Strategy Centre

Ecommerce Competitor Research

 
  
24 October 2014 17:53
  

Ecommerce Competitor Research

Before you create your strategy and value proposition for any business — especially an online venture — you need to understand the market that you are going to operate in. This means that you need to analyse two things from the outset:

  1. The market you are in.
  2. The competitors you are up against.

Based on these two analyses, you should create your core value proposition and strategy.

The great thing about this in digital commerce is that much of the information you need will be readily available online.

As most companies are already in business within a particular market, they don’t have the luxury of choosing which market to enter. However they can adapt their ecommerce strategy according to the most effective way to succeed against their competition.

General Rules in Online Markets

Each market has differences, but there are only a set number of variables in play. There are some general rules about online markets that are worth noting:

1. Online markets are growing

This is a general positive statement — in 2014 when this article is being written, overall online markets are growing in every key consumer economy in the world at around 8% pa. It is therefore important to enter the digital commerce sphere as it is a major growth channel.

2. Ideal online markets have high demand and are poorly serviced online

This is the ideal scenario — you are in a poorly-serviced market that has a growing online demand for products. Often these are markets that are late in their move to the online arena but where the product is still well suited to sell online.

3. Deep niche immature online markets also offer good opportunities

Often it can be seen that immature markets are lucrative when there are a large number of products in a fragmented, specific market niche. This is because the competition can often be weak, the market opportunity reasonable and the ability to compete effectively exists.

4. The more mature the market that you engage in, the more difficult it is to compete in

An example of this is books. This is a market that has been around since the start of online selling — so it is a market with extremely strong competitors. These are markets that are often best avoided unless you are extremely strong in the target market.

5. Technology and key company digital capability determine success

In the digital arena, technology and the company’s ability to implement an effective digital strategy will determine who wins in a market. The reality is that you are involved in an online technology and skills war.

Steps to Understand your Competitors and your Market Opportunity

The goal of a competitor analysis is to give you a clear understanding of:

  1. What your market is and how you should compete in it.
  2. Who your competitors are.
  3. What your own value proposition is — by understanding your competitors’ value proposition.

A basic IRP competitor research analysis involves seven steps. Mark down against each point whether it is:

  1. Objective (a number)
  2. Subjective (a judgement)

Nothing should be fully subjective as you should adopt a consistent method of critiquing information. To do this comprehensively, note whether an item is validated (where required).

1. Understand Your Market Opportunity

Key question: What is my overall available opportunity?

You need to get a feel for the size of the overall market and the percentage of that market that is sold online.

While you will primarily focus on your domestic market, you should also look at the international market as a proportion of your sales will be international.

  1. Focus: on these aspects of your market:
    • Overall domestic market size
    • Online market overview
    • Online market size
    • Extent of the restrictions on selling online domestically
    • Extent of the restrictions on selling online internationally
  2. Tools: It can be hard to pin down reliable information in this sphere. You may have to purchase some of the information.
  3. Report: Produce an overall summary of your market opportunity.

2. Understand Your Competitor

Key question: Who is my competitor?

You need to know who your competitors are and how well they are doing.

  1. Create: a list of your competitors and include their basic background, business figures and resources. Think about their motivations and drive. Make sure you include these details:
    • Company name
    • Background of the company
    • Website address
    • Locations
    • Multichannel capability
    • People involved
    • Number of staff
    • Turnover
    • Online turnover
    • Time online
    • USP and value proposition
    • Online digital ambition

    Use analysis tools to discover their:

    • Alexa rank
    • Alexa rank UK
    • Percentage visitors UK
    • Bounce rate
    • Daily page views
    • Daily time on site

  2. Tools: You can find much of this information on your competitors’ websites, any public information they have produced such as news items, and from website and business analysis tools such as DueDil and Alexa.
  3. Report: Produce a summary of each individual competitor’s business. Then compile an overall summary of the competition in your market.

3. Understand Your Competitors’ Marketing Channels

Key question: What digital marketing channels is my competitor using?

You need to understand how much digital marketing your competition is engaged in. What channels they operate in. The extent of their involvement in those channels.

You also should find out who does their online marketing. Is it carried out internally or do they use external companies? If they use external companies, examine their websites.

