Introduction

While tracking direct competitors is essential, it often leads to a dangerous form of tunnel vision. Many of the most significant threats to a company’s market share don't come from a mirror image of their own business, but from indirect competitors who solve the same customer problems in entirely different ways.

As industries converge and technology blurs traditional market boundaries, the businesses that thrive are those that can identify where their customers' time and money are truly going.

This guide will break down the nuances of indirect competition, explain why it is critical to track these "hidden" rivals, and provide real-world examples to help you sharpen your competitive edge.

Direct vs. Indirect Competition: What’s the Difference?

While both compete for your customers' attention and budget, they do so through different mechanisms.

Direct Competition

Direct competitors are businesses that offer essentially the same products or services as you, targeting the same customer segment to fulfill the same need. For example, if you own a high-end steakhouse, other high-end steakhouses in your city are your direct competitors. You are fighting over the same "dinner out" budget with a nearly identical value proposition.

Indirect Competition

Indirect competitors, on the other hand, are businesses that offer different products or services but satisfy the same core customer need or solve the same problem. These are often referred to as "substitutes" in economic theory . Using the steakhouse example, an indirect competitor might be a high-end seafood restaurant, a luxury meal-kit delivery service, or even a premium grocery store with a "chef-at-home" section. While the products are different, they all compete for the same "premium dining experience" or "special occasion meal" budget.

🔹 Want to Go Deeper Into Indirect Competition?

If you’d like a more detailed breakdown of how indirect competition works — including how to identify indirect competitors and analyze them step by step — check out our in-depth guide: The Hidden Competition: How to Identify and Analyze Indirect Competitors.

Why It Is Critical to Track Indirect Competitors

Here is why tracking indirect competition examples is vital for your long-term strategy:

1. Anticipating Market Disruption

Disruption rarely comes from a direct competitor doing the same thing slightly better. It almost always comes from an indirect competitor offering a completely new way to achieve a result.

Think of how digital photography didn't just compete with film cameras; it replaced the entire need for physical film processing. By the time traditional film companies realized the threat, the market had already moved on to a more convenient solution.

2. Identifying Shifts in Customer Habits

Customers are constantly looking for the path of least resistance. If an indirect competitor finds a way to solve a problem faster, cheaper, or more enjoyably, your customers will migrate. Tracking these shifts allows you to adapt your product roadmap before you lose your user base. For instance, if you run a traditional news site, your indirect competitors are social media platforms where people now consume "snackable" news updates.

3. Expanding Your Innovation Horizon

When you only look at direct rivals, your innovation is limited to incremental improvements. Looking at indirect competition examples opens up new possibilities. It forces you to ask: "How else could my customer solve this problem?" This mindset leads to breakthrough innovations that can redefine your entire industry.

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Ready to Outmaneuver Your Competition?

Try to track your competitors through Outspy

Try For Free

Ready to Outmaneuver Your Competition?

Try to track your competitors through Outspy

Try For Free

Indirect Competition Examples Across Industries

To help you identify these hidden rivals in your own market, let’s explore several powerful indirect competition examples that have shaped modern business.

1. The Attention Economy: Streaming vs. Gaming

In the world of digital entertainment, the most valuable resource is time. While streaming platforms are direct competitors to each other, they are indirect competitors to video games and social media. A user has a limited amount of leisure time each evening. If they spend four hours playing a battle royale game, that is four hours of lost viewership for a streaming service. This is a classic indirect competition example where the products are entirely different, but the "job to be done" — providing entertainment — is the same.

2. The Transportation Sector: Ride-Sharing vs. Public Transit

Uber and Lyft are direct competitors, but they are potent indirect competitors to city bus systems and subways. When ride-sharing becomes more accessible or affordable, it directly impacts the ridership of public transit. Conversely, if a city invests in a high-speed rail network, it becomes an indirect competitor to short-haul regional airlines. Both are competing for the "point A to point B" need, but through vastly different infrastructures.

3. The Food Industry: Grocery Stores vs. Meal Kits

Traditional grocery stores are direct competitors to one another. However, they face significant indirect competition from meal-kit delivery services. These services don't just sell ingredients; they sell the solution to the "what's for dinner" problem. They provide the recipe, the pre-portioned food, and the convenience of home delivery. They satisfy the same hunger and convenience needs as a grocery store but through a completely different business model.

Indirect Competition Examples (Real Companies)

Below are real-life examples of indirect competition

Example 1: Urban Transportation

Core customer job: Get from point A to point B in a city quickly and conveniently.

From a customer perspective, Uber does not only compete with other ride-hailing apps. It competes with every alternative way to complete a trip. A user deciding how to get to work compares price, speed, comfort, and effort — not categories.

For short distances, a Lime scooter may replace an Uber ride. For longer trips, public transport may be “good enough.” These solutions come from different industries, but they all compete for the same travel decision.

Example 2: Entertainment & Leisure

Core customer job: Relax and be entertained during free time.

Netflix doesn’t lose users only to other streaming platforms. It loses them to any activity that fills leisure time. A user scrolling TikTok for 40 minutes has effectively “churned” from Netflix for that evening.

This type of indirect competition is especially powerful because:

1. it reshapes attention spans

2. it changes expectations around content length

3. it influences how much effort users are willing to invest

This is a classic case of indirect competition driven by the attention economy, where platforms from different categories fight for the same evening hours.

Example 3: Food & Convenience

Core customer job: Eat with minimal effort and acceptable cost.

McDonald’s doesn’t only compete with other fast-food chains. It competes with any solution that answers the question “what do I eat tonight?”

HelloFresh competes by reducing decision fatigue and prep time. DoorDash competes by eliminating the need to leave home. Each solution offers a different balance of cost, effort, and convenience — but all target the same moment of hunger.

Even though these businesses have different cost structures and margins, they are indirect competitors because they replace each other in the customer’s daily routine.

Conclusion

The most successful businesses are those that understand they are not just competing within a product category, but within a customer's life. Your customers don't care about how you classify your business; they care about how well you solve their problems.

By identifying and analyzing indirect competition examples, you gain a much broader perspective on your market. This allows you to spot threats earlier, innovate more effectively, and build a product that truly satisfies the customer's ultimate goal.

🔹 Want to Master Competitor Analysis?

Indirect competition is only one part of the bigger picture. If you want a complete, end-to-end view of how to analyze competitors properly, we recommend reading: Competitive Intelligence: The Ultimate 2026 Guide (Strategy, Framework & Tools).

FAQ

What is indirect competition in business?

Indirect competition occurs when companies address the same customer need but do so through different products, services, or categories.
They don’t compete feature-to-feature, yet they influence the same purchase decision by offering alternative ways to solve a problem.

What is the difference between direct and indirect competitors?

Direct competitors offer similar products to the same audience.
Indirect competitors solve the same underlying problem but in a different way, often coming from another industry or category.

In many cases, customers don’t consciously compare brands rather they compare options.

Why is indirect competition important?

Indirect competition is important because it:

1. affects demand, not just market share

2. explains unexpected churn or slow growth

3. reshapes customer expectations around price, speed, and convenience

Companies often lose customers to indirect competitors without realizing it.

How can I identify indirect competition?

To find indirect competition examples in your niche, start by identifying the core "problem" your product solves. Then, look for any other way a customer could solve that same problem without using your product category. Ask your customers: "If our service didn't exist, what would you use instead?" Their answers will often reveal hidden indirect rivals you hadn't considered.

What are real-world examples of indirect competition?

Common examples include:

1. ride-hailing vs public transport

2. streaming platforms vs social media

3. meal kits vs food delivery

In each case, different solutions compete for the same outcome.