Is There a First Mover Advantage in an Online Market?

Abstract

Purpose The aim of this study is to investigate the presence of a first-mover advantage (FMA) in the Swedish grocery market. Further, we wish to contribute to the field of strategic management by broadening the knowledge of FMA within the online grocery market, to add to the non-existent literature and to provide practical insights for firms looking to enter online markets. Design/methodology/approach The paper will provide findings from ten in-depth interviews with a focus on how the online marketplace has shifted the power from the market actors to the consumer. Findings Three distinct themes were drafted from the interviews. Firstly, we found that loyalty is low with consumers online as they are willing to change from a grocer they are satisfied with just because of a discount offered elsewhere. Secondly, consumers aren’t experiencing any differentiation with online grocers in the same way they do offline. Lastly, the online platforms are standardized in a way that makes the consumer feel more at ease in new online stores whereas they would rather not feel at ease in an offline store. All of these themes show us that the switching costs of changing grocer are much lower in an online setting compared to the similar offline setting, which consequently helps new entrants attract consumers even though they are not first in the market. Research limitations/implications The contribution made by this article will help to broaden the knowledge within the field of strategic management and FMA. Additionally, we hope to inspire other researchers to include consumers as a way of analyzing a market phenomenon further. Results wise, no generalization can be made due to the limited amount of data collected. Originality/value When studying the phenomena of FMA, there is a historical tendency to only focus on the market structure or market actors. However, to analyze consumers and consumption in order to understand the FMA in an online setting is as far as our knowledge is concerned new this field.