Second Mover Advantage: Is Finishing Second In A Race Better Than First?

Second Mover Advantage: Is Finishing Second In A Race Better Than First?

Our favorite firms Amazon, Apple, Google, Netflix, Facebook, etc were never the pioneers in their industry. Nonetheless, they today stand as market leaders. Quite amusing, isn’t it? Well, since ages the idea of being the first in the industry has been so talked about that magic of being a second mover is almost evaporated. Well, this story attempts to bring its charm back! Find out about some typical late entrant benefits and some firms that capitalized on it.

Crux of the Matter

What Is Second Mover Advantage?
Simply put, it is the advantage that a company could get by becoming the second entrant into a new market These players, build upon the research and credibility of the first mover to not just develop but climb upon the growth ladder by stepping on the 1st mover’s market share.

Peculiar Advantages

A. Free Rider
The new entrant can understand the techniques and mistakes made by the first entrant and save expenses on R&D, buyer education, and infrastructure development. For example, private airlines use the already built public infrastructure like parking lots, control system, etc to operate their businesses, thus acting as a free rider.

B. Overcoming Market Uncertainty
The product introduced by second entrants will not be new to the audience, hence potential response can be predicted, lowering the risk factor. Apple understood the smartphone market after studying Blackberry phones. They studied the need of the audience, targeted the gap and then dominated the market by squashing Blackberry.

C. Altercate Than Create
T S Eliot said “Good artists borrow, great artists steal”. Among businesses, this saves the entire research cycle cost. Apple never invented MP3 players. They just changed the way music can be heard through the iPods.

D. Steal The Market Share, Later Make Them Obsolete
It is what Jio did in India’s telecom industry, Smartphones did to Motorola and Nokia, Computers did to Typewriters and Digital Cameras did to Kodak are all examples of second mover companies. They entered, disrupted the market and not just trashed but replaced their competitors.

The Trick
However, to be successful as a second mover, the key is to be quick, to be agile! And more than anything, to attack on the gap established. Make an offering that was missed by the previous players. Instead of finding a solution to a new problem, look for the existing problem and try to find its solution.

  • Book Stacks Unlimited was an American online bookstore created by Charles M. Stack in 1992, three years before Jeff Bezos launched It moved to the Internet as in 1994, eventually attracting a half million visitors each month.
  • Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets is a book written by Paul Geroski and Constantinos Markides in 2005. According to the authors, a “fast second company” lets other companies innovate and experiment to create new markets. Then the fast second enters the market just as the dominant design is about to emerge, helps create the dominant design, and uses its size to capture the market.
  • In journalism, a scoop or exclusive is an item of news reported by one journalist or news organization before others, and of exceptional originality, importance, surprise, excitement, or secrecy. The word scoop is of American origin, first documented in 1874. As a verb, meaning to beat someone in reporting first, it is first recorded in 1884.