Dropshipping is more competitive than ever before. Knowing what your competition is up to is essential for success. Here’s how to make sure you never miss a beat.
Here’s the situation:
You’ve got an awesome idea for a dropshipping store. You’ve done your product research, found a great supplier and you’re certain your new business will be a raving success.
But there’s a problem.
You’ve got no idea who else is selling your product. And that matters, because to be successful in dropshipping you have to get and stay one step ahead of your competition.
Enter competitor analysis.
Competitor analysis is important in almost every business. But in dropshipping, it’s absolutely essential. Because when everyone’s selling the same product, knowing what your competitors are up to can mean the difference between success and failure.
That’s why you need to use every tool and trick at your disposal to give yourself a competitive edge. In this article, we’ll break down step-by-step how to analyse and outperform your competition.
We’ll mainly focus on using SalesSource’s revolutionary software to put your product & competitor analysis on steroids (but don’t worry if you’re not signed up yet - there’ll be lots of other practical tips too)
So, whether you’re a dropshipping veteran looking to re-evaluate your niche or a beginner just getting started, let’s dive in and discover how to blow the competition out of the water.
What is Competitive Analysis?
Competitive analysis is about investigating your competitors, discovering what they’re doing and seeing how your business stacks up.
By evaluating the strengths and weaknesses of your competitions, you’ll be able to figure out how you can outperform them.
In dropshipping, competitive analysis helps you determine the best ways to market your products. From things like pricing to ad creative, keeping a keen eye on the competition is essential for your store’s success.
Why Do You Need to Watch Your Competition?
AliExpress Dropshipping is a ferociously competitive business model. There’s a lot of sellers, selling the same product, to the same audience typically via the same advertising platform.
To illustrate, take a look at the research we compiled below after analysing over 30k dropshipping products:
That’s right, within eight weeks of finding a winning product, you’ll typically have 25+ competitors trying to steal a piece of your pie.
And at the one year mark, you’ll have upwards of 60+ stores all going after your customers. Pretty insane, right?
So you can see how difficult it’s going to be successful if you’re not constantly up to speed on what your competition is doing.
When everyone is going after the same audience with the same product, you have to make sure that your ads are the best, that your offer is the most appealing, that your targeting is the most dialled in. All this, plus a multitude of other factors too - dropshipping is a competitive game.
Carrying out a great competitor analysis will help you:
- Make better decisions about your marketing strategy
- Identify the most successful ways to reach customers
- Create goals and targets for your business
- Help determine your pricing strategy
- Validate the demand for your product
In dropshipping, there’s not much room at the top - about 20% of stores generate 80% of sales - so make sure you’re not letting others get up the digital ladder before you.
What Does a Great Competitor Analysis Include?
There’s a bunch of different ways to structure and conduct a great competitor analysis but generally, there are some common fundamental questions that you need to ask yourself when putting together a robust analysis.
- Who are their customers?
- How many sales are they making on a daily/weekly/monthly basis?
- How long have they been in business?
- What Shopify theme are they using?
- What apps are they using?
- Where are they sourcing their products from?
- What do their ads look like? (Video, Images, Customer Reviews etc)
Answering such questions helps to build a general picture about what’s enabling your competitors to be successful and what you can do to increase the amount of value you are offering to customers.
For a deeper analysis let’s look step-by-step at how you can use SaleSource to put together a competitor analysis that’ll allow you to one-up your competition at every turn.
6 Steps to Conducting a Great Competitor Analysis
Once you’re ready to take the plunge into full a full-blown competitive analysis, the following steps will help you start to understand your competitors better than they do themselves.
1.Identify Your Competition
Finding out exactly who’s selling your product is the first step on any good competitive analysis. But unlike other forms of e-commerce, many dropshipping stores can’t be dug out by a google search.
It can take up to four weeks for Google to index web pages - and by that stage, a hot product may already be getting saturated which means you’ll be playing catch up with those who were there before you.
