Recently John Kachaylo,VP Marketing and LuGina Dickson, Product Manager of True Commerce Inc. flew from Pittsburgh to visit me in Redmond and discuss the development of a fabulous new system that will revolutionize the way small businesses function.
True Commerce is a market leader in EDI, the only EDI company recommended by QuickBooks, and its technology is included in QuickBooks Enterprise licenses. The technology which is based on the EDI concept, will enable small businesses to securely transfer purchase orders electronically to vendors across software accounting platforms. The vendors in turn, will have the ability to import the purchase orders into their systems, transmit confirmations and bill the customers who can then import the bills. There will be different levels of automation, verification and permissions available to users.
We already have a company in place who is a vendor for my PalmFlex business, to run tests. The ramifications of this technology are massive in terms of saving time, labor and the environment. It will ensure accuracy and truly elevate the ability of small businesses to engage in commerce in a way unimaginable a few years ago. With this initiative, True Commerce will open up the market for QuickBooks users to efficiencies and opportunities across the world, and enable them to be more competitive with large companies. I feel privileged to be part of this initiative.

When I started QuickBooks consulting in 1993, most of my clients were still using QuickBooks for DOS. There was no QuickBooks ProAdvisor Program or Intuit ISP program. I lived from hand to mouth for many years schlepping from one client to another, always knowing that my billable time was limited by twenty four hours in a day.
After putting up an elaborate “consulting-oriented” web site in 1995 I was quickly picked up by Yahoo and rose to the top of their ranking under key words like “QuickBooks” and “QuickBooks Consulting”. In those days, before the proliferation of remote access, clients were reluctant to send their financial information into cyberspace or share it with someone with whom they had not established a personal relationship. I was all dressed up and nowhere to go.
In desperation, I decided that if I could not generate revenue as a QuickBooks consultant over the internet, I would lower my “calling” and try to sell the damn stuff. I approached Rich Walker at Intuit and asked him whether they had a consultants’ reseller program, but none was set up yet, and it was several years later that the ProAdvisor Program and the affiliate programs were born.
In order to get some income, I continued consulting and wrote a guide book called “QuickBooks Remedies and Performance Enhancements “which I sold through Amazon and on my web site. It did so-so. I also taught QuickBooks at local community colleges.
In 2000 the QuickBooks affiliate program was born and I changed my web site www.quicklabs.com to become sales oriented instead of consulting oriented. A funny thing happened. People started buying QuickBooks from me and since then I have always been Intuit’s number one affiliate. In addition to selling QuickBooks, I made my site a value added resource by publishing my guide book on it, and having a newsletter section, a section for tips and as much content that I could muster up.
In 2004, using QuickBooks as the management foundation, I launched a web site called “PalmFlex” for my wife’s glove business, which at that time was only local. The idea was that I would spend 80% of my time doing QuickLabs work and 20% of my time helping my wife with her business. However, PalmFlex soon took off and the ratios changed so that I was spending 80% of my time working for PalmFlex and 20% of my time doing QuickLabs work. Something had to give, and that is when my QuickBooks consulting and teaching days came to an end.
Several people have commented on my ecommerce proficiency but there is no magic to it. I live and die by Google. A whole new discipline was born centered around Google Analytics and the ROI of key words and clicks. Fortunately I have a great internet professional to help me optimize my search engine performance.
I maintain my philosophy of presenting QuickLabs as a value-added site so that visitors get more than banners. I offer links to resources, integration information and anything I can find that is educational and currently interesting for QuickBooks users. To that end I have approached many associates and vendors offering them attribution and a link to their web site for articles or information that I can put on my web site. Most have been agreeable but most have not followed through, possibly because there is no exchange of money or they see no value in having a link to their web site. This is surprising because the more links to one’s site, the higher the potential for a good organic ranking in Google and more visibility. I spend over $10,000 a month advertising QuickBooks on Google, and expect this to double in the next few years. This brings a lot of eyeballs to my site. We should not underestimate the impact of the internet on the way we do business and live. To get a better understanding of this, read “The Long Tail” by Chris Anderson.
Although my internet consultant says, “Exchange links for links”, I am willing to exchange links for QuickBooks information that will add value to my site. In other words, “Will work for content.”

