ECommerce is growing 23 percent year-over-year, and that growth means increased competition. Every day each category has new entrants in the form of new eCommerce companies and established brands branching out. It is more important than ever to ensure that you are keeping a close eye on your industry and competitors to maximize sales and prepare for new competitive threats.
There are a number of off-the-shelf tools that provide powerful insights into the competition within your industry. Monitoring the product pricing, advertising placements, and organic reach of your competitors will make your company more agile in dealing with the ups and downs of your industry. Additionally, it provides you with a trove of high-value data that you can use to inform your own pricing and marketing strategies.
There are a few reasons why every eCommerce company should invest in competition monitoring:
Competitor Price Monitoring
One of the most important aspects of competition monitoring is price monitoring. 87 percent of customers cite price as the most important factor in their decision-making when shopping online. We also know from our own research that price is an important algorithmic factor in PLA networks – if your price is too high you may not appear in the search results no matter how high your CPC. Monitoring the prices offered by your competition is critical for tailoring your own pricing strategies and staying competitive.
Today consumers have more access to pricing information across brands than ever before. With a few clicks, they can easily see the price of a specific item across dozens of companies and websites. There are many search engines that allow customers to conveniently compare the price of an item across many different brands. They use them, too. According to a study from AYTM, 78 percent of shoppers compare prices between two or more brands, then opt for the lowest price.
Competitor price monitoring allows eCommerce brands to better prepare their inventory and predict future sales. For instance, if a competing company drops the price of a popular item to serve as a loss leader, it makes sense to predict that other brands will see a decrease in sales for that item. The dip in interest can cause necessary changes in ordering and inventory, which can be prepared for in advance with proper competition monitoring. In terms of Performance Marketing, knowing which products you’re most competitive for is essential because you don’t want to waste your ad spend trying to promote products priced well above the average. Conversely, identifying the products for which you are very competitively priced allows you to use them as gateway products into your site.
At Crealytics we can help retailers identify a few high impact products and provide price recommendations based on the competitive landscape and search data.
Learn more: Get the Product Price Right for Google
Using Competitive Data in Dynamic Pricing
Pairing ongoing competitive pricing data with your own dynamic pricing strategies can be extremely beneficial. Dynamic pricing does rely heavily on internal metrics, but you should also look at outside data sources to inform strategy. Tying your competitive analysis directly into your dynamic pricing systems allows you to be more agile in your response to pricing changes.
Identifying when competitors have undercut your pricing on a particular item allows you to adjust your own pricing. Pulling data from multiple sources allows you to take a top-down view of your industry’s pricing for specific items and find opportunities to take advantage.
Monitoring Marketing Campaigns
Half of the battle in eCommerce advertising is figuring out where to place your product ads. A single product could display across thousands of keywords and dozens of networks. Identifying profitable places to advertise your products is important for longevity. But, finding these sources on your own can be like looking for a needle in a haystack.
Tracking where your competitors are advertising both their brand and individual products is critical. There are more software solutions available to eCommerce brands than ever before. In fact, we are seeing nearly 100 percent growth year-over-year in new marketing tech software solutions that are designed specifically for eCommerce businesses.
Tools like AdBeat allow you to monitor the platforms, websites, and keywords that your competitors are using in their advertisements. You can also monitor how competitors are performing in organic search using tools like SEMRush, which can open your eyes to new keywords and organic search tactics.
A recurring theme among upstart eCommerce companies is knowing that they aren’t able to keep up with their competition, but not having a clue as to why that is. Using tools to help you monitor your competitor’s advertisements and general digital marketing activity can help you to identify gaps in your own strategy.
Stay on Top of Industry Trends
An often overlooked reason to implement detailed competitor monitoring is in staying on top of current industry trends. The retail industry moves fast. While reading trade magazines and industry publications can provide some insight, they are often weeks or months behind the actual shift in a trend. There is no replacement for hard data and analysis for understanding your industry.
Monitoring the pricing of competitors can open your eyes to new consumer demands and preferences. For example — if you were a fashion retailer, a sudden uptick in advertising within a particular category can signal a sudden increase in consumer interest. Perhaps a popular actress wore a certain type of sunglasses in her latest movie, and suddenly customers want a pair of their own. Without keeping a close eye on the competition, you might not even be aware of this trend until it has run its course and you are unable to capitalize on it.
Competitor price monitoring doesn’t just let you stay on top of trends in pop culture. Competitors carrying more high-ticket items could be a sign of a shift in the winds of consumer taste. Two competing brands getting into a pricing war for a popular item can skew averages and may be a battle you’d rather not get involved in. Competition monitoring provides the data that you need to assign context to complicated situations.
The value from competitor analysis comes from the broader insights that it provides, not just the hard data that influences each individual decision. Staying afloat in highly competitive industries requires that you have the foresight to see where the winds are blowing and make preparations to deal with those trends.
Identify and Prepare for New Competitive Threats
Another big reason to keep a close eye on your competition is to quickly identify new threats that arrive in the marketplace. Whether it is a new company that is quickly gaining traction, or a larger brand that is moving into your category — seeing and preparing for these threats before they begin to have an effect on our business is important. It may surprise you how many businesses sell products which overlap with your own.
Identifying a new competitor that is rising through the ranks gives you the ability to analyze their efforts and duplicate their strategies that have helped them to gain traction quickly.
A Well-Rounded Approach
Some eCommerce experts will tell you that while competitor analysis can be beneficial in the upper echelons of the industry, most companies would see better results by shifting their focus internally. While it is true that getting caught up in what the competition is doing can do more harm than good, it is always best to take a well-rounded approach.
Keeping a close eye on your competition provides you with data that allows you to prepare for new threats within your market, stay on top of industry trends, find new sources of revenue, and improve your pricing strategies. It provides an opportunity to learn from those that have been successful in your category, and better understand your industry as a whole.
For a comprehensive report on how you stack up against the competition in PLAs get in touch with us on email@example.com.