Business Report: Incumbents, Challengers, and Market Dynamics

This report delves into the dynamics of incumbents and challengers in the business landscape, examining the factors that contribute to the success of challengers over established incumbents. The introduction defines incumbents and challengers, highlighting situations where challengers gain the upper hand, and introduces the concept of disruptive technologies. The main body of the report provides an in-depth analysis of the reasons behind incumbent failures, including resistance to change, lack of innovation, and failure to adapt to evolving market demands. The report uses the case studies of Amazon and eBay to illustrate these points, drawing on a literature review of academic journals, business reviews, and company websites. The conclusion summarizes the key reasons why challengers often surpass incumbents, emphasizing the importance of adaptability, innovation, and customer-centric strategies in maintaining market dominance. The report offers valuable insights into the competitive forces shaping the business world and the strategies necessary for success in the face of disruption.

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Innovation and New Technologies

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Table of Contents
Introduction...........................................................................................................................................2
Literature Review..................................................................................................................................3
Conclusion.............................................................................................................................................7
References.............................................................................................................................................8

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Introduction
Incumbent is an individual who is answerable to all the activities at the workplace.
They are basically the leaders in the market place and have huge market shares. It focuses on
changing the environment by bringing better services. For example the producer of eBay that
is an incumbent and Amazon is considered as challenger. It is an intermediate between the
association of business and materials. If the supplier is currently in use than it is considered
as incumbent as it is holding some place in the association. If some new supplier overtakes
the duties of old supplier, then new supplier is termed as challenger and the old supplier is
termed as incumbency (Antonelli, 2014). Apart from that there are many situations in which
challenger beats incumbents. Challengers in the market are those who are providing same as
mine.
Incumbents are left overlooked but it is necessary to defend an incumbency by showcasing
the performance. They set an aggressive target price and re-compute the price whenever new
opportunity arises in the market. This report helps in knowing how altered version replaces
the old methods (Vargo, Wieland & Akaka, 2015). Other than that Disruptive technology is
used to change the way in which entire business operates, it helps a small company to
establish a larger organisations. Incumbents are beaten by challengers as the challenger’s tries
to focus the market by maintain a good position in a short period of time. Incumbents dig the
large sags to come next in the market but it is difficult for the incumbents to stand out in the
market (Green-Pedersen, Mortensen & Thesen, 2017). Incumbents have a lot of advantage as
there name in the market, increased funds but it can be done by defining what an opponents is
serving, what are the drawbacks and then defining an agenda to beat the challenger
(Karthikeyan & Jonsson, 2016).

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Literature Review
Considering the case of Amazon and eBay, Amazon is an American company and is
owner of the largest Internet retailer till date. It was started by selling the books online which
was expanded to selling of video, audio, software’s, toys and jewelry etc. Amazon use the
strategy of recording customer’s behavior so that offers or bonus could be provided to an
individual accordingly (Haucap & Heimeshoff, 2014). This also increases the value in the
market. Whereas eBay sells the product to website only, its sales depend on the online
auction of products only. This has various limitations as it charge fees from sellers to
showcase their products on the website. Thus eBay has been beaten by Amazon in the
market. It is true that incumbents beat challengers as they start planning at early stage, even
though they have not beaten the challenger. They focus on what an opponent is doing in the
market so that they plan accordingly to increase the budget and has a big spender. Thus
research is a major stage for challengers to beat incumbents. Similarly, Amazon has offered
better job policies in the markets thus allowing the seller to showcase their products via
amazon rather than eBay (Le-Nguyen & Guo, 2016).
In the views of (Syed & Sudhakar, 2017), Amazon has built trust in the market while eBay
had some trust issues like they were caught while selling fake goods, because of this reason
there traffic have decreased. Plus Amazon has provided a good user experience as they reach
out to customers rather than waiting that customers reach out to them. Amazon has created a
user friendly platform that is providing easy access to products and serving trustworthy
products to the customer.
In the literature search, opinions (Bakshi, 2015) stated the reasons why incumbents i.e. eBay
is beaten by the challengers i.e. Amazon. Thus Amazon has beaten eBay in the market and is
one of the leading online retail in the world, has gained attention in the customer sector. The

