Listing your book's competition is a large part of your proposal; sometimes--if you are writing a book on exorcism--it is a very LARGE part of the proposal. (There are a gazillion books out there on exorcism!) Because of this, I will spend a few days going over this valuable proposal point.
Knowing you competition, as Mentor M says, is important because "Editors must prove to their editorial board that a book can stand up to the heat of competing books without burning out." However, if you are writing an ebook or are self-publishing in general, don't pass on this important proposal point. Knowing your competion is just plain ol' good marketing sense. After all, competion isn't always your nemisis--sometimes your competitors work as marketing partners. Without the help of other writers who work to stir up interest for a certain topic, your book just may stay hidden.
Describing your book's competition is not always the easiest task. Writers, I am told, mess this area up more than any other proposal point, which is probably why mentor M warns us that we could get rejected by underestimating our compition. Reason No. 45: You Demonstrate No Knowledge/Faulty Knowledge of Your Competition.
I'm not sure why so many authors have difficulty in this area. I suppose if I use myself as an example, it's because we just haven't done enough homework.In my first proposal for the MotherHeart of God, I simply slapped down a few books I knew existed on the topic. But after reading How to Write a Book Proposal, I realized I was going to need to do some fine tuning. And thank goodness I did. My now extensive (and it's not overly extensive leading to boredom), list of competing books shows me off as one who is not only knowledgeable on the topic of the femininity of the Holy Spirit, but also as one who knows how to compliment her competition. Another bonus for doing my homework:I know what books are soon to be released on the topic. Researching the competition wasn't easy. I had to do a lot of reading, and I ordered quite a few books on-line. But because I did my homework, I feel much more confident as a writer.
There is always competition. And if you are truly interested in your topic you should know who your competition is. In our digital age we can't just think "books" anymore we must look at ebooks, websites and blogs. As mentor M says (and I'll sum his words up for you) don't be stupid. In other words, don't fall prey to the idea that saying your book has no competition is a good thing: "My book is the only book out there on this topic!" This, to an agent, just means you haven't done your homework. Remember, Agents know a lot about books. They'll know if you are handing them a line.
For more info on competition check out the following sites:
Chris Webb's Publishing blog