Digital transformation in businesses has grown over the past year, as companies realize how important it is to have an online presence. With the pandemic still raging, businesses have been left with no choice but to follow where the consumers are. Global retail e-commerce sales were projected to reach nearly $5 trillion in 2021, almost a 50 percent increase compared to the sales figures before the pandemic started.
Without a doubt, online commerce is growing rapidly, as more players enter the market. The competition is getting tighter, so it would be unwise to believe that the opportunities will remain as big and highly feasible as they were a couple of years ago.
Unless you’re approaching e-commerce as a side hustle or a highly niche business opportunity, you need to become competitive if you plan to survive the changes and thrive in the current e-commerce landscape.
Competitive intelligence as a tool for boosting competitiveness
For many, becoming competitive means ensuring high product quality and customer service. These are not enough to stand out and win customers, though. Even the companies with the best products and services can lose out to those that understand the nitty-gritty of online commerce.
It is also crucial to have an in-depth understanding of the market and how to deal with the different aspects and dynamics of doing business online. This is where competitive intelligence comes in.
In Margareta Nelke’s book Strategic Business Development for Information Centres and Libraries, competitive intelligence is defined as “the continuous and systematic monitoring and analyzing of what is happening in our business environment and how it influences and impacts our business.”
This information gathering and analysis activity is used for strategic and long-term business development, as it helps businesses in better understanding the industry or business environment they are in, their competitors, as well as the standing of their products and services. Competitive intelligence can be undertaken manually, but it is more efficient to employ software tools in the process, as it can be tedious and there are repetitive steps that are prone to errors when relying on manual inputs.
The leading competitive intelligence tools available now usually focus on strategy and marketing data, SEO and content analysis, research on affiliates and referrals, as well as information about pay-per-click and display ad campaigns.
Is competitive intelligence legal? Most definitely – and recommended. It is not to be confused with industrial espionage, which entails the illegal gathering of business information, especially confidential data that is supposed to be private. Competitive intelligence is usually concerned with readily available information that only becomes useful after purposeful sorting, analysis, and presentation.
Sources of competitive intelligence
There are many ways to gather competitive intelligence. Competitors themselves can readily provide useful information through their websites, online stores, brochures, posters, press releases, social media posts, newsletters, and job postings. In some situations, you may also gain access to mailing lists and shareholder reports.
Customers can also provide information and insights about competitors. Businesses can conduct surveys or polls to learn about customer sentiments. The reviews and ratings left by customers on marketplaces, or which they post as blog articles or video reviews, can also contain useful details.
Large business, business agency, or organization customers may also share useful bits of information through their websites or social media accounts. Moreover, various online tools and resources help in the collection of competitor information. These include company data aggregators and platforms that pull insights from public groups or forums.
Even news alert tools and other similar resources can likewise help businesses stay up to date with their competitors and industry developments. Also, business intelligence can be obtained from original research, conferences, seminars, salespeople, trade journals, and information shared by industry associations to members.
How competitive intelligence helps
Competitive intelligence plays the following roles as companies try to improve their operations and competitiveness.
- Benchmarking tool – Knowing what others are doing or offering helps establish benchmarks that allow businesses to examine how they are faring. This is important because it is difficult to stand out without knowing what others have. Additionally, competitive intelligence allows companies to see if there are things competitors are doing that they are not doing. You could be missing out on effective marketing tactics that are applicable to your field. You can tweak or improve these tactics further to be more competitive.
- Strategy assessment and operations optimization guide – Aside from facilitating the setting of benchmarks, competitive intelligence is also useful in evaluating whether a company’s strategies are good enough or suitable for the business landscape. Sometimes, businesses are already confident with their marketing and sales strategies, for example, without realizing that they are doing something many others are already doing. This does not help you compete and can be counterproductive.
- Customer perception gauge – Competitive intelligence is also a good way to examine how customers perceive the key players in your niche. Customer sentiments about competing products or brands matter, as they can serve as a guide on how to differentiate with your messaging. If customers think the competitors are much better, it is not enough to simply improve product quality or features. Businesses also need to exert more effort in promoting their offerings or reaching out to potential customers who may have no idea about their products.
- A way to identify market prospects and alternatives – There are instances when becoming competitive does not necessarily mean competing directly with similar businesses. The market may present different vertical opportunities or niches that have not been crowded by other businesses yet. Instead of going head-to-head against established brands, it may be more viable to move to a sub-market, specialize, or offer something new but feasible.
The process of competitive intelligence
Competitive intelligence does not start and stop with data gathering. It involves four major steps – namely, planning, information collection, analysis, and the presentation and protection of information.
The planning stage is when the organization decides on what information to obtain, the ways to gather the information, and the resources to allocate including the time necessary to complete the different tasks. It is also during this stage when the organization determines the objectives in doing competitive intelligence.
The information collection stage is one of the biggest tasks in the process. It can be undertaken manually or a combination of manual and automated methods. There are competitive intelligence tools that make this stage faster and more efficient.
The data analysis stage can similarly be partly automated, with the help of specialized tools, and partly attended to by human data analysts. At this point, organizations establish trends, set benchmarks, compare their circumstances to the market and competitors, and determine the implications of the information they have obtained. They also come up with plans on how to improve their operations and strategies.
Lastly, a report on the competitiveness of the organization is generated for stakeholders. It is also at this point that organizations secure the insights they have obtained. After all, this report can be used by competitors against them. They may also come up with counterintelligence measures to avoid giving away details that can be used by competitors to counter the strategies that will be used by the business based on the competitive intelligence research that you’ve completed.
Knowledge is power
This is one of the most hackneyed cliches, but it is still a good reminder for every business that seeks to become competitive in the online commerce space. Various information online can be used to analyze the business environment, the standing of a business, and the competition. It is not necessary to engage in espionage or unethical data gathering to undertake competitive analysis and develop improved strategies. However, it is also advisable to find ways to protect business information that can be used by competitors.