Page 37 - (DK) The Business Book

START SMALL, THINK BIG 35 35

See also: Beating the odds at start-up 20–21 ■ Stand out in the market 28–31 ■ How fast to grow 44–45 ■ The Greiner
curve 58–61 ■ Creativity and invention 72–73 ■ Changing the game 92–99 ■ Balancing long- versus short-termism 190–91

Amazon.com was a first-mover
in the online retail market. It has
dominated the industry since its
launch in 1995, creating strong brand
recognition and a loyal customer base.

access beneficial terms with key
suppliers (who may also be eager to
enter the new market). Additionally,
first-movers may be able to build
switching costs into their product,
making it expensive or inconvenient
for customers to switch to a rival
offering once an initial purchase
has been made. Gillette, for example,
having invented the safety razor in
1901, has consistently leveraged its
first-mover advantage to create new
products, such as a “shaving system”
on by the example of Amazon, a brand name strongly linked to that combines cheap handles with
businesses spent millions pitching the market itself. First-movers also expensive razor blades.
themselves headlong into new have more time than later entrants
online markets. Conventional to perfect processes and systems, Market strategies
wisdom was that being first and to accumulate market In the case of Amazon.com, first-
ensured that the company’s brand knowledge. They can also secure mover advantage consisted of a
name became synonymous with advantageous physical locations combination of factors. In the newly
that segment, and that early market (a prime location on a main street emerging e-commerce market,
dominance would create barriers to of a city, for example), secure the customers were eager to try online
entry for subsequent competition. employment of talented staff, or purchasing, and Amazon was well
In the end, however, placed to exploit this growing
overspending, overhype, and curiosity. Books represented a small
overreaching into markets where and safe initial purchase, and
little demand existed was the Amazon’s simple web design made
downfall of many fledgling dot-coms. buying easy and enjoyable. Early
With notable exceptions, businesses sales enabled the organization to
found that promised returns were First-mover advantages adapt and perfect its systems,
not being realized and funds quickly accrue when a company and to adjust its website to match
ran short—and for many of these gains a first-mover opportunity customer needs—adding, for
first-movers, failure followed. (through proficiency or luck) example, its OneClick ordering
and is able to maintain an system to enable purchases
First-mover advantage edge despite subsequent entry. without entering payment details.
Being first out of the block David Montgomery and Amazon was also able to build
undoubtedly has its advantages, Marvin Lieberman distribution systems that ensured
and in the case of the dot-coms, quick and reliable delivery of its
those advantages were exaggerated products. Although competitors
to the extreme. First-movers often could replicate these systems,
enjoy premium prices, capture customers already trusted
significant market share, and have Amazon, and the brand loyalty ❯❯