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secret for Amazon success is they it focused on the ways to provide services to customers in
low price and also focused on increasing the service by reducing the delivery time and
serving best quality products, which was a drawback of eBay as they had a large delivery
time. Amazon has crashed the market of eBay in terms of customer satisfaction, as Amazon
is the first platform for buying products online. Researched on the eBay services, Amazon
redesigned the plan to come ahead of eBay, in terms of rating 62% of clients choose Amazon
wherein for eBay its just 12%. The best selection options are available on Amazon whereas
eBay has lesser number of products that it why 79% choose Amazon, while eBay is the
preferred choice for 9% of respondents. eBay does not offer any terms of convenience to
customers such as extra benefits but Amazon leads the survey in terms of convenience as it
allows customers to choose the online retail juggernaut. The goal for challenger is defining
the agenda by looking at the incumbent; the goal of beating incumbent is easy if challengers
are well prepared.
According to the opinion of (AlSheikh, Shaalan & Meziane, 2017), eBay had the chances to
survive and grow in the market but it took the wrong direction and was beaten by Amazon.
EBay did not adapt to the changes in demands of customers and lacked in trust issues.
Amazon used this drawback of EBay and planned the strategy to focus on selling products in
low price but making sure that better services are offered to the customers. As for the case of
eBay, the problem was not that it had lack of ideas; rather it made the wrong choices and
failed to adapt itself with the changing market conditions (MitSloan, 2017)
. eBay was not able to cope up with the competition since it only excelled in selling the
products to the retailers who promises to resell the good to customers having the features was
somewhere a limitation in the market. Amazon worked on this and allowed to sell the
products to a wide range of customers. Amazon made the work easier for seller as it writes all
the description of the product to be sold, in case of eBay the customers need to manually

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describe the product. eBay failed to grasp more customers and continued to manufacture the
same products which it was manufacturing earlier without any new innovations for offers for
the user. EBay lacked in its features as no new innovative products where coming in the
market
(Pattie, Hartman & Johnston, 2017). The reason behind its failure was Amazon who offered
fast services to customers, as the services of Amazon where highly automated. Since, it
requires less amount of time to perform basis tasks. On the other hand, most of the features of
eBay are not automated because of which seller found it difficult to even track the item.
According to (Erikson, 2016), eBay was slow in reacting to market changes. Earlier, people
were comfortable using eBay which were easier to handle but eventually due to the
emergence of Amazon who offered services in a better way market of eBay had fallen. Also
eBay charges for selling their products on monthly basis where Amazon presented a better
way to seller by charging the seller only when they actually make the sell. The possible
customer base for Amazon is much higher than that of eBay. As amazon keeps on innovating
new ideas and offers for clients like Amazon has rapidly prolonged its services like
discovering its rollout of Amazon Prime. Thus innovating new ideas is the major concern of
getting more customers to the business and helps in growing rather than being sable. eBay is
strictly a marketplace platform for users to conduct business but not for retailer, thus retailer
need to search some other platforms. Amazon was in the phase to challenge the incumbents
thus it offered a platform for both a marketplace and retailer. Amazon also offered new
creative services like it has options for huge fulfilment of business, handling the fulfilment
for every merchant on the site. Thus eBay lacked somewhere in the innovation thus Amazon
launched AWS, it is a digital publishing division for selling their movie-streaming division,
audio, books etc. to the user.

