Trade Area Analysis

Understanding Trade Area Analysis With Real Examples

Recently, companies have been looking to understand if their offices, subsidiaries, and warehouses will succeed or fail in a particular location area even before placing them.  Of course, many factors need to be considered; some of them can be easy to identify, like a competitor’s presence, but others not so much, like the cross-company relationships between businesses inside an area.

Trade Area Analysis Relationships between business

That´s why decision-makers use trade area analysis to secure their investment and the success of their expansion and relocation strategies.

We want you to get a better understanding of the subject, so in this article we’ll cover the following topics:

What is a trade area?

Trade Area Analysis Map

Trade area analysis consists of analyzing a specific area to understand all the business and commercial activities of companies, competitors, and users.

What is trade area analysis, and why is it crucial for businesses?

Trade Area Analysis or TAA is a new Big Data tool that uses the power of geolocation data to analyze an area from different angles and perspectives to determine if a location represents a good fit for a business strategy.

Trade area analysis is one of the easiest and most precise ways to understand an area’s market potential, consumer and competitor behavior, and logistic advantages and disadvantages. 

Trade Area Analysis for new locations

Using an interactive map, you can make an in-depth exploration of the area’s businesses and collect valuable insights to:

  • Classify all the companies’ profiles.
  • Forecast demand
  • Plan and structure an effective supply chain strategy.
  • Get accurate information about a facility.

For example, we explored Mckinney’s industrial area in Texas using TAA. As you can see, in this area we can find different businesses from manufacturers to equipment rental agencies. 

What is a Point of Interest (POI)?

TAA not only gives you a general picture of all the business connections in a selected area but also brings a detailed report of each company on the map. These company reports are what we call POIs analysis. 

Trade Area Analysis Points of Interest

Points of interest are specific geographic point locations, and their analysis can help identify competitors and potential business alliances within an area. 

Some insights you can get from another company using POI analysis are:

  • Facility size area.
  • Main business relationships categories.
  • Company´s business ecosystem.
  • “Detected trips map.” 

What is a “Relationships Map”?

One of the most valuable insights a POIs analysis can bring is what we call “Relationships Map.” 

Trade Area Analysis Relationship Map

These maps show a company’s business relationships outside its trade area and inside the US. In the example, we can see an Amazon warehouse and its connections with other company facilities around the country.

Case Study: Exploring an Amazon Warehouse

Trade Area Analysis POIs analyisis

This is an example of a POIs analysis report . As we can see, this Amazon’s warehouse:

  • Registers 2,096 monthly trips.
  • Has business relations with five other Amazon facilities (Mainly with another Amazon Warehouse in Houston).
  • Has strong business connections with three major private companies: Wistron GreenTech (Recycling center), Kens Food Inc (Distributary), and Allsafe Self-Storage (Self-storage facility).

How can you use Trade Area Analysis to improve your business strategies?

At PREDIK Data-Driven, we have developed Trade Area Analysis tools with an exact methodology that allows us to:

1) Identify and collect all the sources of information that are needed.

2) Evaluate and analyze each data piece from all the business entities within an area.

3) Visualize all the POIs and their business connections.

Let us help you make better decisions through reliable and complete data. We have more than 14 years working with top companies like Adidas, Panasonic, Shell and Michellin.