Recently there was an article in the New York Times comparing eBay to Amazon. The author proclaimed that Amazon had taken the advantage in the ecommerce wars by investing in new technology like the Kindle (which is an amazing appliance) and mp3 downloads. eBay, meanwhile was stagnating. It had spent billions on Skype and was distracted by failed initiatives like eBay Express, while trying to migrate from its core auctions business to retailing. Amazon, the newspaper wrote, was a tempting platform for third party merchants who were seeking visibility to its millions of members. Don’t be fooled. It’s a loser’s game.

Several years ago, one of the suppliers for my glove business asked me to represent them on Amazon. Being a manufacturer, they were not set up to ship or provide service to retail customers, and as a result were booted off.

We enthusiastically signed up and found a technology that enabled us to download orders from Amazon into QuickBooks. As our sales picked up, I found myself obsessively trying to gain positive feedback ratings. That is one thing I will say about Amazon’s customer feedback system: it really motivated me to provide a level of service that I would not otherwise have given to our regular website customers. My moods swung daily from the sweet rush of a positive rating, to the agony of a negative review. I was surprised how vulnerable I felt to the capricious and sometimes unfair – oh, so unfair – assessment of my patrons on Amazon.

During the first week of December, our download application broke and the developer abandoned us. This happens more frequently than you would think. In some ways, the internet economy is like the Wild West, with rogues and vipers slithering under nearby nooks and crannies, but that’s another story.

We were left swinging in the wind, and then frantically scrambled to enter into QuickBooks hundreds of transactions in the $20 range. Our data entry employee in India gallantly worked eighteen hour days, trying to catch up, but it was a losing battle, and as Christmas drew nearer, we started shipping out orders by Fedex 2^nd day express to ensure delivery before December 25^th. As more and more anxious customers enquired whether their gifts would be delivered in time, we escalated our shipments to overnight courier, which often cost us more than the value of the purchase. The negative ratings rolled in. Finally, with our backs against the wall, and the sands mercilessly passing through the hourglass, we resorted to giving refunds; not that this gesture would remedy the hurt feelings.

The next year we promised ourselves we would be better prepared, but once again, we shipped products overnight and gave refunds when orders fell through the cracks or we could simply not get them out the door. Although it took us two festive seasons to learn this lesson, it finally dawned on us that most Amazon customers are not repeat customers and they do not buy in volume. Not to mention that Amazon was carving 12% commission out of our sales, including shipping.

LESSON NUMBER 1: AMAZON CUSTOMERS ARE HIGH MAINTENANCE AND LOW MARGIN.

This system is great for customers, and I still buy things on Amazon because of the convenience, security and low prices. Despite the problems, we had actually performed reasonably well. Our feedback was not bad, and we had the most popular winter work gloves and garden gloves on the site. As a result, our products were listed first under key words associated with “winter work gloves” and “garden gloves”. However, unscrupulous merchants tried to push us out by stealing our Amazon stock identification numbers and then switching to a lower quality product. I was amazed at how grudgingly Amazon technical support accepted our pleas for fairness.

LESSON NUMBER 2: AMAZON TECHNICAL SUPPORT IS NOT INTERESTED IN ACTUALLY SUPPORTING AMAZON MERCHANTS. THEY ARE MORE CONCERNED ABOUT PROTECTING THE INTERESTS OF AMAZON.

The next development was that Amazon started selling the same winter work gloves that we had done so well with. Not only that, they pushed us out of the featured merchant spot, even though our gloves were priced lower. When we complained, Amazon explained that if the customer purchased over $25 in merchandise from Amazon, they would get free shipping whereas we charged for delivery. Therefore Amazon had the better deal and was entitled to be the featured merchant.