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In the views of (Willandia, et. al, 2017), Amazon is responsible for all the items sold to the
customers so that issue of trust is resolved where in case of eBay don’t own any products as it
is auction site. Thus the quality of good are degraded which leads to customer dissatisfaction.
It is true that there are chances of being scammed on eBay but Amazon worked on this a
resolved the problem, gathering more customers. Amazon offered many reasons to customers
to choose amazon over eBay as it makes shopping easier and offer a very easy interface to
user. Also eBay is a time consuming process because seller need to wait until the auction is
over thus it could not be used on regular basis for this amazon offered fast and easy services
to customers. And it is considered as more appropriate for customers who repeat buying of
products on regular basis.
According to the (Pepper & Alves, 2017), incumbents are crushed by the new innovators and
they eventually fail in the market. EBay failed in the market due to various roadblocks which
were solved by Amazon. EBay lost the customers interest as it has a very poor feedback
facility and users could not offer a good experience. For this Amazon adopted a method to
serve customers with good services and offer a great buying experiencing so that they can
rely over amazon for a longer run. When Amazon came in the marketplace, eBay somewhere
dismissed from the competition and didn’t provide any new products to the users. On the
other hand Amazon kept on inventing new products in huge quantity and selling the products
in a lower cut of prices gathered new customers. Thus the way to beat incumbents is cut the
price of product and offer more options to the customers. Also as eBay is an auction website
it failed in the market due to poor auction description and using old products. Amazon
worked on this and asked user to sit free and completed the product description by itself.
In the perception of (Clarke, Chelliah & Pattinson, 2018), eBay is beaten by Amazon, as
eBay operates as a third party who needs to connect to the sellers for purchasers. Henceforth

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there is no inventory section of their own so there were various issues in the quality of goods
as it just connected to buyers from sell. Amazon solved the issue of quality as it sells the
products of every kind but ensuring that quality is met.
Conclusion
It can be concluded that incumbents are often beaten by challengers in the market. In
case of e-commerce movement eBay was beaten by Amazon as it gained momentum in the
market by embracing more customers by offering them more benefits. Both eBay and amazon
stand out in the market, but amazon majorly provided the goods directly to the customers
rather than using third party. Also challengers look for drawbacks of incumbents so that
services could be offered to the customers to grow in the market. Better trust means better
sale thus eBay lacked in the trust issues and lost friction of purchase from the buyers.
Amazon offered a better buying experience got boomed in the market. Thus these
shortcomings are the major reason why incumbents are beaten by the challengers.

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References
AlSheikh, S. S., Shaalan, K., & Meziane, F. (2017, October). Consumers' trust and popularity
of negative posts in social media: A case study on the integration between B2C and
C2C business models. In Behavioral, Economic, Socio-cultural Computing (BESC),
2017 International Conference on (pp. 1-6). IEEE.
Antonelli, C. (2014). The economics of innovation, new technologies and structural change.
Routledge.
Bakshi, R. (2015). A Comparison Between User Interface Design for Different Kinds of
Mobile Applications. IJEECSE. Special Issue-TeLMISR, 91-96.
Clarke, T., Chelliah, J., & Pattinson, E. (2018). National Innovation Systems in the Asia
Pacific: A Comparative Analysis. In Innovation in the Asia Pacific (pp. 119-143).
Springer, Singapore.
Erikson, R. S. (2016). The Congressional Incumbency Advantage over Sixty
Years. Governing in a Polarized Age: Elections, Parties, and Political Representation
in America, 65.
Green-Pedersen, C., Mortensen, P. B., & Thesen, G. (2017). The incumbency bonus
revisited: Causes and consequences of media dominance. British Journal of Political
Science, 47(1), 131-148.
Haucap, J., & Heimeshoff, U. (2014). Google, Facebook, Amazon, eBay: Is the Internet
driving competition or market monopolization?. International Economics and
Economic Policy, 11(1-2), 49-61.

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Karthikeyan, S., & Jonsson, S. (2016, January). Competitive Dynamics of Incumbents and
Challengers in British Electoral Competition, 1955-2005. In Academy of Management
Proceedings (Vol. 2016, No. 1, p. 17051). Academy of Management.
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https://sloanreview.mit.edu/article/how-amazon-beat-ebay/, Accessed on 20 March.
Pattie, C., Hartman, T., & Johnston, R. (2017). Incumbent parties, incumbent MPs and the
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Pepper, L. G., & Alves, L. D. F. N. (2017). Small-scale Açaí in the global market: adding
value to ensure sustained income for forest farmers in the Amazon Estuary.
In Integrating Landscapes: Agroforestry for Biodiversity Conservation and Food
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Syed, H., & Sudhakar, K. F. (2017). Exploring How Gender and Age Influences Online
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Willandia, A., David, S., Martha, C., & Kathryn, E. (2017). Market access and wild meat
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