Understanding Indirect Competitors: A Complete Guide for Founders

Why Most Founders Miss Their Biggest Competitive Threat

You’ve mapped out your direct competitors. You know their pricing, features, and market positioning inside out. But here’s the problem: while you’re focused on the obvious rivals, your customers are choosing solutions you never even considered as competition.

These are your indirect competitors - businesses that solve the same customer pain point but through completely different approaches. For a meal delivery service, indirect competitors aren’t just other delivery apps; they’re meal kit subscriptions, grocery delivery services, frozen meal brands, and even that popular restaurant with quick takeout. They’re all competing for the same customer need: convenient meals without cooking from scratch.

Understanding indirect competitors is crucial for startup founders because they reveal the true scope of your competitive landscape. They show you alternative solutions customers are already using, help you identify market gaps, and often signal where your industry is heading. In this guide, we’ll explore how to identify, analyze, and strategically respond to indirect competition.

What Are Indirect Competitors and Why They Matter

Indirect competitors serve the same customer need or solve the same problem as your business, but they do so through different products, services, or approaches. Unlike direct competitors who offer similar solutions, indirect competitors represent alternative pathways to the same destination.

The Key Characteristics of Indirect Competition

To properly identify indirect competitors, you need to understand their defining features:

• Different solution type: They use a distinct product category or service model to address the problem
• Same customer pain point: They solve the underlying need your customers have
• Overlapping target audience: They attract similar customer demographics or psychographics
• Budget competition: They compete for the same dollars in your customer’s wallet
• Alternative consideration: Customers actively consider them when evaluating solutions

Why Indirect Competitors Are More Dangerous Than You Think

Many founders underestimate indirect competition, focusing exclusively on direct competitors. This blind spot can be fatal. Here’s why indirect competitors deserve your attention:

First, they represent the status quo and existing customer behavior. People are already using these solutions and have established habits around them. Displacing an indirect competitor often requires changing behavior, which is harder than offering a better version of what customers already do.

Second, indirect competitors can pivot into your space faster than you expect. They already have customer relationships, trust, and infrastructure. A seemingly unrelated player can become your biggest direct competitor overnight with the right product evolution.

Third, they reveal unmet needs and market opportunities. By studying why customers choose indirect solutions, you discover gaps in your offering and areas where you can differentiate.

How to Identify Your Indirect Competitors

Finding indirect competitors requires thinking beyond product categories and focusing on customer jobs-to-be-done. Here’s a systematic approach:

Start With Customer Pain Points and Goals

Begin by clearly defining the core problem you solve and the outcome customers want. For example, if you’re building a project management tool, the customer goal isn’t “to use project management software” - it’s “to keep team projects organized and on track.”

Once you’ve identified the true customer need, ask: “What else do people use to achieve this outcome?” The answers often surprise you. Teams might use spreadsheets, email threads, physical kanban boards, regular status meetings, or even shared documents. These are all indirect competitors.

Follow the Customer Journey and Decision Process

Map out your typical customer’s decision-making process. What do they research? What alternatives do they consider? What solutions did they try before finding you?

Talk to your customers directly and ask questions like:

• “What were you using before our product?”
• “What other solutions did you evaluate?”
• “If we didn’t exist, what would you use instead?”
• “What almost stopped you from buying?”

These conversations reveal the real competitive landscape, which is often much broader than you imagined.

Analyze Customer Communities and Discussions

Understanding indirect competition requires listening to real customer conversations about their pain points and existing solutions. While you can monitor social media manually, this approach quickly becomes overwhelming and time-consuming for busy founders.

This is where PainOnSocial becomes invaluable for competitive intelligence. Rather than spending hours scrolling through Reddit threads trying to piece together what alternatives customers are considering, PainOnSocial’s AI-powered analysis surfaces exactly what people are actually using and complaining about. When you search for pain points in your industry, you’ll discover not just what direct competitors people mention, but all the workarounds, substitutes, and alternative solutions they’re discussing - these are your indirect competitors.

For instance, if you’re building a budgeting app, PainOnSocial might reveal that people frequently mention using physical cash envelopes, Excel templates, or even just “keeping it all in my head” as their current solutions. These insights show you the full spectrum of competition you’re facing, from sophisticated software to manual methods, helping you understand what you need to be better than to win customer adoption.

Research Adjacent Industries and Categories

Look at industries that serve similar needs but through different models. If you’re in B2B SaaS, examine how consultants, agencies, or freelancers solve the same problem manually. If you’re in consumer products, investigate services, digital solutions, or DIY approaches.

Study category leaders in adjacent spaces. What features are they building? How are they positioning themselves? Often, these players are one strategic pivot away from becoming direct competitors.

Analyzing Indirect Competitors Strategically

Once you’ve identified your indirect competitors, you need to analyze them thoughtfully to extract actionable insights.

Evaluate Their Strengths and Weaknesses

For each indirect competitor, assess:

• What they do better: Why do customers choose them? What advantages do they have?
• Where they fall short: What complaints do customers have? What gaps exist?
• Their barriers to switching: What makes it hard for customers to leave them?
• Their potential to evolve: Could they easily add features that compete directly with you?

