Is it best to be an early adopter or a late adapter?

Internet Retailing

29th Jan 2019

We launched The Party People online in 1999 as Australia’s first online party store. Over the years of running the business, we have sometimes pioneered new technology or been an early adopter; other times, we’ve been late to the party (pun intended). Sometimes when we were late, it was because (wrongly) we didn’t think something was going to be a big deal; but sometimes we deliberately held back and let others pave the way.

The results of all this have been mixed, leading us to have some views on when it’s best to be first, when it’s best to be early and when it’s best to wait for everyone else to iron out the bugs. We have found that, generally speaking, when it came to changes that didn’t involve a heavy technology component, being an early entrant paid off.

When the change involved technology, the outcome varied from getting a jump on the competition, to having to fix all the bugs at our expense and everyone else getting a free ride catching up shortly after.

The Party People offered in-store pickup, now known as click-and-collect, in 1999, and we were the first party store to offer flat-rate, express and same-day shipping. All of these changes hugely lifted our sales and profit. Best of all they involved minor technology changes, often just simply configuration of our existing technology.

Similarly, offering new payment options has also had its benefits, such as Zip Pay’s “buy-now-pay-later”. Being early in all of these cases has meant we offered options to our customers that our competitors didn’t, increasing our conversion rate compared with theirs.

Being the first customer

A university project resulted in us being Google Australia’s first customer, and we went on to be Bing Australia’s first customer too. When we launched, we were paying 1¢ cost per click. This was phenomenally lucrative early on and remains so. Google continues to innovate and release new advertising products such as Google shopping, extensions, dynamic search ads and the list goes on.

Likewise other search engine marketing channels, such as YouTube and Instagram, continue to launch new initiatives. Each time, getting in early was lucrative as pricing is generally based on competition, so things start off cheap before everyone else catches on. For each new initiative we hit on early, we would dip our toe in, work out how to make it work profitably for us, and then scale up while everyone else was just getting started.

We were early on Facebook and late on Instagram (only focusing on it in the last 12 months) and the results again show that being early paid off. We reaped the rewards of growing our Facebook following while it was relatively cheap and easy, but Instagram is now more of a challenge for us. With social media, it would seem that again, being early pays off. Now if you heavily invested in Snapchat, you would probably disagree with me. But, I think the gamble would always be worth it, given the costs compared with the benefits.

With eBay and marketplaces, The Party People were late and we had to compete with established power sellers with thousands of reviews and far better ranking, so we had to compete on price. It would seem that new channels are generally lucrative for early adopters if they get traction. We have launched on many shopping sites that never took off, however the cost of trying was minimal compared with the benefits when they did take off.

Building from scratch

Being the first mover when there is a heavy technology component is not always a winning strategy and the results can vary. When we launched online in 1999 we built our store from scratch, because back then there were no comprehensive platforms. The problem with pioneering is that you burn a huge amount of cost to innovate, and ease the way for everyone else. That being said, we found in that case that the benefits outweighed the costs as we got the jump on our competition and we were rewarded with growing sales.

We moved to Magento 1 very late in its development, which we found was a positive situation. Everyone else had ironed out the kinks and there were far more plugins available when we started development, saving us lots of time and money. That is the main reason we have not moved to Magento Enterprise 2 just yet. Weighing up the cost of investing in a redundant platform vs moving to a new one is tricky but so far the feedback has been that waiting is the best option.

Likewise, for implementation of buy-now-pay-later as a first mover, the technology was expensive and users didn’t know what it was yet so the benefits where minimal. As new users caught on to the trend, the technology also developed and so integration became very cost-effective just at the time benefits started to present themselves.

What we have learned from being first or early compared with being late to implement something new is that we need to consider the cost of trying to solve any problems that come up – the cost of ironing out the bugs – compared with how the overall cost will come down once a product is mainstream. And we always remember, too, the possible competitive advantages of being an early mover.

Dean Salakas and his brother took over The Party People business from their parents in 2008. They operate two bricks-and-mortar stores in the Sydney area and are looking to expand again this year. He has a degree in marketing and operations management from the University of Western Sydney.