Distribution 2.0: The Shelf Wars are Over

January 12, 2009

The shelf wars are over. Thanks to the Web, software distribution has changed. It used to be that to sell your software, you had to get space on the shelf at Best Buy or Staples. Those days are over.

Now users shop for software online – and increasingly they shop for web based services to meet their needs because it is easier than going to a store, and they don’t have to deal with the headaches of packaged software like installation updates, system and compatibility issues, data back up, etc.

What this means is the bottom is falling out for incumbents. Companies like Intuit achieved 87% market share by winning the shelf war. Today companies like FreshBooks go direct to consumers using the web. Perhaps it is by selling to them via advertising online, or – as in the case of FreshBooks – by benefiting from the increased efficiency of word of mouth that the web makes possible. Whichever it is, it’s not by owning the shelf.

Since change begets opportunity, you have to ask: who benefits from these new realities of distribution and who gets hurt? Clearly, it helps us little guys because the big guys can’t muscle you off the shelf in the big box stores like they used to. Who does it unsettle? Anyone who has built massive market share and counts on it to sustain their market cap. I’m thinking of Inuit and Microsoft primarily.

about the author

Co-Founder & CEO, FreshBooks Mike is the co-founder and CEO of FreshBooks, the world’s #1 cloud accounting software for self-employed professionals. Built in 2003 after he accidentally saved over an invoice, Mike spent 3.5 years growing FreshBooks from his parents’ basement. Since then, over 10 million people have used FreshBooks to save time billing, and collect billions of dollars. A lover of the outdoors, Mike has been bitten so many times it’s rumored he’s the first human to have developed immunity to mosquitoes.