The Second Mover’s Advantage

Chess has a pronounced balance problem - White wins, on average, more than Black. How pronounced it is depends on the skill of the players but is sometimes thought of as conferring a 35 ELO point advantage.

Being the popular game as it is, anything from chess can quickly move to other areas of life. As it is now known, the first mover's advantage has become a household expression. It has been used in other sports, business, and numerous other areas.

Business, however, is a little more complicated than chess. Things might not translate as easily and as equally between these domains. There's definitely a first mover's advantage in business. Entering markets where no one else has been provided many benefits, ranging from easier penetration to a greater degree of freedom.

Yet, the business world isn't so black and white. There is a second mover's advantage because the first one will likely make many mistakes. It's unsurprising, then, that the process of getting a product to market or any other business endeavor has been shrouded in mystery. 

These mysteries are usually called "trade secrets," "commercial secrets," or whatever fancy word one likes to use. Yet, it's possible nowadays to reverse engineer without the use of ethically dubious techniques.

Enter web scraping

If you’re reading this, you’ve likely dealt with web scraping. Indirectly, most likely, but you still probably have. Numerous businesses such as travel fare aggregators, e-commerce platforms, cybersecurity companies, and many others either use web scraping daily or base their entire venture around it.

For many, however, it all happens behind the scenes. Some are using businesses that revolve around web scraping. Others use datasets that would be impossible to acquire without the aforementioned tools. Either way, nearly all of us have to deal with it somehow.

On the face of it, the underlying process isn’t that complicated. An automated application goes through several URLs, downloads the source file, and extracts the data. Done over and over again, it can lead to some impressive results.

However, Oxylabs wouldn’t have dedicated scrapers if it were that easy. We wouldn’t have close to a hundred developers dedicated to various parts of the process, constantly tinkering away at all the issues that arise from web scraping. Deep under the layers of superficiality, it’s a technological marvel.

Companies involved with web scraping work with the data in numerous ways. What interests us here, however, is data that is publicly accessible. Going back to our chess example, in the game, all of the moves are visible on the board. In business, they are mostly shrouded in secrecy. Yet, there’s no way to make moves without leaving some data on the board.

“To go boldly where no man has gone before”

Being first to market is enticing. There’s no competition; brand recognition is easy to establish, marketing costs are comparatively low, etc. Finally, it’s a short-lived monopoly, where you get to be the only seller in a country of buyers (as long as the market entry is well calculated).

But, at the same time, the market is never that ready. It isn’t particularly clear how the products or services should be priced. The needs we think might be slightly different from the ones customers have. Capturing the identity with branding is nearly impossible initially as there’s no identity to speak of.

As a result, a lot of time and resources will be spent figuring things out. In other words, we might as well say “wasted.” While definitely a necessary waste, there’s a theoretical optimum market entry. Unfortunately, it would be visible only to those who follow.

Yet, “the internet never forgets” is an adage we had to learn somewhat recently. There are often archives or other reminders of things that have transpired online. Digital businesses are no different. With some ingenuity, you might be able to trace the outlines of the process without having to make the mistakes yourself.

Scraping the advantage

Web scraping has the potential to collect data, as long as it’s publicly accessible, from everywhere and at every time. Once something is being monitored, in-depth historical external data can be collected.

In other words, if a competitor is monitored through web scraping early enough, their attempts to enter new markets will be visible. While you won’t be able to dig deep into the internal data of the mover, the steps they had taken would be permanently visible.

There could be doubts as to whether there would be enough data to extrapolate upon. After all, there might have been many pricing models, marketing plans, branding attempts, and message drafts. They, however, never made it to market, likely with good reason. We have no use for failed attempts.

As such, web scraping reveals to us the effects of the strategies purported to work. Some of them lived through and became successful; some didn’t. While we can’t get data on the latter, it doesn’t matter as we’re only interested in successful strategies.

You might be wondering how far web scraping truly takes someone when trying to discover the underlying strategies. With enough historical data, even highly complicated strategies can be uncovered. SEO, for example, has a reasonably good grip on how search engines rank content - something much more complicated than any single marketing strategy. The same goes for e-commerce pricing strategies - everything can be uncovered with real-time and historical data.

In the end, the second mover now has an advantage as well. It requires web scraping to come to fruition. However, it allows the one who follows to avoid making the same mistakes as its predecessor. In other words, all the same can be done for less effort and fewer resources.