Even if you manage to identify one or two competitors, you may never find all of them, or know which ones are the best. Additionally, you won't know exactly how they've named their product on their store, so a Google Search won't always work.
Thankfully, with SalesSource you can leverage our advanced machine learning algorithms to rapidly detect all other Shopify Dropshipping and WordPress stores selling your product. All you need to run the analysis is an Aliexpress link, a product image or a Shopify product page link.
Oh and forget about digging around to find out who the top competitors are in your niche, SaleSource automatically ranks stores by their monthly sales figures so you’ll know exactly who the leading sellers are. See our article on finding aliexpress best sellers.
Do Guerilla Research
Once you’ve discovered the top competitors in your niche with SaleSource, it’s time to assume the role of a potential customer to understand how their marketing funnel works.
Do this by:
- Following them on social media
- Following their ambassadors/influencers/customers on social media
- Abandoning your cart at checkout
- Subscribing to their email list
- Reading their customer reviews
- Contacting their customer service
As you do these activities, make sure to take notes at every step. Jot down what works well - for example, could you draw inspiration from their abandoned cart email sequence?.
At the same time, see what’s not working so well. For example, by reading customer reviews you might discover they’re not offering fast, free, tracked shipping or that it takes 5 days for them to answer a customer service inquiry.
Distil the best aspects of each of your competitor’s stores and build them into your own marketing strategy. Improve any processes that were less than satisfactory and you’ll end up finding it easy to attract customers and make sales.
3. Run A Deep Store Analysis
While most dropshippers simply browse around competitor sites, the super successful ones leverage tools to delve into hard data.
Why? Because hard data doesn’t lie. Whereas stats like social media followers can be somewhat of an indicator of the success of a brand they aren’t always as accurate as people think.
With SaleSource you can use the patent-pending VolumeFind2 formula to instantly generate accurate estimates of monthly sales data on any store, at any time. The formula was tested on over 2,000 verified revenue stores and estimated figures with a 92% accuracy.
Because of the massive volume of sales data available to the algorithm, no other spy tool has been able to produce the same results. And the best part? Its unique machine learning intelligence means it’s getting even more accurate each and every day.
What’s more, you’ll be able to instantly see the top-selling products in any store as well as determine how long the store has been open. Assessing data such as the store's sales volume and revenue statistics gives you insight into how profitable competitor businesses are.
This isn’t only insanely helpful when studying your competitors, but it’s also incredibly valuable for discovering new hot products. Imagine the next time you’re hit with a Facebook ad for an interesting product, you could instantly know how many sales it’s pulling in each month? It’s product research on auto-pilot.
4. Discover Competitor Apps
Apps have the power to transform your customer’s experience and impact the overall success of your store. In fact, certain apps can be the difference between a successful dropshipping store and a failed one.
The problem is it’s not always immediately clear what apps your competitors are using - especially if they’re employing some less common ones.
But SaleSource lets you peek under the hood of any store and view exactly which apps your competitors are using to deliver their unique customer experience. What’s more, you can also add the same apps to your Shopify store.
Being able to add the same functionality and experiences as some of the world's leading Shopify stores in a single-click is a game-changer that gives you a serious edge over your competition.
5. Analyse Competitor Ads
Dropshipping stores live and die by the quality of their ads. After product selection, the format and structure of your advertising is the single most important factor that’ll determine your success.
And when selling the same product as your competition, one of the biggest differentiators between stores is the quality of their advertising. That’s why it’s essential to take stock of how your competition is selling their products.
With SaleSource you can instantly see the entire collection of active Facebook ads that a store is running in a by viewing their current ad library right from the dashboard.
Examine each of your competitor’s ads and assess their performance. Study the creative and the sales copy - how are your most successful competitor’s enticing customers to click through to their website?
Are they primarily running ads on Facebook or Instagram? How many comments and likes are their ads getting?
Compiling this information is an extremely valuable exercise. Remember that Facebook ads are based on an auction system. Producing more relevant ads than your competitors will allow you to reach more customers at a lower cost and snap up the lion's share of the traffic.
