Do you know what competition is? Despite being a widely discussed concept in e-commerce, many entrepreneurs still have doubts about its meaning and everything it involves in business practice.
We can already say that competition refers to the rivalry between different companies seeking to win the preference of the same segment of consumers.
It varies from market to market, but for those who sell online, it is essential to know how to identify it. And that is our goal with this article. Enjoy!
What is competition?
Competition is what we can call the “rivalry” that exists between companies vying for consumer preference. Basically, it’s a competitive dynamic involving various factors, such as the supply of products and services, the best price, etc.
In the context of e-commerce, competition is important for maintaining good market competitiveness. Ideally, companies should compete fairly and without price wars, avoiding any losses in their cash flow.
But for this to happen, retailers need to have a deep understanding of their own businesses – that is, the strengths and weaknesses of their ventures – and, of course, the market itself.
Advantages of competition in business
Although feared by the vast majority of entrepreneurs, competition generates positive effects on the market and on businesses. A greater understanding of one’s own company is one of them.
See below the main advantages of competition in business:
It maintains competitiveness in the market
The market needs to remain competitive, and the factor that directly contributes to this is competitors. That is, the presence of competitors keeps companies in a constant state of alert, motivating them to continuously improve in order to remain relevant in the market.
Meets customer needs
Healthy competition forces companies to better understand customer needs and preferences. Therefore, they need to offer products aligned with those needs and expectations. The main result of this is precisely greater customer satisfaction.
Analyze the strengths and weaknesses of your own business
Competitors represent a valuable opportunity for entrepreneurs to critically analyze the strengths and weaknesses of their businesses. This will allow you to identify areas that need improvement, highlighting the competitive advantages that your brand can leverage.
Encourage innovation
Another advantage of competition is the incentive for innovation. This happens because the need to gain market share and prominence drives retailers to think more about new strategies.
Imagine you have an online clothing store and one of your competitors starts producing pieces faster and with a better finish than yours… All thanks to a specific machine. Well, you’ll want to buy it for your company too, won’t you?
This encourages the company to always stay updated and not fall behind in the eyes of the customer.
Types of competition
Now that you know what competition is, how about learning about the different types that exist? Those working in e-commerce need to keep in mind that there are different types of competitors… and they all require close attention.
Check out the types of competitors that exist in the market below:
Direct competition
Direct competition is when companies compete directly with each other. They offer very similar products or services, often aimed at the same target audience.
Generally, these companies compete for consumers’ attention and preference based on characteristics such as price, quality, brand, or other specific product attributes.
Indirect competition
Unlike direct competition, indirect competition involves companies that offer different products or services but compete for the same consumer budget or resources.
For example, an online store that sells smartphones may have indirect competitors among laptop manufacturers, as both compete for the allocation of the consumer’s technology budget.
Replacement competition
Substitution competition occurs when businesses offer goods that are not identical but meet the same consumer need. Let me explain…
A fast-food restaurant and a food delivery service, for example. They can be substitution competitors, since both satisfy the consumer’s need for ready-made meals – even if in different ways.
How do you know who your competitors are?
After all the content about what competition is, its types, and other important points, it’s time to understand how to identify it.
Knowing who your competitors are will give you a map of the market, ready to be explored. So, let’s go through the steps:
1. Conduct market research
Conducting market research means gathering information about companies similar to yours or operating in the same sector. But why is this important?
Simply put: because it’s through this analysis that you can identify competitors, understand the competitive landscape, and follow market trends. All this to keep your company up-to-date and properly competitive.
Generally, good market research involves consulting reports and studies about the sector. It’s essential for providing a stronger foundation for your sales strategies.
2. Ask the customers
Asking customers is a simple and direct approach that can provide valuable insights into customer satisfaction, preferences, and experiences.
During the process, strive to formulate precise questions, avoiding ambiguous and confusing answers from the customer. It’s also important to listen attentively to what they have to say, a practice known as “active listening.”
Remember that every detail is important for identifying your competitors and why they are successful in the market.
3. Search for similar companies
Here, we’re talking more specifically about your direct competitors, as we explained earlier in the article.
Focus on those companies that sell products similar to yours and with whom you, in a way, “compete” for the attention of the same consumers. Having this list of companies on hand is essential to know not only who they are, but also to understand their competitive advantages.
The idea isn’t to copy what they do, okay? You’ll analyze them to gain a deep understanding of the strategies that are working and those that aren’t so positive. And, based on that, develop targeted actions for your business.
4. Conduct keyword research
Keyword research is simply analyzing which terms and phrases are important to your business. Anyone who works with online sales knows how important these terms are, right?
Whether it’s for creating an advertising campaign, articles to educate your target audience, or any other initiative… keywords are essential for attracting your audience.
Generally, this practice serves to improve online visibility, reach your target audience, enhance digital marketing strategies, and, of course, identify your competitors.
5. Use tools for competitor analysis.
You don’t have to analyze the competition alone… There are excellent tools that can help you with this. Some of them are:
- Google Alerts: Allows you to receive automatic notifications about new information related to competitors. You can set up alerts for competitor company names or specific industry terms;
- SEMrush: Offers detailed insights into your competitors’ online performance. It helps analyze keywords, SEO strategies, paid ads, and other essential aspects to understand how they are excelling digitally;
- Reclame Aqui: Is a platform where consumers share their experiences with companies. It’s possible to monitor the competitor’s presence on this site, obtaining relevant information about: reputation, areas for improvement, and aspects that are praised by customers.
We are sure that using them will greatly help you in this mission! However, we must emphasize how important it is to know who your competitors are… but it’s not the only point you need to pay attention to in order to have a successful business.
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