What is the Benchmarking?
Benchmarking is a process of comparing a company’s offering against its competitors in a given industry. In shipping, the main comparative points are the shipping cost and the transit time, while in e-commerce, it refers to the product price and its results. Benchmarking allows a company to position itself better in a competitive market, allowing them to acquire more customers.
Significance of Benchmarking in an E-commerce Shipping and Delivery
A comparative analysis in the respective industry is vital, allowing a company to improve its product or service offering and serve more end-users.
- Offer optimization and customer acquisition: Benchmarking compares, identifies, and highlights specific shortfalls in one’s offering. Such insight helps a company to fill the identified drawbacks and improve its product offering. As the offer improves, the chances of acquiring more customers also increase.
- Future-pacing: Consistent benchmarking allows a company to understand the market dynamics while zeroing down on future trends. Identifying future trends can place a company in the driving seat, as they have more chances of leveraging it.
Prerequisites of Benchmarking and How It Works
Market research and information availability are two primary requirements to practice benchmarking. Once the mentioned criteria have been fulfilled, a company needs to follow the below steps.
- Metric identification: A company must choose specific components for benchmarking. It can be price, discounts, reviews, and so on.
- Analysis: The market research is to be compared with the chosen components.
- Optimization: A company will identify some drop-off points that require rectification based on the analytical results.
Use Case with Benchmarking
A Philippines-based merchant selling ready-to-eat cake mixes decided to run a benchmarking test on its industry. They identified that other companies sold the products from somewhere between ₱10 to ₱15. Based on the benchmarking results, the seller created an offer to provide cup-cake liners and a 5-minute cake recipe book for free along with the cake mix. Subsequently, the offer clocked the highest sales.