One of the most important factors you should analyse when selling in an online marketplace is competition, of your specific market, category and of all the products you are competing with. This becomes even more crucial when you decide to sell on Amazon, as customers are faced with plenty of options to choose from when looking for a product.
Understanding the competitive environment your brand faces will allow you to define your short and long-term strategy, and hence increase the probabilities of success for your products. In this article you will find some guidelines and tips on how to conduct a competitor analysis, what are the factors to consider and the conclusions you can extract from it.
Who are you competing with?
To start, you should have a clear vision of who your competitors are. At a first glance, we tend to think that only similar products fall under these criteria, but there are other aspects to consider:
- The benefit that your product targets can be obtained by using different items that are non-identical to yours; for example, there are so many gym products to exercise your biceps, so resistance bands could compete with dumbbells. You should expand your analysis to all applicable products that serve the same end purpose.
- If competitors sell the same product as yours but inside a bundle along with other products, it’s still considered competition.
Extend the research to every product a customer would buy instead of yours. For this, it is a good exercise to put yourself in your customers’ shoes and try to assess the different paths and reasoning they might take along the customer journey.
Study the size and distribution of your market
Once you have defined your competitors’ products, it is important to get an estimate of the market size and understand its composition. This will allow you to forecast your potential sales and optimize your strategy on where your product can be positioned compared to competitors. Nowadays, there are many software tools available for Amazon Sellers to extract an estimation of market sizes (Helium 10 and Jungle Scout are just two of them).
Inside these Amazon research tools, you can create your own market to find new opportunities, and analyse the following:
- Your product market share.
- Total market size.
- Seasonality of sales.
- Recent evolution of the market.
You can also learn which are the best-selling products that are competing with you; it is critical to check if there is a leading competitor taking a significant portion. Usually, it is better to have a more diluted market, where there are easier growth opportunities.
Another key aspect is to know the average selling price present in your market. For a better understanding of the prices of your competitors’ products, you can go further and see how prices differ among products with different characteristics and ratings, helping you to find the best pricing strategy to position your product competitively inside the market. In shorter words, try to understand why some products have a higher price than others.
Complementary, these research tools show you the price history of the product inside the detail page, which helps to understand how the price has fluctuated in the last couple of months. Has the price suffered changes through price reductions or promotions, or has it been stable so far?
Finally, these tools help you understand which are the main keywords that are generating the largest conversions and sales in your market. Doing a thorough keyword research is one of the most important steps for increasing the probability and success of any product on Amazon.
Go into more detail
After getting a general picture of the market, it is necessary to dive deeper into the analysis and look for the smaller elements that show the difference between a successful and a unsuccessful product on Amazon. Look for your main competitors’ strengths and weaknesses through their detail pages. This will allow you to implement any change to your product and/or detail page accordingly. The main details you should look for are as follows:
- Product specifications and/or characteristics. This may give you some ideas about improving your product or even launching a new feature that is non-existent in the market yet.
- Reviews of other products. Yes, we mean read many reviews, good and bad, of other products like yours. Doing this will allow you to get a sense of what customers like and dislike, so you can implement changes in your product or in the detail page (maybe by specifying the characteristics of the product, sizing, usefulness…).
- Product detail page differentiation. Check how well and optimized the detail pages of your competitors are, look at photos, bullet points, descriptions, premium content, etc.
- Product variations. When researching your competitors, you might find new variations and/or bundles that can inspire your product development process. A profitable exercise we suggest is noting down every time you find a new feature you can implement or any idea inside a product detail page that you would like to replicate.
In recap, going into a detailed analysis of your competitors and checking every aspect improves your ability to offer a better value proposition in the already highly competitive Amazon marketplace.
When you’re selling on Amazon, your product and brand will be competing with many others. You’ve already felt how difficult and tricky it is to be different and unique, so putting the effort to understand your market and competitors is vital for building your strategy.
As explained above, you can start with a general analysis and then go into more detail. It requires continuous work that needs to be done day to day. It is counterproductive to do it at the beginning and not carrying it on. The constant tracking and implementation of changes and new features is a must, and it pays off in the long run.