How to do a competitive analysis

For companies in the e-commerce sector, competitive analysis is an extremely important tool, which can be decisive for navigating effectively among numerous good and bad strategic decisions.

In this article, we will explore the different stages of this process and the methods to follow for a useful analysis.

In the end, we will also address the issue of how you can make the shipping logistics for parcels a differentiating factor in favor of your company and stand out in the market.

Competitive analysis is a process through which you get to know better companies that compete with yours for the same customers or market segment. This type of analysis is essential for informing a company's strategic decisions.

In this other article of ours we examine in detail the reasons why competitive analysis is so important for modern commerce.

We can distinguish 4 phases, made up of subprocesses whose details, as we will see, will depend on each situation. Different schemes are possible, and this is only one of the possible ways to conceive the process.

1. Identify the competitors

You should begin by trying to understand who your competition is. This may seem simple, but the reality is that there are not only different types of competitors, but there are often surprises when a serious analysis is done, with the realization that some store that had never been paid attention to (because, for example, it primarily sells another type of product) is in fact a serious competitor.

The conventional way to approach this stage is through market analysis, and other useful methods are researching social media and asking customers about the alternatives they know or have considered.

There are 3 types of competitors that you should take into account:

• Direct competitors

These are stores with a product and a target audience similar to your company's.

• Secondary competitors

Secondary or indirect competitors offer a different product, but in the same category as yours, to a similar target audience. For example, if you have a clothing manufacturing store, the second-hand clothing trade is an indirect competitor.

• Substitute competitors

These are companies whose products fit into a different category, but meet the same need. For example, if you have a bookstore, the cinema can be a substitute competitor, because the public may choose to watch movies as a form of entertainment instead of reading.

Most of your attention should be focused on direct and indirect competitors, although in some cases the analysis of substitute competitors may be relevant.

This is the time for research, for which modern computer tools are an extremely useful instrument. It is not necessary to aim for absolute precision, and in many cases approximate information will be useful.

On the other hand, do not focus only on obvious criteria, such as prices and product quality: markets are subtler than that, and seemingly minor factors are important for understanding the present and the future.

Examples of information of potential interest are:

The company's history

Knowing, for example, whether a company was founded 7 months or 7 years before the research can put the rest of the information into a very different context. The company's trajectory is an important element for obtaining a complete picture.

Location

For physical stores, this parameter is obviously relevant, but it is no different in e-commerce. A company on the other side of the world can be your competitor if it sells to the same area, while one located closer may not be.

The number of employees and customers

It may be possible to obtain this information or, in other cases, you may have to rely on estimates.

Market positioning

Try to understand the type of customer the competitor is trying to reach. What is the unique selling proposition?

The 4 Ps

These are four parameters that will help draw a clearer picture of a given competitor:

• Product

What are the differences compared to your own product? What are the product's strengths and weaknesses? Investigate customer reviews.

• Price

What are the prices, and what kind of discounts or circumstances apply?

• Place

What is the sales location? Is it the internet or a physical store? And is the sale direct or through retail merchants?

• Promotion

What kind of marketing is used to reach the public? What elements are constant or relevant in that marketing? What kind of presence exists on social media?

Using the information gathered, try to understand the differences that distinguish your company from the competitors, and what advantages and disadvantages you have in relation to each one.

Is the competitor's popularity due to location? Or perhaps to the marketing strategy? Try to determine everything that may influence a consumer's choice.

This is the final step of competitive analysis. It consists of determining, based on the information you have, what your competitive advantages are in relation to the competitors, which will be invaluable for planning the future.

With a more accurate picture of the context in which your company is inserted, you will be in a better position to make strategic decisions.

Ask yourself, for example, whether your target customers are dissatisfied with some aspect of the competitor's product or prices and, if so, whether you can present an alternative. Or how you can present a value proposition that stands out from the competition. Or even how to use marketing that meets a demand, or that uses underused means of communication.

One of the unavoidable elements in the analysis of an e-commerce company concerns logistics. The shipping and delivery of parcels has become, with the growth of online shopping, one of the most important factors for customer satisfaction and a crucial element in differentiation between companies.

The InPost approach, based on the use of a extensive network of pickup points, is a solution specially designed for the challenges of today's e-commerce logistics. Visit our website to find out more about what a partnership with InPost can offer your company, and take the first step toward more efficient, more sustainable, and more economical logistics.