Training dies hard. Left to my own devices in the Staples office store, while my daughter shopped for back-to-school supplies, I began counting facings of accounting software. For non-retailers, facings are the number of copies of each package that you can see. If there are three completely visible copies on a shelf, that’s three facings and that was something I learned in a previous life as a journalist covering computer stores.
There were three facings of Peachtree, which seemed an unusually high proportion of Peachtree to QuickBooks since the latter has around an 85 percent share of the retail market. Well, things like this don’t just happen because retail shelf space is so valuable. The reason is simple. Doug Meyer, president of Best Software’s Small Business Division, which markets Peachtree, says the company sells software on consignment at Staples. Without the technique, there would probably be only one facing of Peachtree.
QuickBooks has been so dominant, it seems competitors have tried about everything to make some progress against it. Accpac has given away Simply Accounting, a product which has a dominant position in Canada, but hardly shows up in America. Occasionally you might see an MYOB package at retail. But basically, the shelves are filled with QuickBooks and some Peachtree.
This is an important issue for mid-market vendors. Best Software is making a concerted effort to sell MAS 90 and MAS 200 to its Peachtree base. Intuit is trying to move into the Mid-Market with QuickBooks Enterprise Solutions to give QuickBooks users a migration path. Best openly talks about choking off Microsoft’s air supply, meaning that because Microsoft does not have a retail accounting package, it has no way of funneling these users to its mid-market products. Peachtree and QuickBooks are feeder products that can be the key to mid-market success.
It’s difficult to picture Microsoft letting this situation continue and the company has enough money to buy its way onto the retail shelves. The Microsoft name alone should guarantee 5 percent market share.
What’s market share worth? Intuit’s Small Business revenue, primarily QuickBooks and financial supplies, was $318.8 million for fiscal 2002. Figuring that QuickBooks is most of the revenue, if that amount represents an 85 percent market share, each percent of market share is not quite $3.7 million. What’s probably more important is taking these low-end users and converting them into mid-market customers and it should be fairly easy to calculate the life-time revenue from a mid-market customer. There are a lot of bucks at stake here.
So short of buying shelf space, how can the competitors make a dent in the QuickBooks juggernaut? (This is not a knock on Intuit. I have a lot of respect for what the company has done and its current strategy. But this is a fun exercise.)
What small businesses have always liked about QuickBooks is that it’s not traditional accounting. What CPAs have always disliked about it is the same thing, especially the lack of an audit trail and the user’s ability to change entries.
I’ve always thought competitors should sell against this issue as a perceived quality problem. (But attack the problem, never attack the competitor by name.)
If I were writing the ad copy, I’d have slogans like, "Do you want it quick, or do you want it right?"; "Do-it-yourself accounting is like do-it-yourself brain surgery. Can you afford to get it wrong?"; "Buying accounting software you can change is like buying erasable checks."; and, "If your accountant wouldn’t use your accounting software, should you?"
Maybe this will give somebody some ideas.
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