One of my close friends is thinking about commerce like I do. Commerce is divided into three distinct categories. Trade, Industry and Clientry. The objects of each are different.
The object of trade is to sell each single object (it can be a ship, a forest, a diamond mine or a flower arrangement) at sufficient markup to replace the inventory and stay in business. Trade can use any financial instrument from a loan to a letter of credit.
The object of industry is to reduce cost. Costs can be reduced in production by increasing the scale of production, by increasing the market, introducing technology and improving management.
The object of clientry is to generate a lifetime relationship with the client. This means maintaining the level of skill, product and service that is appropriate for the price. Lawyers, dentists, graphic artists and banks are clientric.
These are not easy to understand and apply. The problem with understanding trade is that it is often associated with small local business. A coffee shop can be trade, but not when it is part of a chain. My client, Itochu, is called a 'trading company'. It is global but located in Tokyo. It is larger than all but a few of the largest industrial companies with $150 billion in sales last year. Apple was $180 billion.
Itochu buys in astronomic lots and does three way trades most of the time. It will buy the entire April sardine production from Norway, trade that for the entire May kiwi harvest in New Zealand and then sell those to a buyer in China. All financed by short and medium term loans from banks and international credit organizations. Even on that scale it is trade.
Clientry is often confused because many clientric businesses don’t behave as if they know you exist. Banks are a good example. So are credit card companies and utilities. If the company acknowledges how long you have been a customer it is clientric. If it should acknowledge how long you have been a client it is clientric.
In this classification, there is no place for government entities or religious operations. But it can include non-profits. Non-profits are just a tax classification of an otherwise normal business.
One way to see the difference between clientric and industrial is to imagine the breakup of an airline company into two components. One component, the industrial part, would operate the airplanes and associated physical equipment with staff and would sell its services to the passenger side of the company. The physical airline would do everything it could to reduce operating costs and increase efficiency. It would carry a large amount of cargo as well as seek many small feeder routes.
The second part of the company, the clientric part, would focus entirely on passengers to give them the best service possible at every price range. It would operate lounge facilities and emphasize long term relations with clients. All customers would feel like the current 100,000 mile club members of existing airlines.
Trade, industry and clientry; how the world works.