Unit 1 – Discussion Question
Name
Institution
During the early days of e-commerce, the first-mover advantage was touted as one way to success. On the other hand, some suggest that being a market follower can yield rewards as well. Which approach has proven to be more successful—first-mover or a follower?
Arguably, the first mover approach has proved to be more advantageous than the follower approach depending on how it is executed. Lee, Choi, & Nariu ( 2014) posits that first-mover approach has an advantage and tends to be successful due to the presence of technological leadership, preemption of scarce assets and switching cost of buyer’s uncertainty which cannot be attained by followers. In essence, companies that gain FMA have the upper hand in their research and development, unlike the second mover approach. For instance, Amazon went online WWW in July 1995 and expanded as an online book retailer that currently the largest retailer with over 27 million active accounts (Banker, 2016). Contrary, market followers such as B&N even though they enjoyed the economies of scale due, to centralized logistics and distribution centers. Their success in the e-commerce market cannot be compared to the of Amazon. Thus, it is crystal clear that in the e-commerce market, companies that adopt the FMA approach have the upper hand in term of resources, cost of capital, and human resources.
References
Banker, S. (2016, June 5). Is Amazon Building a First Mover Advantage in Logistics? Retrieved from https://logisticsviewpoints.com/2016/06/06/does-amazon-have-a-first-mover-advantage-in-logistics/
Lee, D., Choi, K., & Nariu, T. (2014). First-Mover and Second-Mover Advantage in a Vertically Related Market. SSRN Electronic Journal. doi:10.2139/ssrn.2447158