SWOT Analysis for Online Business (+ Template & Examples)

I’m sure you strive to do your best with your online shop every single day, but…Do you know the factors that are driving the success of your business and which could hinder its development?

When you rely on your online shop to earn a living, you simply can’t make decisions based on intuition alone.

To find out where your online business stands, what you’re doing well, and what you could improve on, you need an eCommerce SWOT analysis. You have no clue what that is, right?

Not to worry – grab a pen, download our FREE SWOT analysis template, and get ready to learn more about one of the best and most accessible analysis techniques at the moment.

Let’s take a look at how you can start making informed decisions for your business today with SWOT analysis for online businesses!

What is an eCommerce SWOT Analysis used for?

If you’ve ever attended a business class, the term “SWOT analysis” might ring a bell. Here’s a definition for you:

A SWOT analysis is a technique to find out the internal and external factors that make a company successful or not.

In other words, it’s a tool to analyze in detail how your online shop is doing so as to design a long-term strategy.
The term “SWOT” is an acronym:

• Strengths
• Weaknesses
• Opportunities
• Threats

You can see it more clearly in the SWOT chart below:

Don’t forget that:

• Strengths and weaknesses are internal factors and, therefore, depend exclusively on you.
• Threats and opportunities are external factors that you can’t do much about apart from bearing them in mind.

Having explained this and depicted this in our SWOT diagram, we’ll now tell you why it’s such an important concept. 

Why You Need a SWOT Analysis for Your eCommerce

If you take some time to carry out a SWOT analysis for your online business and the competition, you’ll be able to come up with a strategy to set you apart from the rest of the shops in your market niche.
But there’s more to SWOT than just that. You can also:

• Spot opportunities to give your business a boost in the right time by making optimal decisions.
• Identify your own weaknesses before they jeopardize the profitability of your business. 
• Locate threats in order to minimize or even neutralize them. 

Even though you’ll most frequently do a SWOT analysis for your online business as a whole, you can also do it for:

• A particular project.
• A specific marketing for eCommerce campaign.
• The development of a certain product.

Let’s move on to the lowdown on how to design a good SWOT analysis for eCommerce.

Benefits of Using SWOT Analysis for eCommerce

In the dynamic realm of eCommerce, gaining an edge requires a strategic approach that considers internal and external factors. The SWOT analysis, representing Strengths, Weaknesses, Opportunities, and Threats, has become a favored tool for thriving in the digital market. Here are the advantages:

1. Strategic Planning and Decision Making: The SWOT analysis forms the foundation of strategic planning. By recognizing internal strengths and weaknesses, informed decisions can be made to capitalize on strengths and alleviate weaknesses. This approach aligns resources with opportunities and prepares for threats.

2. Holistic Business Understanding: ECommerce involves intricate operations, technologies, and customer interactions. SWOT analysis encourages a comprehensive view, revealing areas for improvement and leverage points for growth.

3. Enhanced Competitor Analysis: Understanding rivals is crucial in online selling. SWOT analysis not only reveals your own position but also provides insights into competitors’ strategies and vulnerabilities, fostering a competitive advantage.

4. Adaptation to Trends: ECommerce is fluid; trends shift rapidly. SWOT analysis facilitates quick adaptation by identifying emerging opportunities, allowing adjustments to business models and marketing strategies.

5. Clear Goal Setting: Clarity in goals is pivotal. SWOT analysis aids in setting achievable objectives by identifying areas needing improvement and those ripe for growth, be it product expansion, better service, or online presence.

Necessary Background Info to Properly Do a SWOT Analysis for Your Online Business 

Before you get ahead of yourself and start filling out charts on a piece of paper, you’ll need to do some research in order to gather all the necessary information to carry out a useful and realistic analysis.
To perform your SWOT analysis for eCommerce, you need:

• Time: Depending on the size of your business, it might take days or even months.
• Data: Information that’s both objective (financial details, traffic and sales metrics, etc.) and subjective (customer satisfaction, value proposition, unique resources, research on your competition, etc.).

It’s crucial to do the analysis correctly and to plan a strategy in accordance with the results you obtain.

How to Write a SWOT Analysis of Online Selling

After doing all the background research, you’ll have loads of information about your own business, sector, and competitors.
That means it’s time to enter all that data into a SWOT matrix so you can make strategic decisions to improve your business.
And to do that, you’ll need to know what to include in each quadrant of the SWOT matrix:

✅ 1. Strengths

As we’ve said, strengths are internal factors within your business.

They are your strongest points – the things you’re really good at that give you a leg up over the rest of the online shops in your sector.

They’re not always easy to spot since you must take into account not only your own perspective but also your customers’ opinions.
Sound too complicated?
Here’s a little trick: Write down a list of the defining features of your company and then think about whether they can be considered strengths. You can do it quite easily by comparing yourself with the competition.
For example, if most companies in your sector offer high-quality products just like you, that’s not a strength of your business – rather, it’s a necessity generated by the market.
However, if the others sell lower-quality items, it is indeed one of the strengths of your eCommerce. 
Other aspects we can consider to be strengths are:

• Product selection: Your product catalog can be broad or more specific for a particular niche. It doesn’t always have to align with the best-selling products on the internet.
• Shipping: You can improve the logistics by making it faster, safer, or cheaper than the rest.
• Return policy: When creating your online store’s return policy, tailor it to your customers’ needs and keep it simple and clear.

