Do you want to know how your business is doing today and where it will be tomorrow? Or do you run an ecommerce business that’s doing bad and you’re wondering why it doesn’t bring expected profit? If you need to answer these questions, you come to the right place. One of the best ways to check this is to research your business and look at things from a broader perspective. That’s where SWOT analysis comes into play.
Conducting a SWOT analysis can assist you in identifying what your ecommerce company is doing well and what aspects should be improved. This type of research is an effective tool to check in with the health of your business and define possible directions in which to take your brand.
In this blog post, we’re going to discuss what a SWOT analysis is, its elements, and the advantages of conducting a SWOT analysis. We’ll also give some tips on how to do a SWOT analysis effectively and share a SWOT template that you can apply for your retail company.
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. SWOT analysis is a tool used to evaluate major elements that have an impact on your business success. These four elements are grouped into internal and external factors.
Strengths and weaknesses are internal factors that are related to your ecommerce business (company culture, geography, staff) with the application of time, effort, and resources. Internal factors are under your control.
Opportunities and threats are external factors that emanate from the environment that is surrounding your business (economy, competitors, market size). External factors are usually outside of your control, but you can introduce tactics to respond proactively.
Strengths and weaknesses state what is happening now, whereas opportunities and threats concentrate on the future. SWOT is typically conducted by a business analyst who tries to set a plan of action and fulfill that plan into reality.
Developing a SWOT matrix is a great way to evaluate its business effectiveness at a minimal cost. A SWOT diagram helps you to:
Below, we’ve provided 5 tips on how to conduct an effective SWOT analysis into your strategic planning process.
Invite your team and start brainstorming ideas. People involved in brainstorming sessions can be from different spheres (marketing, finance, IT, customer support) Encourage everyone to participate, the more opinions, the better.
The idea behind brainstorming sessions is to hear everything your team has on their mind to gather as many ideas as possible so that you don’t miss out on anything crucial. Write down all the ideas and you might discover a thing or two that could positively influence your bottom line.
Once you’ve gathered feedback from your staff and set the goal of your SWOT analysis table, it’s time to work on the four elements of your swot model: strengths, weaknesses, opportunities, and threats.
Determining the strengths of your company is the very first stage in SWOT assessment. Your brand’s strengths are characteristics that serve as your company’s advantages, the aspects that your company is doing well.
What do you do better than your main competitors in the same niche? Are you a trendsetter in your industry? What makes your online business one-of-a-kind? Do you offer handmade goods not available elsewhere?
Any factor of your ecommerce business is only a strength if it provides superior benefit. For instance, if all key players in your industry offer customer support, then the customer support is not a strength, it’s a necessity. If your ecommerce store provides free shipping and your main competitors charge extra costs for shipping, then it can be considered a strength in strategic analysis.
The second step is to figure out the areas of your ecommerce business that need to be improved. Weaknesses are any aspects that negatively affect the success of your company. Consider things you find challenging to obtain and the times you’ve struggled to respond to the customer’s expectations. What aren’t you doing well? What aspects do your customers want you to change? What are your biggest difficulties? What is your ecommerce business lacking?
At this stage, the crucial thing is to acknowledge these drawbacks, so be honest and face any unpleasant truths. For example, if your checkout process takes longer than other ecommerce websites or your customers don’t have access to multiple payment options, you can be in trouble.
After you’re done with your internal factors, you should search for opportunities from the ecommerce landscape. Opportunities are the factors that your online business could take advantage of. Being able to identify and make use of opportunities can significantly change your company’s ability to compete.
Where do you see the huge possibilities for your retail business? What is your biggest chance to get more profit? Can you make your customer experience better? Have there been any changes in the market that create an opportunity? What ecommerce trends have a positive influence on your business? What current technologies can help to cut expenses?
For example, the introduction of PWA (progressive web app) has made the mobile experience as user-friendly as possible. Cloud computing helps to deal with scalability challenges and to automate the manual process of ordering, inventory, and fulfillment. Apple Pay enables customers to buy products online without entering their card and personal details. There are multiple opportunities on the market, make sure not to miss them!
After identifying opportunities, move on to examining your major threats. Threats are all the external areas that can negatively affect your company’s future, such as supply chain disruptions, emerging competitors, and more. To navigate the outside disadvantages requires careful examination from store owners. In most cases, you don’t have any control over your threats, but it’s still essential to keep up-to-date with them so that you can create backup plans if bad things occur.
What threats could seriously impact your financial situation? What areas beyond your control could be an obstacle to your business success? What external factors might threaten your business goals? Has a new product been launched that makes your business at risk? What new technologies on the market could potentially be harmful to your online store?
Think about the disadvantages you face when you start selling online. For example, new technologies are not only opportunities but can be a threat to your company. The introduction of advanced technologies may make your products become obsolete. Therefore, if there is a possibility, try to react proactively and prepare the solutions to the emerging threats, before your business becomes a victim of them.
Once you’re done with the SWOT brainstorming process, organize your thoughts, and consolidate your results in the SWOT matrix.
It doesn’t make sense to create a competitor SWOT analysis and conduct thorough research if you don’t act upon your findings. Once you have prioritized your SWOT findings, come up with a plan to develop short-term and long-term strategies for your online business.
If you want to reap the benefits from the strong sides of your business, come up with strategies on how to apply it in practice. For example, if you offer free shipping, make sure to implement a pop-up, so that your customers see it easily. If selling your product is limited to a small group of people and is one of your weaknesses, you should take measures to improve the product appeal to attract a wider range of your potential customers.
A SWOT analysis is a useful tool for business assessment, that helps you to figure out what you do well, to face your weak points, mitigate the risks, and to take the advantage of opportunities that the market offers.