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.

Related Terms

network effect

view all terms in the Business and eBusiness glossary or all terms in the Digital Marketing glossary

Marketplace [ads]

marketingterms.com/discounts/ – discount codes for items frequently used by digital marketers; design, domains, hosting, PPC, SEO, more.

Articles

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

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