First-Mover Advantage

Definition

A sometimes insurmountable advantage gained by the first significant company to move into a new market.

Information

It is important to note that the first-mover advantage refers to the first significant company to move into a market, not merely the first company. For example, Amazon.com may not have been the first seller of books online, but Amazon.com was the first significant company to make a entrance into the online book market.

First-mover advantage was initially touted as crucial in the Internet economy, although now there is a growing backlash against it. First-mover advantage can be instrumental in building market share, but this may or may not translate into business success.

Basically, being a first-mover only makes sense if the rewards justify the risks. Some industries reward first-movers with near-monopoly status and high margins. Other industries do not offer similar rewards, allowing late-movers the chance to compete more effectively and efficiently against early entrants.


Synonyms

FMA

Related Terms

network effect

Sites

n/a

Articles

Think Fast, Be First
ClickZ (September 18, 2001)

The Myth of the First Mover Advantage
siliconvalley.internet.com (April 5, 2000)

The Book On First-Mover Advantage
ClickZ (October 26, 1999)

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