With many businesses operating in the eCommerce sector, the market has continuously increased value. It is already valued at over $4 trillion and is projected to increase by 9% CAGR annually. But with every business or industry, competitors are trying to be more successful. That’s where a good competitor analysis can help eCommerce businesses.
It’s not just about looking at the competitor’s products and players, there is more involved in the whole process. In this blog, we are going to look at why competitor analysis is critical for eCommerce success and some actionable tips and strategies to excel in the area.
Analyzing The Competitor Pricing In The Most Competitive Market
The price of your product is what determines your market position and demand in the market. So you need to set the prices correctly to ensure you get the maximum number of customers. However, this may sometimes be challenging given that businesses don’t always have access to certain content beyond the borders of their countries due to geo-restrictions. This is a solvable issue though. For example, if a business wants to know the prices of a product in the US, they can use a US proxy to find that out. This allows companies outside of the country to pose as a local consumer and browse accessible websites and products to get a better understanding of what’s at stake.
Why is this important? In eCommerce, price elasticity can make or break sales. When a business looks at how competitors change their prices based on demand, seasons, and holidays, businesses can change their own strategies to stay competitive. For example, during days like Black Friday, many retailers offer region-specific discounts. Companies can use US proxies or proxies based on other countries (depending on their needs) to monitor these changes and adjust their strategies accordingly.
Understanding Customer Preferences Through Behavioral Data
Price isn’t the only factor that comes into competitor analysis – you need to also understand what customers value the most and their preferences, the behavioral data of competitor’s products and customers to find out key trends like preferred product categories, popular features, and even gaps in the market.
For instance, you can look at competitor reviews to research the pain points customers have with their products. This can help you modify your strategies and website to one that is based on behavioral data. Amazon is a great example of this since it allows businesses to analyze the “Customer Also Bought” section to identify complementary products to offer. You can study social proof techniques like testimonials or influencer endorsements to enhance customer engagement tactics.
Benchmarking Website Performance For A Better User Experience
Website performance is also a big factor in eCommerce success. There are many factors associated with website performance like loading times, responsive elements, navigation, product spacing, etc. that all affect the user experience. You need to benchmark your site with your competitor’s site to look at speed, mobile responsiveness, and overall user experience.
You can use Google’s Core Web Vitals to get an excellent outline for doing this analysis. There are also third-party tools like Pagespeed or GTMetrix to compare the loading speed and other metrics of your website with others. If your competitor often ranks high, try to find out the areas in which they rank and change your strategies accordingly. For example, if your competitor has a faster loading time than yours, consider using lazy loading or compressing images to load your site even faster.
Monitoring Marketing Campaigns And Promotions
Competitor analysis also extends to monitoring marketing campaigns and promotions, including the choice of color, product positioning, etc. You can track competitor ad placements, social media activity, and email marketing efforts to identify what works well for your audience.
To look at the marketing performance of your competitors, social media is a great source. It can provide everything from the type of promotions that are run generally or on specific seasons. You can analyze their social media posts, posting frequencies, engagement metrics, and more, to get insights into what type of content this shared audience loves.
Email marketing is also a great source to look at to see how they segment their audience, the frequency of their campaigns, and the types of incentives offered.
To sum up, for any eCommerce business to succeed, competitor analysis is very important. You need to understand your competitors properly and change your strategies according to what they have and have not done to increase your chances for conversions.
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