for improvement?

By analyzing these reviews, you can avoid similar mistakes and improve your products or services to better meet customer expectations.

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Social media and online reputation

Competitors’ social media activities can reveal valuable insights. Which platforms are they most active on? How often do followers engage with their content? Have they run any particularly successful campaigns or posts?

Social media is not just for promotion; it’s a powerful way to build relationships with customers. Observing competitors’ strategies can provide inspiration and help you enhance your own social media presence.

After understanding the importance and key elements of competitive analysis, many eCommerce business owners may wonder: ‘How often should I do competitive analysis? Once a year? Only when I have spare time?’

This is a critical question because analyzing too infrequently might cause you to miss market opportunities, while doing it too often can drain your focus and resources. The ideal timing for competitive analysis depends on your business stage and market dynamics – there’s no one-size-fits-all answer.

Here are some common scenarios to help you decide when it’s time to dive into analyzing your competitors:

When should you conduct competitive analysis in eCommerce?

When launching a new business or entering a new market

If you’re just starting your eCommerce journey or planning to enter a new market, competitive analysis is essential. At the beginning, you need a clear understanding of the market landscape and competitive environment. It’s like studying a map before a trip – you can only plan the best route and avoid unnecessary detours if you know the terrain.

When launching a new product or service

Planning to release a new product or expand your service offerings? This is another crucial time for competitive analysis. By studying competitors’ similar products, you can refine your pricing strategy, design compelling promotions, and identify opportunities to differentiate your offerings. This ensures your new product gains traction quickly.

When sales growth stagnates

Have you noticed your sales leveling off or declining? Competitive analysis can help pinpoint the issue. Your competitors might have introduced new strategies, such as price adjustments, promotional campaigns, or improved website experiences. Analyzing their moves helps you understand recent market changes and adapt your approach accordingly.

When major market changes occur

Significant changes in the market – like economic shifts, evolving consumer habits, or new regulations – make competitive analysis even more important. Market-wide changes affect all players. By understanding how your competitors are responding, you can adjust your own strategies and identify opportunities in the shifting landscape.

During annual planning

The beginning of a new year or strategic planning period is an excellent time for in-depth competitive analysis. Reviewing the past year’s market trends and competitor performance helps you identify successful patterns and potential risks. This data becomes the foundation for informed planning and resource allocation for the year ahead.

For ongoing competitor monitoring

Even without major business changes, regularly tracking your competitors is a smart practice. Markets evolve constantly. Competitors may introduce new products, launch marketing campaigns, or rebrand. Keeping an eye on their activities helps you stay up to date with trends and maintain a competitive edge.

Pro tip

Competitive analysis isn’t a one-time task – it’s an ongoing process.

Whether you’re starting a business, launching a product, facing a sales dip, or navigating market changes – competitive analysis provides the clarity you need to move forward. Think of it as your strategic map: Knowing your competitors better equips you to tackle the challenges of the eCommerce market with confidence and seize opportunities as they arise.

In the world of eCommerce, understanding when to conduct competitive analysis is important, but what’s even more crucial is how to do it. It’s not just about browsing your competitors’ websites or checking their prices. It requires a structured approach to ensure you can extract valuable insights from the data.

So, how exactly should you go about it?

Worry not – we’ve summarized a simple, practical set of steps to help you get started easily:

How to conduct effective eCommerce competitive analysis?

This is a systematic set of steps, from setting clear goals to conducting in-depth research, and then summarizing insights and developing strategies.

1. Define your goals and scope

Before you start, be clear about what you want to achieve from your competitive analysis. Are you trying to understand market trends, optimize pricing, or improve your products? Are you focusing on a specific competitor, or looking at the entire industry? Clear goals help you stay focused and avoid getting distracted by too much information.

For example, if you want to improve user experience, prioritize studying competitors’ website designs and customer service.

2. Identify your competitors

Not all competitors are worth studying in depth. Here’s how to filter them:

Direct competitors: Offer similar products or services, targeting the same customers.
Indirect competitors: While their products are different, they meet the same customer needs.
Potential competitors: New brands that might enter your market.

3. Collect competitor data

Focus on the following aspects:

Website and user experience: Browse their site, noting the navigation design, loading speed, and checkout process.
Products and pricing: Look at the range of products, their prices, and any promotions or bundled deals.
Marketing: Analyze their advertising content, keywords, social media activity, and target audience.
Customer feedback: Read reviews and ratings to understand customer satisfaction and common complaints.

4. Analyze the data and spot opportunities

Organize the data into charts or reports, then identify your competitors’ strengths. Where do they fall short? Are there gaps in the market you can fill?

