Look at the literature over the last hundred years or so, and you will see 2 classes battling for the economic upper hand. They are Labour and Capital.
Karl Marx based his whole theory around this battle. While classical and neoclassical economists portrayed it in less confrontational terms, much of their theories were still based around competition between these two classes.
Enter the third class – Consumers.
With the advent of mass consumerism, abundant capital and plenty of labour (globalisation has opened up big pools of cheap labour) it now looks like this battle has become a three way contest between capital, labour and consumers. Whereas raising capital for a venture, or recruiting sufficient trained workers used to be the main hurdles to overcome in order to grow, it has now come to the point that attaining sufficient customers has moved to the forefront. Just look at airlines. The size of their loyalty programme is often far more important strategically than just about anything else, and their loyalty programmes can contribute more to earnings than flying people around. Then there are financial institutions. The reach and size of their customer base and not just their product offering.
This brings us to Amazon. Amazon has grown from nothing to a multi, multi billion dollar colossus, but has made almost zero profit. According to a story in the AFR (18th April), the CEO of Amazon makes no reference to profit, one reference to “shareowners” and 19 references to “customers”. Moreover, he merely thanks “shareowners” for their support, but lauds customers by thanking “every customer for allowing us to serve you”.
Is it just a case of a big company realising where its bread is really buttered (and, by implication, others have not realised this), or does it represent something more.
I suspect it is both – they realise where their bread is buttered, and this certainly has bigger implications. Consumer power is on the march. Watch out those businesses who don’t recognise this.
