David and Goliath - Battles between E-commerce Startups and Incumbents: Evidence from Denmark

Abstract

Startups' use of e-commerce is expanding nationally and globally and has changed the competitive landscape for new venture startups and market incumbents. How startups should engage in competition with market incumbents is well explored in the current literature through concepts like entrepreneurial strategies. Yet, the increasingly dynamic impact of e-commerce affects the underlying mechanisms in strategic moves of entrepreneurial strategies. This thesis aims to analyze how e-commerce startups challenge incumbents based on empirical data from Denmark. More specifically, it investigates whether e-commerce supports startups to compete with incumbents and how e-commerce startups should move strategically to challenge incumbents successfully. To examine this, we applied a mixed methods research approach in this thesis. First, we conducted five interviews to understand the effect of e-commerce on entrepreneurial strategic moves by answering a proposition. Second, we developed four hypotheses based on insights from the in-depth interviews to understand e-commerce startups' ability to challenge incumbents. A questionnaire was distributed to ecommerce startups across Denmark to test our hypotheses. 98 useful responses were examined using a multiple regression analysis. The results indicated that three out of four hypotheses were statically significant, therefore e-commerce startups should focus on 1) using storytelling, 2) serving a niche segment, and 3) building trust with their customers. Moreover, a hypothesis regarding the product level of innovativeness were found not supported. Our thesis suggest that the use of e-commerce supports startups to engage in competition with incumbents. Furthermore, e-commerce startups should focus on investing resources in the three strategic moves to challenge incumbents successfully