Ignorance is not bliss
Any company operating in any open market needs to be watching out its competitive landscape closely. Surely, the resources to be spent or attention to be dedicated on such operation may vary from market to market or company to company, depending on the market’s competitive forces and company’s market positioning. However, it’s certain that, ignorance is not bliss in business.
Especially, if we are speaking of a market of 12 million e-commerce companies, it’s an immediate, unfortunate prescription for failure.
E-commerce is a digital market, where accessibility and convenience is at its best when we consider the seamlessness of the purchasing journey of a shopper – compared to conventional shopping. Therefore, although it can still be achieved, loyalty is not a given for any particular e-commerce site in the world – including yours. Loyalty in e-commerce is almost crafted at every single purchasing journey and in order to sustain it throughout the lifetime of a customer, an e-commerce site should always be acting dynamically by clearly understanding the motivations of their customers.
Online shoppers can terrifyingly (!) shift their purchasing decisions from your store to another for several reasons. Therefore, you should be extremely well at understanding these dynamics and be able to analyze the reasons why visitors coming to your website through various paths do not eventually convert. More importantly – and miserably – the reasons why you might be losing your visitors to your competitors should be studied more in-depth.
In order to understand these causalities affecting purchasing behaviors of online shoppers, and to leverage that understanding, your e-commerce business should be aiming for gaining solid competitive intelligence capabilities.
This article has been written with that specific aim in mind by believers of the power of Competitive Intelligence in E-Commerce, and it does not necessarily target a certain sized companies or companies in specific markets, but instead, anyone from an e-commerce company of any size, active in any market or country, can immensely benefit from reading this insightful article.
Competitive intelligence as we conventionally know it, has mainly been a business field which required extensive labor resources. Because it required data from the market, and the way to gather that data from the market was obviously to go get it. In order to know what your competitors have been doing, you needed to leave the building yourself and open your eyes and see what’s happening, or you could have delegated or outsourced that to companies who would conduct that research for you by dedicating their own resources. In short, it was expensive and hard to get.
Therefore, it had limited accessibility within the market and had been more of an enterprise activity/need/asset. However, thanks to the digitalization of all sorts of businesses, including the transformation of conventional retail into online retail or more broadly, e-commerce, the nature of competitive intelligence has also been reshaped.
The much desired market data has turned into digital market data, which could have been virtually accessed from anywhere by using the right technologies, and the need to go get it has diminished, or more appropriately, it just disappeared. Automation replaced manual work, which dramatically decreased the costs of accessing fresh data from the competitive landscapes.
As Prisync, we are proud pioneers of this transformation and utilize our technology in such a way that competitive intelligence can become more of a commodity and companies of all sizes can get started with benefiting from that.
Our focus is mainly on the storefront-level competitiveness, particularly on what shoppers actually buy, i.e. the product and its price. The competitive factors involved at that exact purchasing (say, conversion) step are mainly the pricing and the assortment strategies of a company.
As the leading provider of competitive pricing intelligence for e-commerce, here, we will share a step by step guide on how to master competitive pricing and assortment intelligence in e-commerce and help you find out why competitive pricing really matters and how to handle that safely (profitably), and strategically. As we made it clear before, automation is a major ingredient of our work, so, as expected, you’ll also learn more about how to implement an automated solution/tool to boost your e-commerce competitive intelligence.
Now, let us show you why and how competitive intelligence will bring the bliss into your e-commerce business.
And, the answer is…
“Price” was the answer of the %60 of the online shoppers, when they were asked to name the most important factor affecting their purchase decisions.
Shoppers no longer need to wander from shop to shop or mall to mall, to find the best retail price out there. Thanks to e-commerce, they can simply browse through tons of online options for a particular product at various price-points and pick the one that attracts them most.
More than %90 of online purchases follows a pre-purchase time spent on comparing prices across multiple e-commerce sites. In addition to that, deal-hunting is no longer a sport at all. Comparison shopping engines drive around %25 of the website traffic for e-commerce websites, and this ratio is even higher for e-commerce sites in more price-sensitive verticals, like consumer electronics. These price comparison engines simply show the shoppers, the best deals across all available online sites – i.e. exactly what they are after – and saves the time to be spent on browsing each site separately, one by one.
So, you tell me! With all these in mind, wouldn’t it be odd for you to simply ignore the online prices of your competitors? Yes, it would be, indeed.
This is exactly the tricky part of the competitive pricing. Everybody doing e-commerce is certainly aware of its importance – and potential – but when it comes to taking action, it turns into an unscalable burden, because there are too many price-points to be followed, and they all change very frequently. – Around %2 of online price-points change (increase or decrease) within a day.
Therefore, no time should be lost further on speaking of the importance of having competitive prices in e-commerce, but rather we should drill down how to achieve that while still remaining profitable. Are you ready to automate your competitive pricing intelligence?
Pre-automation Steps: Filling in the blanks of competitive landscape
Effective implementation of business intelligence tools of all sorts heavily rely on the right questions asked prior to the widespread usage of such a tool within a company.
