The 2011 Global Intelligence Survey by the Global Intelligence Alliance (GIA) revealed that, in spite of the economy, nearly 70% of North American companies plan to increase their budgets for competitive intelligence in 2012. Of these, 94% agree that they have benefited from competitive intelligence; 42% without a competitive intelligence operation intend to launch one within 12 months; and 69% plan to increase their investments into competitive intelligence over the next two years.
Competitive intelligence is doubly important for online retailers because they need up-to-the-moment information on their competitors’ products and prices in order to make their own strategic short-term decisions. Issues include competitors’ terms of sale, price policies, and the plans they have for changing the way in which they differentiate one or more of their products from yours, says Consultant Arik Johnson, noting that "marketing and sales managers are among the main users of tactical intelligence, because… "they want to know how to win the day, today."
So why is it so important for online retailers to invest in good competitive intelligence?
Image above: Forrester Research / TechCrunch
1. Online retailing is growing at an ever-increasing pace. "With a struggling economy and no real comeback in sight, more people are looking to find the best deals they can online,” says TechCrunch Editor Erick Schonfeld. Citing the Forrester Forecast, "Online Retail Sales Will Grow To $250 Billion By 2014", Schonfeld notes that 82 percent of consumers who end up buying online are satisfied with their buying experience. The Forecast also concluded that retailers need to do a better job appealing to online consumers in their physical stores -- to which Schonfeld says -- “I come to a different conclusion: avoid going to real stores and buy online whenever you can. You will be happier.”
2. The lines between brick-and-mortar retailing and online retailing are blurring. With the ever-increasing use of smartphones for all sorts of information gathering, comparisons, and ultimate purchases, the ways that consumers connect with online and on-site retailers is changing every day. Note the recent Retrevo survey where buyers said they were going to stores, using their smartphones to compare information, and then buying online.
3. Competition is growing and getting more sophisticated. The proof is all around us. And witness the GIA survey above, as companies of all sizes act on the importance of learning, knowing, and responding to what their competitors are doing in real time -- both in the use of competitive intelligence in general, and pricing intelligence in particular.
4. There's greater transparency these days. Resources such as the Internet have made gathering information on competitors easy. With a click of a button, analysts can discover future trends and market requirements. The competitive advantage needed by online retailers is pricing and product information in real-time in order to compete by taking action on their own pricing and products with lightning speed.
5. Retailers are increasing their use of pricing intelligence tools. There are more and more sophisticated intelligence tools available to optimize pricing for thousands of products, spot possibilities to reduce prices and increase sales, analyze data, determine ideal product mix, and increase overall profitability. Tools to track competitors’ prices 24/7, gain pricing insights, identify significant pricing opportunities, and note comparative price distributions and trends.
With the ever-increasing pace of online shopping and buying, online retailers have to act on their competitors' behaviors in real time to remain competitive and viable. To do so, they need to use the sharpest intelligence tools available to get the data to take correct actions in order to stay competitive and make sales, today.