Ever heard of competitive analysis? A competitive analysis allows you to see how you stack up against the competitors vying for the same target audience in the same industry. It enables you to assess your strengths and weaknesses of current and even potential competitors, and through this, you’d be able to see what opportunities and threats lie ahead of you.
Starting a business entails plenty of research, and this research includes your customers’ pain points, what your competitors are doing, price points, and strategies to get your brand known to your audience.
Performing thorough research to understand your target customer base, customer demographics, the products you want to sell, whether there’s a demand for it or if it’s profitable, and who your suppliers helps steer you in the right direction on making prudent investment choices for your business – resources, money, or time.
Competitive analysis forms one of the earliest and important research you need to do, apart from customer and product research.
When starting your analysis, there are several questions you need to ask when you’re researching who your competitors are:
- What unique value proposition do they offer?
- Are they a dominant force in the segment you want to venture into?
- What could you do that will be better than what they are offering customers?
- Are their products as good as they claim? Ordering a test sample from your competitor is a good idea in this case if you’re looking to test the quality.
- Do they have a strong presence on social media?
- What visible strengths do you notice?
- What’s their advertising like?
- How do they engage with their customers?
- What do the customer reviews say about them?
There’s a lot to think about, and out of those lists of possible questions you come up with, there are specific areas you want to focus on when analyzing and testing your competitors:
- Do an audit of their product – Make a list of all the products your competitor is selling that’s either identical or similar to yours (yes, it sounds tedious, but you need to know what you’re up against). This is an excellent way to analyze your product and theirs. How many do they have versus how many you want to offer? Do you want to offer less as a starting point? If so, how is your product different from their current offering?
- Use brand + model + product type= ideal title – Areas that you’ll need to focus on include the titles they have used for the products (Amazon’s recommended format is “brand + model + product type = ideal title”), what the features of the product are and the unique selling points, whether they actively respond to the customers’ questions or not, and what the quality of their images are like. To survive, you’re going to have to do better than what they’re doing, so you’re going to need all the information you can get.
- Focus on their reviews – The honest customer reviews will say it all. Reviews will offer insight into your competitors and what contributes to their popularity. Look at the products they are selling that are similar to yours, and see how many reviews they’ve got. A basic rule to go by here is that if your top five competitors have more than 300 reviews from customers, it means competition is steep, and you’re going to have to put in a lot of hard work before you can gain some traction.
- Take note of how long your competition has been in business – Don’t be discouraged if you notice your competition is doing great in terms of reviews. They’ve probably been selling for a while, and you’re just getting started. You’ll get to their level eventually if you put in the work for it, but with competition like that, you need to be prepared that it might take a very long time before you see a win for your team.
- Look at the sellers – Does your competition sell on Amazon? Look at the Seller Profile of your competitors. Does the Seller Profile indicate that they’re third-party sellers like yourself? Or, is the seller Amazon? If the answer is the latter, it’s going to be hard for you to compete against the products Amazon themselves are selling. Because of their scale, they’ve got access to better pricing, and they’ll be able to undercut all the other sellers on the platform. The best advice for new start-up sellers is to try and avoid selling products where Amazon is already dominating on that front.
- Check out Amazon’s Product Page – This works great if you’re a third-party seller. Look at the “Product Page” of the product you plan to sell. If there are way too many sellers listing, perhaps you might want to consider selling something else because it will be tough to crack that market. However, if you’re still keen to pursue the product regardless, you could look at the advantages you can offer over the other sellers. Prime shipping, perhaps? Or, lower shipping fees? Something to think about when you’re assessing and testing your competitors.
- Quality of the listing – What kind of descriptions and keywords are your competitors using? What do they have in common? Browse the listing quality of your top five competitors and observe what similarities you can spot. If you could make your listing better than what they’re doing, it will give your products an advantage. You’re trying to look for possible weaknesses you could use to your advantage when you’re writing your product listing description. Some examples of poor-quality listings you want to avoid in your description include a lack of keywords in the title, no bullet points, descriptions that are too short, vital information missing, and poor-quality images. Avoid using only one image in your product listing, too. No customer is going to be impressed by that.
Of course, analyzing your competition doesn’t end when you launch your business. Analysis of your competition, price, and customers need to be done every business cycle to ensure you’re on top of your game and never lose out to your competition. If you’re looking to start a business, check out https://taxfyle.com/business-incorporation-services for assistance in business registration.