Indirect competitors, with examples: the four kinds of rival, why a search based list misses two of them, and what to do about each
A direct competitor sells what you sell. An indirect one takes the same money for a different thing, a substitute removes the need, and the fourth rival is the customer doing nothing. Worked examples in six categories, how to find the ones you cannot see, and the response to each.
Published by AI Knows Us · Updated 20 October 2026
An indirect competitor solves the same problem with a different product, so it takes your revenue without ever appearing in a list of businesses like yours. A takeaway loses a Friday order to a supermarket ready meal. A gym loses a member to a set of weights in a spare room. An accountant loses a client to accounting software. None of those rivals sells what you sell, none of them turns up when you search your own category, and between them they explain most of the lost sales nobody can account for. There are four kinds of rival in total, and two of them are invisible to the way most businesses build a competitor list.
The four kinds, with examples
| Kind | What it is | Example | Why it wins |
|---|---|---|---|
| Direct | Sells the same thing to the same buyer | Two plumbers covering one town | Price, availability, or being easier to find |
| Indirect | Solves the same problem with a different product | A ready meal against a takeaway. A coach against a course | It is cheaper, faster or less effort for the same outcome |
| Substitute or replacement | Removes the need for the category | A video call instead of a flight. Software instead of a service | A change in technology or habit, not a change in your market |
| Non consumption | The buyer does nothing at all | The leaking tap that stays leaking for a year | Inertia, uncertainty about cost, or no deadline |
The last one is the largest competitor in most considered purchases and the one nobody puts in a presentation. If your sales notes are full of deals that went quiet rather than deals that were lost to a named rival, your main competitor is the customer deciding later.
Six categories, worked through
- A gym. Direct: the other gym on the high street. Indirect: home equipment, a running club, a fitness app. Substitute: a walking habit that needs nothing. Non consumption: the January intention that never starts.
- An accountant. Direct: the practice two streets away. Indirect: bookkeeping software with a support plan. Substitute: the business owner doing it themselves in a spreadsheet. Non consumption: filing late and paying the penalty.
- A restaurant. Direct: the restaurant next door. Indirect: a delivery app, a supermarket meal deal, a pub. Substitute: cooking at home. Non consumption: staying in and eating what is in the fridge.
- A hotel. Direct: the hotel across the road. Indirect: a short let apartment, a serviced flat. Substitute: a day return instead of staying over. Non consumption: staying with family.
- A software product. Direct: the named competitor in every comparison. Indirect: a spreadsheet, a generalist tool, an internal build. Substitute: a change of process that removes the task. Non consumption: carrying on with the current mess.
- A marketing agency. Direct: another agency of the same size. Indirect: a freelancer, a contractor, a junior hire. Substitute: a self service platform the client runs themselves. Non consumption: the marketing that never gets done.
Why your competitor list misses two of them
Most competitor lists are built from search results, which is a sound method and has a known blind spot. A results page shows businesses that have written pages about your category, so it surfaces direct rivals and the aggregators that sit above them. It does not surface the ready meal, the spreadsheet or the spare room, because none of those is competing for your keyword. Building the search list is still the right first step, and the method for it is in competitor analysis as a repeatable method, which is explicit that search competitors and business competitors are two different lists.
Four ways to find the rivals the results page cannot show you.
- Ask the people who did not buy what they did instead. One question, asked of ten lost enquiries, produces a better indirect list than any tool. The answers are usually a product you had not considered or nothing at all.
- Read the versus and alternative queries. What buyers type after your category name tells you which other categories they are weighing you against.
- Put an open text question on the enquiry form. How are you handling this at the moment. The answers name the substitute.
- Read reviews in adjacent categories. People explain what they switched from, which is the clearest statement of an indirect rivalry you will find in public.
What to do about each
| Rival | The wrong response | The response that works |
|---|---|---|
| Direct | Matching their price | Differentiating on one named axis a buyer can check: speed, specialism, guarantee, proof |
| Indirect | Explaining why your category is better in general | Competing on the job rather than the category, in the buyer's own words, with the cost of the cheaper option made visible |
| Substitute | Ignoring it because it is not your category | Reframing the comparison, and moving towards the part of the job the substitute cannot do |
| Non consumption | More persuasion | Lowering the risk and effort of starting: a small first step, a fixed price, a deadline that is real |
The indirect row is where most marketing goes wrong, because the instinct is to argue for the category. A takeaway that advertises how good takeaways are has not answered the ready meal. One that says hot, at your door, in thirty minutes, for less than two ready meals has.
Putting them in the analysis without drowning in it
Three to five direct competitors with full columns, and one line each for the indirect and substitute rivals, naming what the buyer gets from them and what it costs. That is enough. A sheet with twelve rivals of four kinds is a sheet nobody refreshes, and the output that matters is still a decision per finding rather than a complete map. A finished assessment at that size, with a source against every line, is in a competitor assessment, filled in.
One number is worth tracking per indirect rival: how often it comes up unprompted in sales conversations. A substitute that was mentioned twice last year and eleven times this year is the single most useful early warning available to a small business, and it costs nothing to count.
Questions about indirect competitors
What is an indirect competitor in simple terms?
A business that solves the same problem with a different product. It competes for the same money and the same moment without selling the same thing, which is why it rarely appears on a list of companies like yours.
What is the difference between indirect competitors and substitutes?
An indirect competitor offers a different product for the same job. A substitute removes the job: a video call does not replace one airline with another, it removes the trip. In practice the two blur, and the useful distinction is whether your category still gets bought.
Can an indirect competitor become a direct one?
Often, and that is the reason to watch them. A software company that adds a service, or a supplier that starts selling to your buyer directly, arrives as a direct competitor having already built the audience.
How many competitors should I track?
Three to five direct with real detail, plus a one line note on each indirect and substitute rival. The limit is what you will actually refresh each quarter.
How do I find indirect competitors I have never heard of?
Ask lost prospects what they did instead, read the alternative and versus searches in your category, and put one open question on your enquiry form. All three cost nothing and all three name rivals no tool will show you.
Is doing nothing really a competitor?
In any purchase a buyer can postpone, it is usually the biggest one. The response is not more persuasion, it is removing the risk of starting: a smaller first commitment, a known price, and a reason the date matters.
The rival list an assistant produces
There is now a fast way to see which companies a buyer will consider alongside you, and it does not require asking anybody. Put the question your customers ask to ChatGPT, Gemini, Perplexity or Claude, keep your own name out of it so the answer comes back clean, and read the two or three companies it names and the sentence beside each. The answers routinely include the indirect option, because they are built around the buyer's problem rather than around your category, which makes them a cheap source of exactly the rivals a search based list misses. AI Knows Us asks those buying questions across the main assistants and records who gets named and what the answers were built from.