Track Competitor Stores
The world of e-commerce moves at lightning speed. It only takes one of your competitors to discover an app, an ad strategy or a new product that allows them to race ahead and dominate the market.
That’s why keeping tabs on your competition at all times is essential to your success. You simply can’t afford to let somebody else gain a competitive edge on your business.
Not only can watching your competitors help you stay ahead of their every move, but you can also learn a great deal by following some of the world’s leading dropshipping stores.
For example if a store doing $1m in sales each month makes a move on a new product and starts pouring resources into it - you can bet your bottom dollar that it’s a product worth testing yourself.
Common Competitive Analysis Mistakes
1. Not Using Data to Make Decisions
Without accurate data, high-level decision making gets reduced to good guesswork. While appraising a business without data is more useful than skipping an analysis altogether, it’s hard to rise to the number one spot when you’re not basing your strategy off hard figures.
All of us have biases that lead us to make assumptions which may or may not be helpful - such as that 50k Instagram followers must mean they’re running a successful business or that if a store is spending big money on ads, it means that a product is successful.
Incorrect assumptions can lead us astray and cost us thousands of dollars and weeks of work. That’s why it’s always wise to use the most up to date software and tools to gather accurate numerical data to inform your competitor analysis.
2. Thinking It's a One-off Process
It’s important to remember that while you’re always working to outperform your competitors, they’re also working to outperform you. A huge mistake with competitive analysis is to think it’s a one-and-done process.
The truth is that never revisiting your original insights can lead to your making decisions based on outdated or inaccurate data.
The game of dropshipping is in a constant state of evolution which makes competitor analysis an iterative process.
Keeping an eye on your competitors is an ongoing process - not something you do once and then never again.
Spending Too Much Time Manually Analysing Stores
Given that we’ve stressed the importance of checking out your competition, this seems a little counter-intuitive. However, in reality, carrying out manual competitive analysis can take buckets of time.
And as a business owner it’s important to manage your time effectively by automating or outsourcing time-intensive tasks. And with the SaleSource Chrome Extension, you can instantly analyse any Shopify Store or product.
Leveraging an artificial intelligence tool to do your research for you frees up precious time that you can spend on important profit-focused activities like split testing your ads or negotiating a better rate with your supplier.
4. Not Thinking About Market Timing
Considering your market timing is incredibly important when it comes to dropshipping. For example, there’s plenty of profitable dropshipping businesses selling products now, so if you started trying to sell you’d have a really tough time.
Trying to compete with established market players who have substantial cash-flow and market share is remarkably tough. A wiser approach is to get in early on a new product and become the established businesses with ad buying power that your competitors can’t match.
That’s why it’s imperative to have competitor data so you can determine if it’s the right time to bring a given product to market. Knowing when others brought the product market helps you determine if it’s the right time for you to follow suit.
5. Not Taking Action Based on Your Results
The whole point of doing a competitive analysis is to give you a leg-up on your competition. But many entrepreneurs who undertake a competitive analysis end up letting it accrue digital dust buried in a folder on their computers.
Always keep in mind that almost every product has an audience who’ll pay money for it. As long as you're doing the basics right, the biggest barrier to your success will be other people who are also trying to become successful.
Never forget that dropshipping is a competition - and to make it a profitable business you have to be able to consistently beat out challenges at every turn.
So, use the findings of your competitive analysis to inform and execute on the unique aspects of your marketing strategy to claim the top spot and leave your competition behind.
Using the information in this post combined with a machine learning tool such as SaleSource will empower you to successfully carry out your own competitive analysis.
Doing so will help you understand how to sell your chosen products more effectively while also allowing you to get one step ahead of your competitors.
From social media and product pages to customer reviews and shipping policies, there’s no area of your business that can’t be optimised by looking at how the best in your industry are doing it.
The results of your competitor analysis allow you to better position your brand as the one that people gravitate towards. Sure, it might involve a little bit of hard work - but with every struggle a solid competitor analysis will pay back the time investment hundreds of times over.