Competitor research: An overview of how to do it and why you need it

Every merchant wants their business to stand out, and their USP and products to be remarkable. But markets are saturated, the digital space is overcrowded, and many businesses miss the mark of “stand out” status.

It’s hard for new businesses to hit their stride. In fact, nearly 50 percent of businesses fail in their first five years. One of the reasons this happens is that not enough eCommerce businesses know how to do competitor research.

Conducting competitor research (a.k.a a competitor analysis) is key to having a rock solid business plan and brilliant brand strategy.

Keep reading to find out how to make the most of your efforts.

(Or click here to jump down to the TL;DR)

What is competitor research?

So, you may be wondering, what is competitor research exactly? 

For those who are familiar with it, you’ve probably heard it described as a SWOT analysis, where you identify the strengths, weaknesses, opportunities, and threats of your competitors.

strengths, weaknesses, opportunities, threats

A SWOT analysis is a great place to start, but an analysis that gives you actionable insights goes a bit further.

A competitor analysis is the process of collecting and assessing data within your industry, market, and among your competitors. Compiling this data allows a company to better understand its place in the market and use insights from the research to understand its strengths and identify its weaknesses.

Competitor research is especially important for small to mid-sized companies looking to compete with industry titans. Learning from the layouts of big businesses allows you to re-examine your approach with strategies that are proven to work with your target market.

Benefits of competitor research

Competitor research is about more than knowing who the competition is. It also helps business owners refine their offers, sharpen their content, realize their niche, and learn more about how they can connect with their audience.

Here are a few important benefits to competitor research:

  • Planning for the future

  • Discovering weaknesses

  • Identifying market gaps

  • Understanding your market better

  • Learning new tools and technology

  • Understanding customers better

  • Improving your marketing strategy

  • Converting more customers

How to do competitor research

Sometimes the issue isn't that businesses neglect doing competitor research. It’s that they don’t do it right.

But don’t worry —  we’re going to walk you through how to do competitor research correctly, so your efforts aren’t in vain.

What to include in your competitor analysis

While conducting your research, you should be sure to examine:

  • Strengths

  • Weaknesses

  • Differentiators

  • Marketing

  • Pricing

  • Location

  • Customer Reviews

How to complete competitor research

To conduct competitor research, you need to…

  • Identify your direct competitors, starting with 10 to 12 if possible.

  • Determine the products and services you’re competing against.

  •  Include  companies that may complement or supplement your business’ main products. (For example, if you sell cookware, you might include home decor vendors.)

  • Evaluate pricing and shipping costs.

  • Research their content strategy, noting the social media platforms they’re using and observing the engagement patterns. (But be aware that engagement does not always equal leads or conversion.)

  • Record your findings. 

Once you’ve documented all of the data on the competitors you’ve identified and researched, it’s time to analyze that data and evaluate areas of improvement for your business.

Your next steps should include:

  • Creating a plan of execution. 

  • Monitoring your progress.

  • Tracking your results. 

competitor feature comparison  chart

How often does competitor research need to be done?

Knowing what you’re up against in this competitive landscape is crucial to your business’ success, so keeping a pulse on your competitors, market, and industry should be done regularly.

What determines “regular” for you may vary depending on how volatile your industry is. However, many businesses use the cadence of conducting the big analysis annually and smaller check points on the competition quarterly or biannually.

How Elementum used competitor analysis to inform our business strategy

Does this process really work? Isn’t this just taking business owners away from the real work of running a business?

Nope. It really is essential.

In fact, competitor research was a key component in the development of our flagship product,  a Shopify theme (coming soon!). We used our over ten years worth of experience working with competitor platforms and products — plus direct feedback from merchants we’ve worked with to build eCommerce stores — to craft a product that will be helpful to merchants, and more than just good design. 

Why?

Because no matter how great your ideas are, they can’t be truly effective unless you understand the needs of your market.

At the end of the day, you’re not just creating for the sake of  innovation — you’re creating to find effective solutions for people’s needs. And one of the best ways to make sure you’re meeting those needs is seeing how the competition interprets the demands of your market.

Of course, that’s not to say that competitor research is the only angle you should be focusing on. But its importance really can’t be understated, and we’ll explain why below.

Here’s a quick case study of Elementum’s competitor research… 

The problem

After spending so many years in the eCommerce agency space, we found that our frustrations and the frustrations of the many merchants we partnered with centered around the same thing: limited creative freedom inside a theme template.