Once you’ve figured out what your strongest points are, it’ll be easier to focus on them to drive better results from your e-commerce.

✅ 2. Weaknesses

This point is harder to tackle because you have to be realistic and may face some unpleasant circumstances you didn’t anticipate.

Your focus should be on finding whatever is hindering your business or what your competitors are doing better than you.

Some of the most common weaknesses for online shops are:

• Financial resources: Does your budget make it hard to invest in your business?
• Shipments: If, for example, you sell perishable or bulky products, shipping is more expensive, which reduces the profitability of your sales.
• Payment distrust: Some clients are still reluctant to buy online, which is why it’s important to have different payment methods).
• Lack of a clear value proposition: This means that you don’t clearly differentiate yourself from the competition.

Despite being an internal factor, having an external opinion is also advisable.
For example, you can ask your customers if they think there’s something you could improve upon. That’s another way of discovering weaknesses you may have never considered.

✅ 3. Opportunities

These refer to any given scenarios that might come up in the market that your shop can take advantage of to improve its position with the resources it already has available.
Opportunities may come in different shapes:

• Increase in a product’s demand: For example, anything worn by influencers at popular events usually sells out in online clothes shops within hours. It could be very beneficial for your eCommerce to work with influencers to increase your product’s demand.
• Technological improvements: The use of productivity tools can improve your production process and reduce costs.
• Innovative niches: If you detect an underexploited niche, then that’s a great opportunity to widen your potential market.
• Changes to legislation: For example, they may pass a law affecting your sector that makes your clients more willing to make a purchase, so it’s important to learn about the legal requirements of launching an online shop.

Focusing on your strengths may even lead to detecting and generating more opportunities.
Likewise, you can generate more opportunities by neutralizing some of your weaknesses.

✅ 4. Threats

Threats are external factors to your company.

They refer to potential changes within your sector or country that might directly affect business growth.

One example is a change to your country’s legislation that directly affects your products.
Other examples may have to do with strategic movements from a sector giant, like when Netflix killed Blockbuster (and how it’s now killing off traditional cable TV).
In order to identify threats, it’s essential to ask yourself some questions, however unlikely they seem at first:

• Are there any legal hurdles that could slow down your company’s growth?
• Could my market niche be attractive to a bigger company?
• Are my competitors growing rapidly?

That is to say, ask yourself about anything posing a possible risk to the company or its growth prospects.

This is a simple eCommerce SWOT analysis example:

After taking a look at this SWOT analysis of online selling example and seeing some of the opportunities and threats of this online business, you probably have a better idea of how to do a SWOT analysis of your online business.

Tips for Writing a SWOT Analysis for Online Selling

Creating a robust SWOT analysis demands careful analysis. Here are essential tips for an effective analysis:

1. Be Objective and Honest: Objectivity is key. Address strengths and weaknesses truthfully. Analyze external opportunities and threats impartially.

2. Involve Stakeholders: Engage diverse viewpoints. Marketing, customer service, and sales teams offer valuable perspectives.

3. Focus on Specifics: Avoid generalities. Detail how strengths contribute to customer satisfaction, for example.

4. Prioritize: Not all factors are equal. Prioritize based on impact to allocate resources efficiently.

5. Link Strengths to Opportunities: Show how strengths can harness opportunities. A strong social media presence can tap into new customer segments.

6. Mitigate Weaknesses against Threats: Analyze how weaknesses worsen threats. Limited payment options might hinder competitiveness.

7. Identify Trends: Detect patterns. Numerous opportunities tied to a strength might signal a strategic direction.

8. Set Actionable Goals: Translate analysis into goals. Define steps to leverage strengths, address weaknesses, seize opportunities, and mitigate threats.

9. Regularly Review and Update: ECommerce evolves. Regularly refresh the analysis to stay aligned with business goals and market changes.

By adhering to these guidelines, you’ll craft an ecommerce SWOT analysis that captures your online selling business succinctly and guides strategic choices for growth and achievement.

Right, so what do I do with the SWOT analysis of my online business now?

Once you’ve carried out your SWOT analysis for online business, you’ll have created a nice overall view of your company’s situation.
You can implement several actions after analyzing the results:

• Boost strengths: Keep doing what you’re already doing well and try to improve even more.
• Deal with weaknesses: Neutralize or fix as many as possible.
• Minimize threats: Mitigate as many as you can while bearing in mind that you can’t control all of them (but you can be better prepared to face them).
• Make the most of the opportunities you get: Identify potential opportunities in order to set new goals for your business.

By following this strategy and using our SWOT analysis template, you will not only avoid risks and pitfalls, but also propel your business in an effective way. And that’s what really matters to you at the end of the day.

Where Are You Going to Start Gathering Information for Your eCommerce SWOT Analysis?

This matrix is a powerful tool that also happens to be relatively easy to use.
By doing a SWOT analysis of your online business, you’ll be able to:

• Detect trends before your competitors do.
• Minimize your weaknesses.
• Focus on your strengths.

In sum, it’ll let you design a long-term strategy to ensure success in your online shop.

Don’t forget to download our Free SWOT Analysis Template to get started on improving your eCommerce business.

Use the SWOT analysis sample from the article to help you get started. It’s time to grow your online store with SWOT analysis for eCommerce!