Pro tip

Use a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to structure your data more effectively.

5. Develop strategies and make improvements

Based on your analysis, adjust your strategy. If a competitor’s marketing campaign is working well, could you use a similar approach? If they have weaknesses in certain areas, can you turn those into advantages for your business?

6. Continuously monitor and update your analysis

The market and your competitors are always changing. What works today might not work tomorrow. Regularly revisit your competitive analysis to ensure your strategy stays competitive. We believe that by following these steps, you will gain clear market insights from competitive analysis and be able to develop more accurate and effective eCommerce strategies.

As the saying goes, “A workman must first sharpen his tools before he can work.”

When conducting competitive analysis, using the right tools can make your work much easier and more effective. Whether it’s collecting data, analyzing competitors, or monitoring market trends – there are many powerful tools that can help you achieve your goals.

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Which tools can help with eCommerce competitive analysis?

Website traffic and keyword analysis tools

These tools help you understand your competitors’ traffic sources, popular keywords, and SEO strategies:

Semrush: Analyze competitors’ keyword rankings, traffic sources, and paid ads performance, helping you improve your own SEO strategy.
Ahrefs: A powerful SEO tool for researching competitors’ backlinks, popular content, and overall website performance.
Google Keyword Planner: A free keyword research tool that’s perfect for identifying high-volume search terms and trends in the market.

Best for improving SEO rankings, optimizing paid ads, or driving more website traffic.

Market and competitor research tools

These tools help you gain a full view of the market landscape and competitor performance:

SimilarWeb: Quickly check your competitors’ website traffic sources, visitor distribution, and popular pages.
BigSpy: Great for analyzing competitors’ ad strategies and creative ideas, as well as tracking their historical ads and performance across social media and other platforms.
Crunchbase: If your competitors are businesses, this tool helps you understand their funding, growth, and development status.

Best for understanding the overall market structure or developing competitor-focused strategies.

Social media monitoring tools

Social media is an important platform for brand promotion, and these tools help you analyze your competitors’ social performance:

Social Blade: Track competitors’ follower growth and content performance on platforms like YouTube and Instagram.
Social Peta: Identify the most popular content from competitors, helping you create targeted content marketing strategies.

Best for increasing brand visibility or attracting more attention on social media platforms.

Customer feedback and review tools

By understanding your competitors’ customer feedback, you can identify improvement opportunities:

ReviewMeta: Analyze product reviews on Amazon, filtering out fake reviews to understand real customer needs.
Trustpilot: Check customer reviews for competitors to identify their strengths and weaknesses.
Google Reviews: Analyze competitors’ local business performance and customer satisfaction.

Best for optimizing user experience or making targeted service improvements.

Data organization and analysis tools

Once you have a lot of data, you need effective ways to organize and analyze it:

Google Sheets / Excel: Create spreadsheets to record and compare competitor data.
Tableau: Visualize complex data to help you quickly identify trends and opportunities.
Notion: Record and manage the competitive analysis process, making it easier for team collaboration.

Best for summarizing analysis results into clear reports or sharing findings with your team.

How to choose the right tool?

Choose tools based on your specific needs:

If you’re focused on SEO and website traffic, Semrush or Ahrefs are great options.
If your goal is to understand social media performance, Social Peta or BigSpy may be more suitable.
On a budget? Starting with free tools like Google Keyword Planner is also a good choice.

Effective competitive analysis for eCommerce success

After all that’s been discussed, it should be clear by now that eCommerce competitive analysis is not only an important strategy – but also a key to standing out in a competitive market. By understanding the concept, importance, key elements, and how to effectively implement competitive analysis and use tools, you should now have a solid framework for developing your eCommerce competitive strategy.

Remember, the market environment is always changing, and competitive analysis is an ongoing process that needs constant optimization. Whether it’s discovering new market opportunities or improving existing strategies, staying sharp on your competitors and customer needs will give your eCommerce business lasting competitive power.

Knowing your competition is only half the battle – acting on it is where the real growth happens. 8fig’s innovative tools and tailored solutions help you stay agile and ahead, no matter the challenge. Ready to make your next move count?

Have article ideas, requests, or collaboration proposals? Reach out to us at editor@8fig.co – we’d love to hear from you.

Chouese Z

Chouese Z is a co-founder at BigSpy. He is a dedicated expert in advertising, SEO, and ASO, with deep experience in driving successful marketing strategies and empowering businesses to grow.

How to conduct effective competitive analysis for your eCommerce business