ecommerce swot analysis

SWOT Analysis and its benefits to ecommerce

Most people will be familiar with the concept of a SWOT analysis.

Whether you learnt about the technique as a student, or have had to complete one as part of your job, you may never have really considered the benefits it could have to your business operations.

If you’ve not heard of a SWOT analysis, it stands for ‘Strengths, Weaknesses, Opportunities and Threats’.

Completing one for your business, product or service will show you exactly what you can improve on, what you’re doing well, the opportunities for improvement and what could be a factor in ruining your chances of continued success.

With this in mind, a SWOT analysis offers a concrete, real-world audit of a company, alongside a scan of its relative standing within its market.

The basics of a SWOT analysis

The objectives of a SWOT analysis are to build on your strengths and minimise your weaknesses.

You will want to quickly take advantage of opportunities that present themselves and try to mitigate outside threats.

In a market that changes as fast as eCommerce, such an analysis should occur at least once a year.

Your customers can be a good source of information about what you do well and where there is room for improvement and you should seek their input.

Ecommerce merchants should compare their businesses against both other online sellers and brick-and-mortar retailers.

This complicates things because something that may be a strength when compared to a brick-and-mortar merchant — dynamic pricing, for example — may not be a factor for eCommerce competitors if they too offer dynamic pricing.


To consider your business’s strengths, you need to understand what you do better than the competitors in your industry?

For eCommerce merchants, examples might be a larger selection of products and faster or cheaper shipping than other eCommerce merchants.

Do you make comparison-shopping easy and quick?

Do you suggest other product options to your customers?

These are competitive advantages.

Ecommerce vendors benefit from a structural advantage — you have lower operational costs than a brick and mortar store.

What makes your business unique? Do you offer niche products not available elsewhere? Are they handmade or one-of-a-kind?

Typical Ecommerce Weaknesses

Because of shipping times, there is no immediate gratification with eCommerce.

Heavy, bulky and perishable goods are expensive to ship.

Price matching is always easy for the customer and therefore a concern for the merchant.

Security and fraud concerns mean some people are still reluctant to use their credit cards online.

Allowing customers to pay using PayPal can blunt this concern.

The problem of shoppers inability to touch and try on products can have can be neutralised by having bricks and mortar stores, very good photography/videos, reviews or just very good returns policies and highlight how easy it is to return.


The questions you should be asking are “What new technologies can help me grow my business and attain an advantage over my competitors?” and “Where are my competitors vulnerable?”.

An example of this could be ensuring your website is built using the latest HTML5 coding and is responsive for mobiles and tablets.

Ecommerce changes every day.

New technologies and features have helped level the playing field with traditional retailers.

For instance, improvements to shopping cart software have created a quicker, smoother, more customer-friendly shopping experience.

Live chat has enhanced eCommerce customer service, blunting the traditional retailer advantage.

Using Big Data analytics could be an opportunity for eCommerce companies to better understand customer preferences.

Social media sites provide free or low-cost promotions.


You should always be looking for broad industry shifts that might affect your growth. These include legal and regulatory changes. E.g. Cookies

Low barriers to entry are a constant threat in eCommerce. It’s easy to set up an eCommerce business, even in a garage. People can sell items via Facebook or eBay without setting up their own websites.

Big e-commerce merchants, such as Amazon, can always undercut smaller sellers on price.

All eCommerce merchants are competing with Amazon and its successful Prime shipping program.

However, options now exist that can put online merchants on a more competitive footing with Amazon. Using such a service could diminish a weakness.

Also try and think of ways to attract non-price sensitive customers or delivering added value to the products such as quick turnaround, free delivery, customer service, loyalty points, easy reordering process etc

So, let’s put this into practise.

We’ve created a SWOT Analysis diagram below for an independent, family-owned jeweller.

By establishing their strengths, weaknesses, opportunities and threats, you can focus on what your business is doing well, and how you can use those points to your advantage, and vice-versa when working on your weaknesses.

SWOT analysis

To take this a step further, you can also make each point from the SWOT Analysis into an actionable strategy.

Similarly to a SWOT Analysis, a TOWS Analysis provides a business with a visual representation of how to a plan of action can be made from the detailed SWOT Analysis.

tows analysis


Completing a SWOT analysis on a regular basis, perhaps once or twice a year, will really help you to understand your position in the eCommerce market.

Whether that’s giving you a broad overview of eCommerce industry trends, show you where you stand in relation to your competitors or provide insight into mitigating your weaknesses and building on your strengths, it’s something every business should consider when making future plans.

If you’d like to discover how we can help you and your business to create a successful digital marketing strategy, please click here for a free online marketing review of your website.

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