LESSON NUMBER 3: WHEN YOU ARE A MERCHANT ON AMAZON, THEY HAVE ACCESS TO YOUR SALES RECORDS, AND MAY BE IN A POSITION TO CHERRY PICK WHICH PRODUCTS THEY ARE GOING TO SELL, BASED ON THIS INFORMATION.

Ah, but we still had the best selling garden gloves. Not only that, I owned the trademark on the name, and paid for and owned, not only the UPC code, but also the images. Imagine my horror one morning when I discovered that once again, we were no longer number one on the list. We were displaced by a competitor who was selling our gloves, with our name, our UPC code and our image at a higher price! After toiling for years to establish our gloves as the most popular garden gloves on Amazon, and losing money in the process (remember the overnight deliveries), with one flick of the digit, we had lost our position.

I phoned Amazon technical support and firmly asked them to put me back where I belonged. They explained that it was out of their hands as there was an “algorithm” - a mystical and omnipotent “algorithm” - that determines who is the featured merchant.

LESSON NUMBER 4: WHEN YOU ARE A MERCHANT ON AMAZON, YOU HAVE NO EQUITY IN YOUR PRODUCTS. IN OTHER WORDS YOUR VISIBILITY ON AMAZON IS SUBJECT TO THE WHIMS AND FANCIES OF A “SUPERNATURAL ALGORITHM” THAT CONTROLS EVERYTHING, AND CANNOT BE CONTROLLED.

“Algorithm”, meet Hal. That was it. Enough is enough. I promptly notified Amazon that I was cancelling my account and removing my products. They sent me a form letter telling me that I had been a good merchant, and would I reconsider? “Never!” I said to myself, and with a determined push of a button, obliterated all my products that we had spent months entering into the database. With a sigh of relief and futility, this episode had come to an end. I could now focus on my own web site and my own customers.

About a week later, I decided to see what had happened to my Amazon competitor who had pushed me out as the featured merchant for garden gloves. When I clicked on the link to view the product detail, there was my garden gloves image, in all its glory, with my trademark name and my UPC code, selling briskly, I’m sure.

“They can’t do this,” I said to myself through clenched teeth. I fumbled for the phone in a panic, and with a short breath, told the Amazon technical support person that I owned that trademark, the image and the UPC code for the gloves on display in the browser, and they did not have permission to use them. The representative, in a steady, confident tone referred me to the Amazon merchant agreement. When I signed up as a vendor, I had granted Amazon unlimited rights to use my products as they deemed fit, in perpetuity.

LESSON NUMBER 5: WHEN YOU SIGN UP AS AN AMAZON MERCHANT, YOU FORFEIT YOUR RIGHTS, AND YOUR CHILDRENS’ CHILDRENS’ RIGHTS IN PERPETUITY.

Several weeks later, after, I had partially recovered from this trauma, I realized that I had never reconciled my Amazon commission checks with my sales reports. As I had closed my account, I no longer had access to that information, and I could no longer phone the support line. Actually, you don’t phone them. You send them a message and request that they phone you. I sent an email to everyone at Amazon I had on record, humbly requesting my records. I needn’t have bothered. I received an email from an Amazon technical representative a week later telling me that my information had been purged.

THAT IS WHY SELLING ON AMAZON IS A LOSER’S GAME.

It’s in the DNA. Every company inherits DNA from the people who start or manage the business for long periods of time. We’ll take Bill Gates out of the equation for this article, because although his fingerprints are all over Microsoft, I would like to discuss Steve Ballmer, the man who currently runs Microsoft and has been with the company practically since its inception. He comes from a similar formative background as Scott Cook, the founder of Intuit, maker of the very successful QuickBooks. They both graduated from Harvard and worked at Proctor and Gamble, which is greatly respected as an institution that understands the consumer market.  This is where their paths diverge.  Scott Cook went on to conceive of Quicken, based on the idea of helping people simply and easily manage their personal finances.