  1. Find out: these figures for your competitors:
    • Total amount of traffic
    • Percentage of organic traffic
    • Percentage paid traffic
  2. Tools: Examine all of the following:
  3. Search Engine Marketing — Google

    • Google PPC (UK)
    • Google Ireland
    • Google Canada
    • Google Australia
    • Google USA
    • Other Google channels

    Search Engine Marketing — Bing

    • Bing PPC

    Affiliate Marketing

    • Affiliate Window
    • Commission Junction
    • List of Affiliates
    • Their offering to affiliates (%)

    Remarketing

    • Do they use remarketing?

    Social Media

    • Number of ‘Likes’ on FaceBook
    • Number of Followers on Twitter
    • Extent of FaceBook activity — Posts per month
    • Social Media paid advertising

    Marketplaces

    • What is their sales rating on eBay?
    • What is their sales rating on Amazon?

    Email Marketing

    • What is the quality of their email marketing?

    Content Production

    • Are they involved in content production? To what level?

    Multichannel Marketing

    • Are they involved in a multichannel marketing strategy? What is your assessment of this?

    Other Channels

    • Are they using any other marketing channels?
  4. Report: Describe how you rate each competitor’s current online marketing strategy. Then create an overall assessment of online marketing in your market.

3. Understand Your Competitors’ Technology

Key question: What technology is my competitor using?

  1. Find out: the technology platform that your competitors use. Discover who provides their ecommerce and inspect their website. In particular, examine:
    • Your competitors’ online value proposition.
    • Their multichannel overlay, if any (this will be a guess based on the technology platform).
    • Online market size.
    • The visual and layout impact of their site (subjective assessment — poor, average, good, excellent; include notes).
    • The data structure on their site (subjective assessment — poor, average, good, excellent; include notes).
    • The checkout UX when making an order (poor, average, good, excellent; include notes).
    • The quality of their mobile offering.
    • The site search quality (poor, average, good, excellent).
    • Whether their site includes multiple languages.
    • Whether their site includes multiple currencies.
    • Whether their site includes multiple payment mechanisms.
    • Whether their site includes attribute implementation.
    • Whether their site includes personalisation.
    • Whether their site includes click and collect.
    • Whether their site includes segmented marketing messaging.
    • Their Trust Pilot / third-party rating value.
  2. Tools: You could gather this information by critiquing your competitors’ website and the SEMrush online tool.
  3. Report: When you have all these details, write an overall assessment of your competitors’ technology (subjective assessment — poor, average, good, excellent; include notes). Then produce an overall assessment of the technology used in your market.

5. Understand Your Competitors’ Price And Value Proposition

Key question: How do I compare with my competitor?

  1. Compare: your price and value proposition against your competitors. Specifically, you should:
    • Find out the total number of products they are selling.
    • Find out the total number of brands they are selling.
    • Compare your top 10 sellers with theirs (lower, higher, same, % difference).
    • Compare your top 10 mid-range sellers with theirs (lower, higher, same, % difference).
    • Compare your 10 slowest sellers with theirs (lower, higher, same, % difference).
    • Find out if they have a loyalty scheme.
    • Check if they have an obvious pricing strategy.
  2. Tools: You could use Google Shopping to speed up the gathering of this information.
  3. Report: When you have all these details, create a summary of your competitors’ price and value proposition. Then create a summary of the overall prices and value propositions in the market.

6. Become a Customer of your Competitors

Key question: What’s it like to be a customer of my competitor?

  1. Subscribe: to your competitors’ email lists. Order from their websites to check their sales collateral.
  2. Report: Write a subjective assessment based on how you compare with your competitors.

7. Create a Final Summary Report

This should include a high-level assessment of the overall market and competition. Circulate it around your key stakeholders.

Conclusion

  • Competitor analysis plays a major role in understanding your competitors and your market.
  • It should also inform your value proposition and your digital strategy.
  • The information you gather should indicate where you are strong, where you are weak, where the opportunities are and where the threats are.

All markets have competition, but it is important to pick the fights that you can win. Competitor research forms a core part of digital strategy creation and is something that you should return to on a periodic basis.

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