Too many of the themes we worked with didn’t give merchants the ability to properly showcase their storefronts without intensive (and costly) customization work. Often, we found that the requested customizations from merchants we worked with were relatively straightforward and intuitive asks.

For example: 

  • Being able to utilize high impact video content that tells a brand’s story on high converting pages.

  • Allowing more freedom around section layouts and branding.

  • Creating a clean and stable codebase that, should customization be of interest, developers are able to move and develop with ease.

Seeing merchants encountering these issues so frequently is ultimately what led us to start brainstorming concepts for a theme of our own. Because everyone should be able to make basic and not-so basic updates to their storefront on their own.  

Ultimately, our brainstorming efforts produced Elementum: A B2B start-up with over 10 years of collective experience in theme and app customization looking to make a name for itself in the ever-changing eCommerce industry.

Our solution

We made it our goal to create a highly customizable and intuitive theme that would be as accessible for new merchants as it was for established brands. To do that, we spent a lot of time going over the pain points we heard from merchants and experienced as developers.

Those experiences turned out to be a crucial part of our approach in building a Shopify theme.

Initially, we focused on examining products from a merchant’s perspective — especially features we wished we could have had at various points in our careers. We asked ourselves, “What technical updates are requested most frequently? How many of those requests can we build into a theme template to reduce the amount of customization needed after a theme is purchased?” 

From there we moved on to the developer side of things, and focused on things like simplicity  and readability. We knew that we wanted to avoid creating complex abstractions, but we also wanted to create a codebase that would empower — and perhaps inspire — devs that wanted to make additional customizations to the theme.

One of the main things our team kept in mind was simplicity. We didn’t want the codebase to feel unfriendly or intimidating. Especially for developers that may not have previous experience with a Shopify theme. 

Our dev team outlined an approach that moved away from the typical structured customization options that required hardcoded updates for anything outside of ‘a’, ‘b’, or ‘c’. In its place, they created an open-ended framework that lets the mind of the creator decide what the limitations are. Additionally, they ensured that parts of the codebase could serve as blueprints for taking attributes of features and sections from one part of the theme and applying those concepts to other pages.

Once we had that documented, we started looking at reviews for competitor products and services, and addressing how we could build a design that took those customer needs into consideration. This part of the research stage proved to be invaluable because it gave us insights into a wider variety of merchant and developer perspectives. We took the information we gathered and used it to evaluate our initial strategy. Doing this allowed us to identify a lot of potential feedback that we may have encountered with our first design and respond accordingly.

Finally, we focused on discussion boards and forums to see what communities merchants in our target market frequented and the frustrations that they had with other products on the market. We focused on the specific nuances of the issues each merchant and developer had, and used that information to evaluate how their experience with our theme would be.

The result

We’ve successfully… 

  • Identified customer pain points 

  • Addressed them by creating a hassle-free theme customization experience 

  • Anticipated the needs of our target market by making it intuitive to use best practices and optimize customer journeys  

  • Reduced the time it takes to build out a dynamic storefront

  • Increased accessibility to a high-functioning storefront for merchants that don’t have tens of thousands of dollars to devote to site development

All of our competitor research came together to create a friendlier Shopify theme.

TL;DR

Don’t be one of the 50 percent of businesses that fail in their first five years. Or a business that ‘just doesn’t understand why’ your business isn’t performing as well as it could.

Learn how to do competitor research, so your business can succeed.

When done properly, competitor research allows you to…

  • Analyze and understand how your business strategy will perform against competing brands

  • Find hidden strengths you should leverage and weaknesses you should be mindful of

  • Gain a better understanding of how your products and services will be received

  • Discover actionable insights that allow you to be more competitive in the future

We covered a lot in this blog — everything  from the basics of competitor analysis to our own research methods.

Even though this is a great read (😉) we know you don’t want to spend all day scrolling to find the hidden gems.

Here are the highlights:

  • Learn about competitor research and why it’s necessary for a successful business plan 

  • Understand the benefits of competitor research that can refine your brand strategy and stimulate business growth

  • Get the steps of conducting a competitor analysis along with what factors to include, templates, and how often to do them

  • See our process, and how Elementum’s competitor research informed our business plan and improved our marketing strategy   

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