If you're just starting up, the biggest question to ask yourself would be, 'does this excite you, and will it excite you 3 years down?'
If not, you got your answer.
If yes, any space, however saturated or dull, has scope for innovating and/or improving the customer experience. For that, while you need to be aware of the competition, it's best to focus on understanding customer needs and catering to them. Some of the greatest innovations have sprung from just understanding the customer and their needs a little better, and not blindly following the competition stating nothing more can be done.