How Many Is Too Many? Taking a Look at Your Competition

Entrepreneur 7 Comments

Competition CartoonOver the course of the past 2 months or so I’ve been outlining a few ideas (on paper) for websites that I’d like to develop. Part of this outlining process has been looking into whether or not anyone else offers a similar service and if they so, how many people offer the service. While researching the competition for one particular idea I found that there are currently 3-4 other viable websites that offer the same general services (probably 2 that are major competitors).

At first glance 2-4 competitors for similar product might not sound too bad, but considering the service is tailored for a specific niche, I’m wondering, before I do the actual website development, is that too many competitors and does my website stand a chance against the already established competition?

Before committing to a ‘Yes’ or ‘No’ answer to that question first do the following:

1. Identify The Competition
The obvious first step to deciding whether the competition is too stiff is to find out who the competition is. Spend some time googling and searching other search engines for the competition. Come up with a list of keywords and keyphrases that you think your product/service would target and do some searching.

Create a list of the total number of competitors as well as a list of the top competitors in the niche. When ranking them consider factors such as Alexa ranking, # of users, SERPs position and how related they are to your product.

2. Analyze The Leaders
Once you have your list of the top 5-10 leaders in the field, take a closer look at their websites to examine exactly what they offer to their users/customers. Specifically look at:

  • What services they offer that are different than yours?
  • How does their website look and feel? Consider it’s design and functionality.
  • What types of claims and guarantees do they make?
  • What makes them unique from the other competitors on your list?
  • Does your product/service offer anything that they don’t? See #3.
  • What type of marketing and advertising do they employ?
  • How long have they been in operation? See #4.

3. Find Market Gaps
Now that you’ve gone over the competition with a fine toothed comb, you need to analyze the data you have and try to figure out where the gaps are in the market. What are these competitors lacking? The best way to help guarantee success is to find a foot hold by exploiting one of the gaps in the market. If you can offer one thing that the others competitors do not, while offering all of the things the competitors do offer you can potentially sway customers your way. Don’t just be a copy-cat or clone, find a unique selling point and take advantage of it.

4. Evaluate The Market
Although not necessarily the last step in the process, you need to understand the market you are getting into, specifically the demand. Are there enough customers in the market to sustain another site? Take a close look at the number of customers/users of your competition, either by using Alexa and traffic statistics or actual user counts. Compare their actual user base to the number of days or months they’ve been in operation to see how they’ve been growing and if there is a large enough user base for your site to provide services to.

By analyzing your competition ahead of time it will definitely help you to understand the market better while potentially making you re-think your plans to enter and overcrowded market. One thing I’m slowly learning is that sometimes you have to overcome your fear of competition and run with your idea. If you truly think it’s a great idea, do sound planning, build a solid product and market the hell out of it. If it fails, well at least you can say you tried and won’t be wondering what could have been.

Good Luck!

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    1. 1 Deron Sizemore November 13, 2007

      I agree. I’m getting ready to develop a new niche site and have been doing some of the very things you discuss here. Luckily for me though, my business partner and I will only have one competitor. So hopefully we can put out a great product for the visitors in this niche.

    2. 2 Erik Karey November 13, 2007

      Yeah Deron, for one of the ideas I plan to start developing this month, I have 2 strong competitors and then 2 weaker ones. I’m hoping there is room for me in the market and like I said at the end of the article, I’m willing to try and see what happens instead of wondering.

      Best of luck with your product as well!

    3. 3 Deron Sizemore November 13, 2007

      Yeah, I think you’ll do just fine. A lot of people are afraid of competition, but I look at it as a motivator. I can see what the competition is doing, and do it (or try to) better. Google wasn’t the first search engine, but they’ve done it better than anyone else.

    4. 4 Jon Cardozo November 13, 2007

      I agree with you that sometimes you have to go ahead and not be afraid of the competition. One thing you have to keep in mind is that if there is no competition, then there’s probably not a sufficient interest in the marketplace. You could be the first one with a great idea, but knowing that there is already competition helps to convince you of the viability of the market.

      I heard one marketer say that he spends half his time studying his competition and the other half doing a better job than them. This may seem like a simple statement or a cliche, but I think it is incredibly profound. It’s one of those nitty gritty details that we can’t overlook in our daily business.

    5. 5 Erik Karey November 13, 2007

      Jon – Your right about when there is no competition it’s hard to gauge the market interest, but then again too much competition and it’s hard to get a piece of the market share. You have to find the right balance I think.

    6. 6 Verne November 13, 2007

      Good advice to all us serial entrepreneurs out there. At any given moment I’ve got 3-5 different new projects that I’m itching to start. Doing the research you’ve recommended here should be among the things everyone should do to help make the tough decision of whether to commit or not.

    7. 7 Entrepreneurial Decision Making: Choosing the Right Idea by Erik Karey: Internet Entrepreneur November 14, 2007

      […] Research It I talked about this yesterday, but researching the competition can help you to decide whether to move forward with one particular idea over another. By evaluating […]

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