How to Competitor Benchmark to Identify Opportunities

How to Competitor Benchmark to Identify Opportunities

Written by Leong KexinJune 19, 2020

How to Competitor Benchmark to Identify Opportunities

In an increasingly competitive landscape, brands and retailers must competitor benchmark to stay ahead of the game.

E-commerce continues to scale and push the boundaries of profit and opportunities worldwide. In Asia alone, the e-commerce market is estimated to surpass one trillion USD in 2021.

While this creates an abundance of opportunities, the stakes are much higher as more brands and retailers scramble to go online.

What is Competitor Benchmarking?

Competitor benchmarking is a methodology in keeping tabs on your competition.

Buyers typically competitor benchmark on regular intervals to stay in the loop of the changes in competitors’ strategies.

Competitor benchmarking entails looking at the overall performance of your competitors at a high level or drilling down to monitor each competitor’s assortment, pricing, discounting and product placement strategies. 

How to Competitor Benchmark Effectively?

To illustrate how to competitor benchmark, we take a look at two of the fastest-growing ASEAN brands, Pomelo Fashion and Love, Bonito to understand their strategies and their performances.

From reviewing the last six months’ launches, we conclude that both brands adopted very different strategies in assortment, pricing, discounting and product placements.

 1. Comparing Brand Performance to See Where You Stand in the Market

Pomelo Fashion currently has an assortment size of 4,661 products, a much larger online offering with almost 2,000 products more than Love, Bonito.

Competitor Benchmark - Comparing brands' trade performance
Pomelo Fashion and Love, Bonito’s trade analysis. Source: Omnilytics Dashboard

Pomelo Fashion and Love, Bonito achieved high full price sell-outs at over 80%. High full price sell-out rates demonstrate a strong grasp of consumer demand by both brands.

Consistent launches maintain newness and engage consumers. Over the last six months, Pomelo Fashion, being the epitome of a fast fashion brand, has been actively launching new products – with a 20% higher new-in rate than Love, Bonito.

In contrast, Love, Bonito had a lower newness rate, hinting at a tighter assortment strategy than Pomelo Fashion.

Pomelo Fashion’s high replenishment coupled with its strong new-in rate suggests that the brand maximises its best-sellers by re-stocking frequently while maintaining a steady stream of new launches to meet the demand of fast fashion consumers.

2. How to Compare Assortment Strategies?

The right assortment mix is important for brands to maximise selling opportunities. While not all product categories perform equally well, betting on the right assortment mix can significantly improve sales.

For example, whilst the Pants and Leggings category may not always be the best performer, it is still essential to consider stocking a limited assortment to complement an outfit. Competitor benchmark helps brands spot gaps in the market and adjust their assortment mix accordingly.

Competitor benchmark - Analysing brands' top categories
Pomelo Fashion and Love, Bonito’s category contributions. Source: Omnilytics Dashboard

The above compilation benchmarks the top categories within Pomelo Fashion against Love, Bonito, showcasing their sell-out rates against the overall stock count for each category.

The Tops category leads the assortment for Pomelo Fashion. With both the highest product count and category sell-out rate of 52%, the brand consistently met growing demands for this category.

On the other hand, Love, Bonito had fewer contributions for its Tops category, despite amassing the highest sell-out rate.

High sell-out rates in low contributing categories suggest a possible gap in the market for the brand to fill. Conversely, categories with low sell-out rates such as Jumpsuits indicate low demand.

This raises a red flag for brands to revisit their assortment and consider discounting slow-sellers.

3. How to Compare Pricing Strategies?

The pricing strategy for both brands varies. Pomelo Fashion has a wider price spread compared to Love, Bonito with a price point concentration between USD29 – USD42.

Competitor benchmark - Price summary
Pomelo Fashion and Love, Bonito’s price summary. Source: Omnilytics Dashboard

Even more telling is the price point which each brand invested in. Pomelo Fashion had contributions in most price brackets, with the highest concentration in the USD35-40 range.

Meanwhile, Love, Bonito invested most heavily in the USD30-35 price bracket, with minimal products below USD15.

A higher entry point allows brands more room for discounting and maximises margins – but also runs the risk of driving consumers to their competitors.

Competitor benchmark - Analysing brands' price breakdown
Pomelo Fashion and Love, Bonito’s price breakdown. Source: Omnilytics Dashboard

In the end, it all falls back on the brand’s DNA. If the brand started at a lower entry point, a gradual scale is best to encourage consumers to increase their expenditures.

4. How to Compare Discounting Strategies?

Timing, depth of discounts and promotional tactics all play an important part in an effective markdown strategy.

Competitor benchmark - Analysing brands' discount breakdown
Pomelo Fashion and Love, Bonito’s discount breakdown. Source: Omnilytics Dashboard

Pomelo Fashion currently has 45% of its assortment on discount, exceeding Love, Bonito at 33%. Pomelo Fashion also employs deep discounts on more products, which are met with a strong sell-out.

In comparison, Love, Bonito practices shallow discounting – only 10% of its assortment were discounted at 50% or more.

Love, Bonito’s low sell-outs for discounted products means their online consumers are less price-sensitive and discount centric. In a similar situation, brands can look into stocking at multi-label discounting sites or sell offline as an alternative markdown strategy.

On the other hand, deep discounting is an effective strategy for Pomelo Fashion. In view that they adopt a high launch frequency, fast stock clearances ensure healthy inventory levels.

5. How to Determine Distribution Strategies?

With e-commerce taking over traditional brick and mortar, brands now have abundant distribution channels.

Pomelo Fashion's distribution channels
Pomelo Fashion’s distribution channels. Source: Omnilytics Dashboard

Pomelo Fashion distributed its products on Zalora, a multi-label retailer in South East Asia. High sell-out performance at full price suggests that Pomelo Fashion’s alternative distribution on Zalora is to reach a wider audience – not to push old stock.

Love, Bonito's distribution channels
Love, Bonito’s distribution channels. Source: Omnilytics Dashboard

In addition to stocking on Zalora, Love, Bonito is also available on FashionValet, a multi-label retailer that focuses on modest fashion.

Love, Bonito could be targeting different demographics with a diverse distribution strategy. The assortment distributed on Zalora was met with a lower sell-out rate than on Love, Bonito’s own platform, with a higher discount rate. This indicates that the brand is likely utilising Zalora as a discounting platform.

Summary

Brands and retailers should competitor benchmark for a clearer understanding of the retail landscape and how to leverage the findings to build impactful strategies.

Pomelo Fashion and Love, Bonito have very distinct strategies. The former moves quickly both in terms of launches and speed to sell-out and rely on deep discounting for clearance.

Love, Bonito, on the other hand, starts with a higher price point and prefers to capitalise on its best-sellers with higher replenishments.

Focusing on key strength is by no means a business mistake, but proper assortment planning with both internal and external data is a crucial step to avoid overstocking.

Competitor benchmarking allows you to:

  • Spot gaps in the market.
  • Understand your competitors’ grasp of their consumer demand.
  • Observe critical success factors.
  • Identify product placement opportunities to expand market reach.
  • Source for alternative clearance strategies.
  • Map where your brand stands amongst the competition.
  • Leverage competitors’ past data to formulate growth strategies.

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