Rules to Long Tail Blues

April 10, 2007

Tom Slee has posted his critique of Chapter 14 – Long Tail Rules. Tom believes a power shift is occurring.

One of the changes we’ve seen in both sides of the technological vice (online stores + big-box stores) is that power has shifted away from manufacturers and to retail outlets. Amazon can sell goods without paying for them first. Wal-Mart is trying to introduce systems that will pay suppliers only when someone actually buys a product, so that their own shelf space becomes free (to them). It’s a power shift leading to a transfer of costs, not a cutting of costs – and power matters.

I think this “power shift” is an interesting idea worthy of further research. However, Amazon and Wal-Mart did not invent cashflow management and I’m not convinced that a general transfer of costs is underway. It could be, but just looking at this one shift in accounting practices is not indicative of a power grab.