The secondary first-mover advantage in crypto payments –all benefits, no risk?
- A commentary by Stephan Schmidt, Chief Commercial Officer at SALAMANTEX
You might already be familiar with the so-called first-mover advantage, “a term used to describe the benefits of being the first company into a market segment. This can be used to describe a whole company or a particular product or service offering.” Being the first to enter the market with an innovation can reap enormous benefits. As the first and only one to offer it, you might gain a high market share. Consumers often show brand loyalty to the pioneering brand, which might allow to maintain this market share head start over competing products launched at a later stage.
It goes without saying that first movers also take some risks. First movers bet early on emerging market trends, potentially too early. If the gamble doesn’t pay off with the product or solution finding only few buyers, the pioneer may face financial and brand value losses. The first mover has to establish the market from scratch, while competitors can later make use of the prepared landscape and enter the market with all the lessons learnt from the first mover. This potentially brings them more revenue with less investment and risk.
However, in this article, let’s analyze the secondary first-mover advantage using the example of the SALAMANTEX crypto payment solution and their client portfolio of merchants and service providers, which are already offering this innovative crypto payment option to their customers. Third party companies offering a first-mover product or service — this is what we want to define as the secondary first-mover advantage for this article.
Let’s jump right into the analysis, starting with the advantages of being a secondary first mover:
- Increased customer loyalty and brand value by acting as a pioneer in a fresh market;
- Ability to address a much broader customer base; namely, the more digitally-savvy future generations demanding the possibility to pay with digital assets;
- Future-proofing the business in a fast-paced world of technological advancement.
Let’s go from theory to practice with a real-life success story that demonstrates those secondary first-mover advantages. Grünzweig Automobile, a car dealer from Austria, was one of the first merchants to offer the SALAMANTEX crypto payment solution to their customers:
“As a traditional Austrian car dealership, we have to keep re-inventing ourselves to stay ahead of the competition and reach an additional customer base. We decided to choose SALAMANTEX as our payment partner because they are regulated, in geographical proximity, and we don’t have any crypto volatility risk with the option to get paid out in Euro”, states Philipp Grünzweig, Member of the Leadership Team at Grünzweig Automobil GmbH.
In May 2021, the car dealer integrated the crypto payment solution. Just three months after the launch, Grünzweig Automobile welcomed a customer, who wished to buy an Aston Martin and pay for it with Ether. The buyer had specifically searched for a car dealership, which accepts cryptocurrencies, to fulfil his lifelong ambition of buying his dream car. He identified Grünzweig via the online SALAMANTEX merchant map. Just one month later, another car was purchased with Ether, this time a Kia XCeed. Many more requests for cars followed from across Europe in the coming months as word got out and the crypto community amplified the story.
While being a secondary first mover could come with some risks, such as wasted investments into new assets and infrastructure that might not pay off. In the case of the SALAMANTEX crypto payment solution, there are only advantages to being a first mover. Customers may use their existing hardware estate to provide the same seamless payment experience to their customers. With an extremely user-friendly solution that follows a process similar to card payments, staff and customers can easily use this innovative payment option.
How about technological progress, what if there are any new cryptocurrencies or existing currencies in a new, digital form like a digital Dollar or e-Euro (known as CBDCs — Central Bank Digital Currencies)? In the FinTech space, development indeed is extremely fast paced, with new products and currencies entering the market every day. SALAMANTEX has created a flexible long-term solution that adapts to the evolving market. Merchants signing up today will benefit from all future updates to software and services.
Historical data shows that technological innovations follow through several stages: a slow start, followed by an exponential adoption and growth phase, to ultimately steadying itself on a high level. We are currently still in the slow phase of the transition, which is the ideal time to enter the market and become a pioneer. As digital assets become increasingly mainstream and get adopted by rising numbers, there will be less opportunity to reap first-mover benefits. For those adopting a wait-and-see approach, let us leave you with this powerful statement: “Complacency kills whether you are a first mover or not.”