When it comes to monitor the online competitive landscape, e-commerce companies should also be asking the right questions, before expecting meaningful output.
There are 2 crucial competitive questions that should be asked by any size of e-commerce company, active in any market vertical in any country:
- Who are my competitors – worth actively/dynamically monitoring and reacting against?
- What’s my competitive assortment – the list of products worth comparing vs. competitors and pricing competitively with a dynamic approach?
These are the 2 must-answer questions before inputting data into a competitor price tracker to be able monitor relevant market data and to take action on the meaningful insights.
Selecting which competitors to track
The stage where you pick the competitors to monitor, should both rely on data and insights of the category and product managers within the company. They know their category or product specific competitors by heart. They feel the competition in the market everyday in every single domain. Therefore, it’s worth asking them these questions regarding the companies that they regard as competitors. However, this is not enough and such an approach should be certainly extended or maybe refined by a more data-driven approach.
Each competitor in your market is not as significant as one another, and maybe focusing on some of them won’t bring in much gain compared to others. Identifying the significance of competitors can be checked by a very simple method using a search engine, like Google and a website analytics tool, like SimilarWeb together.
Competitors that have been initially listed down – by the category or product managers – should be analyzed deeper in terms of estimated monthly traffics or monthly growth rates or marketing channels and should be eliminated according to a certain strategic threshold, for ex. You can say “Exclude a competitor if it has a monthly visit less the 3.000.”
Refinement of an initially prepared list should be also extended skeptically by a ground up approach, like simply Google’ing for major SKUs in your assortment and listing down the top website results, i.e. your competitors.
Later on, the sites that appeared in the search results as such should also be pushed through the analytical approach where it goes through refinements depending on website traffic characteristics.
At the end, you’ll end up with the list of competitor websites worth monitoring dynamically.
This approach could be criticized as being a little generalist, so alternative approaches may also be derived. One of these alternative approaches can be focusing on product level competition and instead of listing down competitors before analyzing competition for all the competitive assortment, you can also pick your competitor websites at product level one by one. Such strategy would work best for highly price competitive market segments, where shoppers can easily pick any alternative in the market no matter what the maturity, strength or the brand-power of a website is.
Selecting which products to benchmark vs. competitors
Not all SKUs are created equal.
There are certainly some products that perform significantly better than others within certain periods of time, or there are certain product groups that constitute the majority of the revenues within a company. Therefore, analyzing the price competition at the product level would not bring the exact same ROI for each product available within your portfolio. The thing that needs to be done is to maximize this ROI by picking up the list of the products in a strategic way.
The most important factor affecting the competitiveness of a particular product is the demand for it in the competitive landscape.
Online demand can be analyzed or traced down in many different ways in e-commerce market. Demand data for online products can be estimated by taking a look at the internal sales data within your company and also your market might signal that out in many ways. One smart approach would be using Google Keyword Planner to find out how much online shoppers are searching out for certain products online. It can be certainly implied that product names with significantly higher search volumes in Google have significantly higher demand.
As stated above, another way to derive information regarding product level demand data is to take an internal look back at the sales figures within a company. Many verticals of e-commerce market also carry the characteristics of Pareto distribution. Therefore, it’s common to see that around %20 of the overall SKUs constitutes the %80 of the total revenue. As competitive intelligence require intensive focus, leaving the products that constitute the remaining %20 of the revenue, would let a company to focus on just one-fifth of its whole assortment. – or in some categories, even less.
Depending on your competitive strategy, these ratios of %80 and %20 can be fine-tuned and the refinement within the product assortment can be redesigned.
In the end, what you’ll have in hand will not be just a list of the products to be benchmarked vs. your competitors, but a dynamic approach that will yield such a list dynamically any time you need, say once in every month or quarter. Therefore, you can actually update your competitive assortment to be benchmarked vs. your competitors depending on your strategy.
Gathering/Importing the product links into your competitor price tracker account
As the lists for competitors and products have been gathered, a one-time mapping of the products’ URLs is required in order to direct the price tracker to the relevant products’ links, online.
When such mapping has been completed, the data containing the products to be monitored along with their links, can be simply bulk imported into your dashboard by simply in the format displayed in the dashboard.
As mentioned before, the list of the products or even the list of the competitors to be monitored may be dynamic. Therefore, in case of the appearance of a new competitor or following the launch of a new competitive product line, new batches can simply be imported into the dashboard to track prices of the products from the imported links.
This step may seem to be a labor-intensive operation at first sight. However, the thing is that it’s required to be done at the beginning of the tracking and needs to be updated only on a quarterly or monthly basis, the changes would not be that dramatic compared to the batch already being monitored.
After completing all these pre-automation setups, the ultimate usage and joy of competitive intelligence begins (sales and profit margin boosts of around %20 on average), and you start to gain crucial insights vs. your competitors in a fully automated way and can get started with acting on these insights.
The best way to start automating your competitor price tracking efforts is to try it our yourself by signing up for your 14 DAYS FREE TRIAL NOW!