What is the Importance of Competitor Analysis in E-Commerce

May 20, 2023
Natalie Thorburn

Due to the modern free market and a widespread internet connection, everyone may run an e-commerce business more efficiently and profitably. As a result, ten websites are selling the same product as yours for every one you sell. The more straightforward it is to launch an online store, the more difficult it is to succeed. However, competitive analysis is functional!

So, in this post, we will show you how an e-commerce company can conduct a competitive analysis to keep one step ahead of its competitors.

Defining E-Commerce Competitive Analysis

The goal of analyzing competitor is to identify the competitor in business and assess their several marketing tactics (such as social media contents, targeted ads, and dynamic pricing), as well as their market position, products, and market shares.

The data gathered can then be used to benchmark how you stand compared to your competitor. For instance, understanding the rates of your competitors charge for the similar products you both make is a frequent result of competitive pricing intelligence.

Importance of Competitive Analysis

It is crucial to perform a competitor analysis since it gives you four crucial insights:

1. Becoming aware of your limitations and strengths

Having a reference point is a helpful strategy for figuring out the strength and shortcomings of your company. By understanding detail about industry's competitors, you can more accurately evaluate the place you stand, which areas you need to focus on, or which operational spheres reaches their full potential.

2. Recognizing market Trend

During competitor research, you can also discover fresh competitors who had previously escaped your attention. It will be easy to compete against competitors the more you are aware of them.

3. Recognizing Trends

You can learn about your market's underlying patterns by routinely examining them. Following suit could be a good idea if you own a coffee place and notice that all your competitor use paper straws rather than plastic ones to avoid losing consumers.

4. Establishing Standards

Both small and large organizations should be included in your analysis. It shows how far you have advanced over your competitors and what you need to do to catch up.

Ways to Perform Competitive Analysis

It would help if you undertook your analysis before writing about the contest. You will need to take the following actions:

1. Determine who your Competitors Are

Finding your competitors is the first step in doing a thorough competitive study.

List your industry's or market segment's direct and indirect competitors. While indirect competitors use different products or services to address the same issues that your company does, direct competitors offer comparable goods or services.

Remember that this list might evolve. It's essential to check it frequently to stay current on new competitors or adjustments to your existing competitors. For instance, an established competitor's product offerings could change, or a new one could enter the market.

2. Identify the Market

Following identifying your competitors, you must research the market as a whole.

Market size, growth rate, trends, and consumer preferences are all included in this. Make sure you comprehend the primary demand drivers, your target market's demographic and psychographic characteristics, and any potential market gaps or possibilities.

Researching and gathering data for a market analysis might take a lot of time. Fortunately, you'll use this procedure to finish the market study section of your business plan. Therefore, conducting this research will be helpful in many aspects of your plan.

3. Create a Foundation for Competition

You must develop standards for contrasting your company with competitors. You want the metrics and data you select to clarify particular issues. (Do we serve the same clients? What features are available? How many clients are being attended to?

The following are a few things to consider about:

  • Percentage of the market
  • Features or offered for goods or services
  • Pricing
  • Streams of supply
  • Markets served
  • marketing techniques
  • Consumer assistance

4. Investigate the competitors

Now is the time to start learning about your competitors. Your study will be far more targeted and straightforward because you took the time to investigate the market and set up a comparative framework.

There is no ideal research methodology, so begin by looking into resources like the websites of competitors, social media, client reviews, market studies, press announcements, and public financial statements. You can also interview clients, vendors, or professionals in the field as part of your primary research.

5. Consider their Advantages and Disadvantages

Evaluate each rival based on the standards you've defined in the competitive framework. Determine their main advantages (competitive advantages) and disadvantages.

6. Recognize Chances and Dangers

Determine opportunities (areas where you can exceed them) and dangers (areas where they may outperform you) for your company based on the strengths and weaknesses of your competitors.

Reasons of Having Competitive Analysis in E-Commerce

One of the main goals of an e-commerce competitor study is to stay one step ahead of your competitors. Additionally, losing clients and income would be unavoidable if you believe the process is excessively time-consuming and want to avoid investing time and money. It would help to have a solid marketing plan to stay afloat in a competitive market. An analysis of the competition also makes this process simpler.

  • You will get knowledge of the current business climate, which will aid in effective brand positioning.
  • You can use it to identify your unique selling proposition.
  • It will assist you in identifying the vulnerabilities and strengths of your competitors.
  • You can use it to improve your company plan.
  • It will outline the opportunities you have to grab customers' attention.
  • Competitor analysis has a wealth of benefits for any Internet business owner. Some people still view it as an afterthought, though. Do the necessary research to gain and succeed like your competitors.


Understanding your competition and your market greatly benefits from competitor analysis. Your value proposition and digital strategy should be informed by it.

You should determine your strengths, weaknesses, opportunities, and threats based on the information you receive.

There is rivalry in every market, but choosing the battles you can win is crucial. Competitor analysis is crucial in developing a digital strategy, and you should revisit it occasionally.


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