In the fast-paced world of ecommerce, keeping a close eye on your competitors is no longer optional – it‘s essential. With barriers to entry lower than ever, online retailers can expect to face a growing number of rivals vying for the same customers. Fail to monitor your competitors effectively, and you risk everything from getting undercut on pricing to completely missing major market shifts and opportunities.
Thankfully, a robust competitor monitoring strategy can help you stay one step ahead. By tracking metrics like pricing, product assortment, promotions, and more, you can gain the intel needed to make smarter decisions and drive growth. In fact, a recent study by McKinsey & Company found that ecommerce players who excel at competitor monitoring achieve 2-5% more in earnings before interest and taxes compared to their peers.
Identify Your True Competitors
Before you can start monitoring, you first need to know who your real competitors are. Many retailers make the mistake of only benchmarking against other businesses in their specific vertical. But your true competitors are any companies going after the same customer base and share of wallet as you.
One helpful framework is to group competitors into three buckets:
- Direct competitors that offer similar products to a shared target audience
- Indirect competitors that provide different products and services but fulfill the same underlying need for customers
- Replacement competitors that remove the need for a product altogether by offering a new way of doing things
Be sure to track a diverse set of competitors to get a comprehensive view. A good rule of thumb is to monitor 5-10 core rivals that you‘re most worried about as well as another 15-20 secondary competitors.
Harness the Power of Price Indexing
With your competitor set identified, one of the first areas to analyze is pricing. Are you priced above or below the competition? How do customers perceive the value of your products compared to alternatives? Getting pricing right is critical for protecting your margins while still enticing shoppers to buy.
To cut through the noise, try leveraging a metric called the price index. Borrowed from the economic realm, the price index allows you to understand how much a given competitor‘s pricing impacts your business. Here‘s how it works:
Price Index = (Competitor‘s Product Price / Your Product Price) x 100
Calculate this for each competitive product and then take the average to determine an overall price index for the competitor. Plot all of your competitors on a graph and you can quickly visualize who is priced above or below you and by how much. Focus your efforts on the rivals with the largest deviation from your pricing.
McKinsey found that using advanced price indexing, retailers can identify the most important 20-30% of SKUs that drive 80%+ of their competitive risk. This enables teams to take action where it matters most instead of getting bogged down monitoring every single product.
Don‘t Neglect the Product Assortment
Pricing isn‘t the only area where monitoring the competition pays dividends. Keeping tabs on competitors‘ product catalogs and new launches can clue you into lucrative opportunities.
For example, let‘s say you notice several of your rivals have recently started selling a hot new product. Upon further analysis, you realize it‘s a major trend that you‘ve completely missed. Tracking competitor assortments gives you a chance to quickly spot these gaps and react before it‘s too late.
Best-in-class retailers don‘t just react to competitors‘ assortment changes, though. They proactively use the intel to identify white-space opportunities and get to market first. For instance, you might discover an emerging product category that your rivals haven‘t jumped on yet, giving you a head start.
Automate Competitor Monitoring with Web Scraping
Of course, monitoring competitors manually is extremely time-consuming and resource-intensive. That‘s why many leading retailers are turning to web scraping tools to automate the process at scale.
Web scraping technology allows you to quickly extract large amounts of public data from competitors‘ websites, like pricing, product details, customer reviews, and stock levels. This data can then be cleaned, structured, and fed into dashboards and algorithms to derive actionable insights.
Some key data points to consider scraping for competitor monitoring include:
- Product names, descriptions, images, and metadata
- Pricing and promotions
- Stock levels and availability
- Customer reviews and ratings
- Shipping information and fees
- Product categorization and tagging
- SEO elements like page titles and meta descriptions
To get started with web scraping, you‘ll need to choose a scraping tool and set up crawlers for your target websites. Look for a solution that offers:
- Ease of use: Point-and-click configuration or simple scripting for non-technical users
- Scalability: The ability to scrape hundreds or thousands of pages concurrently
- Reliability: Fault-tolerant architecture that can handle network issues and website changes
- Customization: Flexibility to tailor scrapers to your specific use case and target sites
- Data export: Integration with analytics platforms and data warehouses for downstream analysis
Keep in mind that you‘ll also need to take steps to avoid bot detection and IP blocking when scraping competitor websites. Best practices include:
- Respect robots.txt files and terms of service
- Limit your scraping frequency and concurrent requests
- Rotate user agents and IP addresses
- Introduce random delays between requests
- Use headless browsers or real device infrastructure
Once you‘ve collected competitive data, the real fun begins. Web scraping provides a treasure trove of insights you can use to inform your pricing and product strategies. For example:
- Identify which competitors‘ products are the most similar to yours and track their prices over time. If you see a rival consistently undercutting you, it may be time to revisit your pricing strategy.
- Monitor competitors‘ stock levels to predict demand and avoid overselling. If you notice a particular SKU is frequently out of stock, that could be a signal to increase your own inventory levels.
- Analyze customer reviews to assess how your products stack up and identify areas for improvement. If buyers consistently mention a pain point that your rivals have solved, prioritize that feature in your product roadmap.
Bringing It All Together
Competitive monitoring is a powerful tool for any online retailer looking to stay ahead in an increasingly crowded market. By leveraging data and automation, you can keep tabs on rivals‘ every move – without breaking the bank or burning out your team.
The key is to focus on the metrics and competitors that matter most for your business. Don‘t get bogged down tracking vanity metrics or companies that aren‘t really a threat. Instead, use frameworks like price indexing to zero in on the insights that will actually move the needle.
Of course, collecting competitive data is only half the battle. To truly capitalize on your monitoring efforts, you need to democratize the insights across your organization. Make sure everyone from pricing strategists to category managers has access to the latest intel and knows how to act on it.
Finally, remember that competitor monitoring is an ongoing process, not a one-time project. Markets and rivals are constantly evolving, so your strategy needs to evolve with them. By making competitive analysis a core competency, you‘ll be well-positioned to adapt and thrive no matter what the future brings.