Many people out there running businesses, especially online, fail to do one of the fundamentals of developing a successful business: knowing your competition well.
For brick and mortar businesses, this can be much easier. For example, you run a restaurant, and you see your competition across the street having a special discount. However, online, it is not as obvious. I see many web entrepreneurs that think that they exist in a vacuum. They are not worried about what their competition is doing, that is even if they are even aware of who their competition is! These are the same people that are splitting their heads open trying to understand why things aren’t going as they planned.
Knowing your competition provides you valuable information that can then help you plan ahead and avoid potential problems. For example, you see a competitor’s pricing of similar items to yours being a little bit less. With this information, you can then either make the price more competitive, or offer more value than the competitor.
Think of it as a race. Let’s say you were to run that race and notice no one around you. You are all alone. So you don’t know if you need to speed up or afford to slow down a bit because you have no idea what is happening around you. By gaining knowledge on your competitors, you can then see if someone is breathing down your neck, if you need to speed up to catch someone just ahead of you, or if you can afford to simply cruise and take a breather.
The more knowledge the better. Because this will help you plan out your goals in a more realistic fashion. So how do you size up the competition online? There are many things you can do, such as comparing search results positioning, Alexa ranking (although this is subjective and not quite accurate), link popularity, etc. This is information that you can then adjust to estimate what their numbers are compared to yours. Of course, this is not a perfect exact science, but it does provide a clue as to how they are positioned in comparison with the business that you are running.
Gathering information on your competitors should be mandatory for anyone running a business, especially online. Going at it without knowing if a certain competitor is having a sale or if one has volume discounts or shipping discounts, or if one is adding new products that may make yours obsolete, is like walking, or should I say running, blindfolded. You are asking for trouble.
Also, you may be forgetting that competition can bring out the very best that you have to offer. It can push you to give that little “extra” that can take your business to new heights. It can bring out a level of creativity within you that you didn’t know existed. Bottom line, there is much more to gain than to lose by figuring out what your competitors are up to.
Remember, the only way to be truly competitive is by first knowing who you are competing against 😉