This analysis helps you position your solution more effectively and identify where you can create clear differentiation.

Understand the Trade-offs Customers Make

When customers choose an indirect competitor over your solution, they’re making specific trade-offs. Understanding these trade-offs reveals your strategic options.

For example, customers might choose a manual spreadsheet solution over your automated software because:

• It’s free (prioritizing cost over efficiency)
• They already know how to use it (familiarity over features)
• It’s more flexible (customization over structure)
• They don’t need to convince others to adopt it (simplicity over collaboration)

Each trade-off points to a potential positioning strategy or product improvement that can make your solution more attractive.

Map the Competitive Positioning Landscape

Create a positioning map that includes both direct and indirect competitors. Use axes that matter to customers - not just features, but outcomes, ease of use, price points, or time to value.

This visual representation helps you identify:

• Crowded areas where competition is intense
• White space where no solution exists
• Your unique position in the overall landscape
• Potential threats from competitors moving toward your position

Strategic Responses to Indirect Competition

Understanding indirect competitors is only valuable if you act on those insights. Here are strategic approaches to address indirect competition:

Position Against the Real Alternatives

Your marketing shouldn’t just compare you to direct competitors. Address the actual alternatives customers are considering, including manual solutions, DIY approaches, or “doing nothing.”

Frame your messaging around the problems with current solutions. If customers use spreadsheets, talk about the time wasted on manual updates, the risk of errors, and the lack of collaboration features. Make the pain of the status quo clear and compelling.

Lower Switching Barriers

Indirect competitors often win because they’re easier to start with or require less change. Counter this by making your solution as frictionless as possible:

• Offer migration tools or services to move data from common alternatives
• Provide templates that replicate familiar workflows
• Create a generous free tier that lets people try before fully committing
• Design onboarding that minimizes learning curve

Partner or Integrate With Indirect Competitors

Sometimes the smartest move isn’t to fight indirect competitors but to work with them. If customers are heavily invested in a particular solution, integration can be your entry point.

For example, many SaaS products integrate with Excel or Google Sheets rather than trying to replace them entirely. They meet customers where they are and gradually prove their value.

Learn and Adapt From Their Success

Indirect competitors exist because they’re solving something real for customers. Study what makes them successful and consider how you can incorporate those strengths.

If manual solutions are popular because of their flexibility, can you add more customization? If customers love a competitor’s simplicity, can you streamline your interface? The best product strategies borrow proven ideas from across the competitive landscape.

Common Mistakes When Dealing With Indirect Competitors

Avoid these pitfalls that trip up even experienced founders:

Ignoring Them Entirely

The biggest mistake is dismissing indirect competitors as irrelevant because they’re not in your category. Remember: your competitors are whoever is competing for your customer’s attention, time, and money. If customers choose them instead of you, they’re competitors - regardless of how different they seem.

Trying to Be Everything to Everyone

When you discover all the alternatives customers consider, it’s tempting to add features to match every indirect competitor. Resist this urge. You can’t out-spreadsheet Excel or out-manual the manual approach at their own game.

Instead, focus on your unique value proposition and be dramatically better at your core offering. Win by being the best at what you do, not by being mediocre at everything.

Assuming They Won’t Evolve

Today’s indirect competitor can become tomorrow’s direct rival. Stay vigilant about how these players are evolving. When you see an indirect competitor adding features that move them closer to your space, take it seriously and respond strategically.

Turning Competitive Intelligence Into Action

Understanding your indirect competitors isn’t just an academic exercise - it’s about making smarter strategic decisions. Here’s how to put this knowledge to work:

First, update your competitive positioning and messaging to address the real alternatives customers face. Make sure your marketing speaks to people currently using indirect solutions, not just those already shopping in your category.

Second, let competitive insights inform your product roadmap. Build features that address the gaps customers experience with current solutions, both direct and indirect. Prioritize improvements that make switching from indirect competitors easier and more valuable.

Third, train your sales and customer success teams on the full competitive landscape. They should understand why customers might choose spreadsheets over your software, or a manual process over automation, and how to address those concerns effectively.

Fourth, monitor the landscape continuously. Competitive dynamics shift constantly. Set up systems to track indirect competitors’ moves, new alternatives entering the market, and changing customer preferences.

Conclusion: Expanding Your Competitive Vision

Indirect competitors represent the full spectrum of choices your customers face when solving their problems. By understanding these alternatives - from sophisticated products to manual workarounds - you gain a complete picture of your competitive landscape and can make more informed strategic decisions.

The founders who succeed aren’t those who ignore indirect competition or get overwhelmed by it. They’re the ones who study it carefully, learn from it, and use those insights to build products that are genuinely better than all the alternatives customers consider.

Start by identifying your true indirect competitors today. Talk to your customers about what they used before and what they’d use if you didn’t exist. Map the full competitive landscape. Then use that knowledge to sharpen your positioning, improve your product, and create value that makes the choice obvious.

Your competitive advantage isn’t just being better than the obvious rivals - it’s being better than every alternative your customer considers, including doing nothing at all.