Steve Ballmer helped create a monopoly that brings out many third rate software applications. Each man’s philosophy has influenced the development of their respective company. Whereas Scott Cook emphasized the principle of integrity to his employees, Ballmer’s quest was to control and intimidate as much of the software market as was legally possible. Although a judge’s ruling declared that they were a monopoly and unfairly controlled the market, Microsoft continued to do so with reckless abandon. The Bush administration’s justice department capitulated to their legal maneuvers.

Meanwhile Scott Cook was trying to listen to customers, and engaged in ongoing and costly usability studies to make Intuit’s software as user friendly as possible. His question was “How can we make our software so good that people will refer it to friends, family and associates?”  The consequence was that QuickBooks became the dominant software application in its market, propelled by its history of customer satisfaction.

Microsoft came out with monsters like Outlook, Internet Explorer and Front Page (now known as Expression Web). My wife always knows when I am working with Expression Web because I frequently blurt out “Oh, I’m being punished again.” It has an illogical mind of its own, and regularly does one thing when the intention is to do another.  For example, I will try to change the font and a border will appear around the cell. I have worked with the program for over 10 years and I still am not able to change the default font on my web site from Times New Roman to Arial. When Microsoft came out with the most recent version of Front Page, they gave it the new name “Expressions Web” to embellish its image. It is the only software program I know that actually deteriorated when upgraded.

What amazes me is how people passively accept this as the way computers work. This is not how computers should function. When I use Outlook, I feel my rights have been violated by being forced to use a crappy program without an alternative. There used to be a good email program called Eudora, but they shut down their development and support because they could not make money competing with the 500 pound gorilla.  Let me give you an example of why Outlook is such a third rate application. I engage in frequent dialog with my customers, vendors and associates by email. I create folders in Outlook for saving recurring communication, so I can easily find old messages. Inbound messages go into the correct folders when I receive them, but when I send a message, it goes to the “Sent Items” folder. I then have to go through all my sent messages and manually drag them to the correct folder.  There are no rules to filter sent messages. Where’s the intelligence?

It’s actually an insult. Years of productive time have been wasted by a generation of computer users that stare blankly into the monitor like monkeys while Windows boots up. I guarantee that if there was a competing product on a similar platform, the makers would challenge each other to see who could develop an operating system that would boot up faster.

This brings us to Steve Jobs. He is lauded as a genius for the innovative and high quality products that Apple produces. I have great respect for the man, but I don’t know if he is a genius. He is just smart enough to know that if only he can keep Microsoft’s hands off his products, he can bring out hardware and software that is intelligent and works well.

I have a confession. I worked for Microsoft as a tester for their Money personal finance program in the late 1990s. I recall going up to my manager’s manager (a serious violation at Microsoft) and suggesting that if they made a minor change to their program, customers would benefit by being able to better understand how it works. The manager looked at me as if I was a lunatic and responded, “Customers don’t tell us how to make software. We tell them how to use it.”  Outside the campus cafeteria there was a huge banner arrogantly proclaiming “Microsoft Money. Intuit’s Biggest Nightmare.” This was after Microsoft unsuccessfully tried to buy Intuit. A couple of weeks later I was fired because my “thinking was not original”. It is scant consolation that recently Microsoft discontinued the desktop version of Money. If they spend as much time and put as much resources into satisfying customers, as they put into keeping competitors out, they would develop better products.

Every few years Microsoft comes out with a product to compete with QuickBooks. They rattle their chains and promise to revolutionize the accounting software market. If I remember correctly, the last time they did this they couldn’t even give their program away for free. It’s like QuickBooks is a football and Microsoft plays the parts of both Lucy and Charlie Brown. They never learn that they cannot create a program like QuickBooks. It’s not in their DNA.

In 2004 I created a web site for my wife’s glove business called PalmFlex.com. Shortly after, I attended a QuickBooks Conference in Boca Raton, Florida.  At the conference I met Brad Waddell, the man who created the QODBC driver. The QODBC driver enables QuickBooks to communicate with other programs and is essential for most applications that integrate with QuickBooks. I asked Brad whether he could develop an application that would import orders from our web shopping cart into QuickBooks. He said he could, and introduced me to Chuck Vigeant, his partner at the time. Chuck supervised the production of the import utility and several months later it was up and running. I was thrilled to experience the efficiency and accuracy of downloading sales into QuickBooks, rather than dealing with the grinding burden of manual data entry.

