Competitive research: how to find a gap in the market for your dropshipping business

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Get ahead of the game by performing competitor research. Not only is this crucial for standing out from the crowd in ecommerce, but it will give you direction for your dropshipping business. It is a key part of your dropshipping business plan, which ideally you will conduct before you set up your ecommerce business. Successful companies run a competitor analysis regularly to keep an eye on the market.

The benefits of dropshipping competitive analysis

What exactly are the advantages of putting this research together?

Here are the pros:

  • Collect up-to-date market research and see what other similar brands have to offer
  • Check and compare how much competitors are selling their items for
  • See how competitor ecommerce websites have strengths and weaknesses in their design and function
  • Keep up with the latest market trends
  • Find a gap in the market
  • Find a way to do things better (eg cheaper delivery prices, a better website, or a better range of a particular niche product)
  • Find a unique selling point
  • Understand how to set your business apart from the competition
  • Use this information to find a specific target audience and effectively sell to them
  • Tools for researching competitors

    Thankfully, conducting market research and finding information about your competitors is quite simple. It will require several hours to collect your findings, however, the main tools you need are easily accessible.

    1. Search engine research

    It's worth using Google, Bing, and Yahoo to compare paid adverts and organic ranking in the search engine.

    2. Similarweb

    Similarweb is a free website that lets you look up any online company and see key statistics such as volume of website traffic, the global ranking of the website, country and category rank, bounce rate, pages per visit, average visit duration, and a list of their top competitors.


    Another free tool, CompanyCheck can check any UK company to see their financials, year established, names of the directors, shareholders, and nature of business. There are similar websites in each country, which you can find by searching for "company checker" and the country name.

    4. Emerald Insight

    This is a reputable market research platform that allows you to access articles, journals, and research papers. Emerald Insight has a range of open access papers as well as a paid subscription. Used by universities, librarians, and researchers, this platform is a quick way to find ready-made competitor analysis reports and market data.

    5. BCC Research

    Similar to Emerald Insight, BCC Research offers a huge database of published reports in a range of sectors including business and commerce.

    Method for analysing your competition

    Porter's five forces model

    The Porter's five forces model is a method of looking at the competitive pressure in an industry, as created by Michael Porter at Harvard Business School in 1979. To use this framework, use the following five categories to research and brainstorm the key points:

    1.Degree of competitive rivalry

    How competitive is it overall in the industry? How many rivals are there?

    2.Power of suppliers

    How much power do suppliers have in your marketplace? How easy is it for them to increase the prices?

    3.Power of buyers

    How much power do customers have? Are there many suppliers that they can choose from to find the best price?

    4.Threat of substitution

    What is the likelihood of your customers finding an alternative similar to your product?

    5.Threat of new entry

    Are the barriers to entry in your niche marketplace high or low? How easy is it for new competitors to enter the scene and threaten your position?

    Direct and indirect competitors

  • Direct competitors are those that offer the same product as you. They have the same market and are high competition.
  • Indirect competitors are companies that are targeting the same customers as you but you have different products. Their product could be a substitute for yours.
  • Example: Coca-Cola and Pepsi are direct competitors. An indirect competitor of both would be Starbucks' supermarket iced coffee.
  • How to format a competitor analysis

    The easiest way to put your competitor analysis together is in a word document. Create a table or written paragraphs with headings corresponding to the five key points above. Put your information in bullet points to easily breakdown your research. Make your competitor analysis as detailed as you want, the more research you have, the better your business ideas for your dropshipping start-up.

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