Advantages of Amazon.com being the first mover in E-commerce.

1276 Words Feb 17th, 2006 6 Pages
E-commerce (electronic-commerce) refers to business over the Internet. With the growth of commerce on the Internet and the Web, e-commerce often refers to purchases from online stores on the Web, otherwise knows as e-commerce Web sites. The e-commerce marketplace is intensely and savagely competitive. Mellahi and Johnson (2000) noted that major sustainable competitive advantages are almost non-existent. That means that firm's market advantage such as economies of scale are no longer enough to make a firm secure in the e-commerce marketplace. According to McCrohan (2003), the e-commerce market has raised the level of market dynamics such that firms face constant challenges, disequilibrium and change. This also means that firms must adapt …show more content…
Thus, waiting and watching the first mover in order to free ride on the technology or other innovations translate into automatically losing market share.

Being first to market and continuous innovation have enabled Amazon to achieve a highly recognizable and trusted brand name (Economist, 2000). This is not surprising given the fact that the company spends approximately 40 per cent of its revenue on brand building due to its firm belief that customers first and foremost look for trusted brands when they deal online (Margolis, 1999). In addition, Amazon.com is customer centric. Jeff Bezos, founder and manager of Amazon, reported that Amazon's vision "is that we want to be the world's most customer-centric company, that we focus increasingly on trying to get the customer experience right. Within that, we want to build a place where people can come and discover anything they might want to buy online" (Business Week, 1999). The company marketing expenses increased threefold between 1998 and 1999. Amazon.com is seeking to capitalize on its brand and diversify its business to become the best place to buy, find and discover any product or service online. Indeed, the company claims that its online diversification strategy into other product category