Why it pays to show up late in the game in business
Three key reasons why you don’t always have to be first to market from a second-mover start-up
So, the party has started and you aren’t there yet. Now you have to decide whether to stay at home or make a fashionably late appearance. What do you do?
Everyone wants to have that novel idea and be the first to launch it, but being a second-mover can sometimes have more benefits than we realise.
Here’s why you should get off the couch, put on those new shoes you’ve been dying to wear, and get out there:
1. It’s lower risk
Being the first person to the market with an innovative idea is much riskier than following a successful product. To start, it’s difficult and time consuming to come up with an idea that the market will find valuable. Plus, bringing a new product that you’ve spent countless sleepless night creating to the market doesn’t guarantee that you will sell it.
In fact, you risk the high chance that the profit will never make up for the time and money you have invested in its development. Being a second-mover to a successful product cuts the risk that consumers wont be interested. You can rest assured that there is a market out there for your product and because you have put significantly less resources into development, if you fail the losses are minimal.
2. Your market is already established
Selling an imitation product requires considerably less market research than starting from scratch. If people are currently buying the product, you can be confident that it’s something consumers are interested in, and you likely already know whom you need to target.
The money saved by skipping this exhaustive marketing research stage can be used towards adapting the existing product to give your company an edge. For example, Gourmesso, a second-mover in the Nespresso coffee capsule industry, took advantage of its late start by producing pods containing coffee from organic agriculture that are also Fairtrade and come in over 20 varieties.
This key enhancement allowed the start-up to reach the group of progressively growing consumers that value where their products come from.
3. You can innovate the process
While it could be advantageous to spend time and money coming up with a meaningful innovation for the product, you may find it’s not necessary to change what’s already viable and instead use your resources to work on adapting the production process.
Dropping the price of a product without dropping the quality is the number one problem a company will face. A more efficient and less costly process is the best way for a company to drop the price of their products and gain a competitive advantage.
Using the expired patent on the Nespresso capsule, Gourmesso was able to focus on cutting its expenses elsewhere, allowing it to use specially roasted, quality coffee beans while still pricing 30% less than its largest competitor.
Overall, as a second-mover you have more flexibility to adapt than you would going in blind.
Sometimes we are so focused on coming up with the next great invention that we don’t think to take advantage of existing opportunities. Look at Facebook, Amazon, or even Gourmesso; emerging late in the game can often have major benefits.
So, being a second-mover is not the most glamorous way to enter an industry and you can’t exactly call yourself a pioneer. But, if you had shown up to the party on time would anyone have really noticed your new shoes, anyway?