At the end of our first month in business, I discovered a problem. The purchases in our shopping cart were paid by credit card and the batch deposits on our bank statement did not show the credit card detail, so I could not reconcile. When I tried to access the credit card payment information online, it was a nightmare to find the data. As a result, I could not determine which payments to select in our QuickBooks “Payments to Deposit” window to match batch deposit on the bank statement.  Therefore I had no way to know which online transactions were actually deposited. “I can’t run this business if I can’t reconcile my banks statements,” I exclaimed to my wife Barb in anguish.

After fretting over the issue for several days, the only solution I could come up with was to randomly select credit card payment in the “Payments to Deposit” window until the deposit totaled a dollar or so over the amount of the deposit on the bank statement, and then put in a line item negative adjusting entry in the “Make Deposit” window so that the total exactly matched the bank statement. This enabled me to reconcile my QuickBooks checking account accurately every month, even though there was no relationship between the transactions in our web store and the bank statement.

In the meantime I had signed up for QuickBooks Merchant Services so we could process orders that were taken over the phone by credit card in the “Receive Payments” window. This was a completely separate account to the online merchant account in PalmFlex.com, with a different account number. When I reviewed my bank statement I could see by the merchant account number whether deposits were from internet sales or phone sales. I noticed that the QuickBooks Merchant Services payments were always batched together in the “Payments to Deposit” window and the total of the batch was exactly the total of the deposit amount on the bank statement. This was a huge development!  Any business that accepts credit cards would be able to reconcile their bank statement faster, easier and more accurately if they used QuickBooks Merchant Services to process their credit card transactions.

 However, my web store was using a 3^rd party merchant processor and so those payments were only listed individually. I surmised that if I could use QuickBooks Merchant Services to process my web transactions as well, perhaps I could download those payments as batches, and then I would not be depositing random payments and making adjusting entries. It was no problem to sign up my web store with QuickBooks Merchant Services, as I already had an account with them, but how was I going to get that payment data into QuickBooks?

To find out, I contacted the senior product manager at QuickBooks Merchant Services. He told me that the batch information could be transferred to my shopping cart when transactions were processed online, but I would need to a software developer to customize the code in the utility that downloads the transactions into QuickBooks.  As Chuck Vigeant was no longer doing this type of integration, who could I turn to? I knew that this technology was now being used by a few web stores like GoDaddy.com and ProStores.com. However their shopping carts were limited in terms of functionality and customization. They were web hosts with a mass market appearance and basic utility. They were not appropriate for our specialized business where we were selling gloves with variations is material, style, size and color. I knew that Intuit had purchased Homestead, a web store provider, and they were developing its QuickBooks integration, but once again, it was not compatible with the personalized shopping experience we were trying to create. At least the technology is available.

I contacted Manish Jha owner of Atandra. He makes a very good product called T-Hub which downloads orders into QuickBooks from many web stores including Amazon, Yahoo Store, eBay and X-Cart. As I was migrating my web store to X-Cart, I asked Manish if he could customize T-Hub so it also downloads QuickBooks Merchant Services batch payment information. He agreed, and last week informed me the development was complete and ready to test.

This new is a significant and exciting breakthrough that will provide a solution to a significant ecommerce accounting problem: facilitating bank statement reconciliation with shopping cart transactions. This will elevate the ability of millions of small businesses doing ecommerce to manage their finances easier, faster and more accurately.

I will post information about my QuickBooks Merchant Services download tests on this blog when I have the results.

For information about QuickBooks Merchant Services, click here: http://quicklabs.com/quickbooks_merchantservices.html

For information about T-Hub, click here:
http://quicklabs.com/Integration/T-Hub.html