Last week, Tradeshift made a big splash in the business network pond with the announcement of a strategic partnership that involved a $10 million investment from Inuit. Intuit is the software company responsible for QuickBooks, one of the most widely used SMB accounting software products with approximately 5 million customers. Tradeshift is an eInvoicing provider and a B2B network with approximately 150,000 suppliers on the network. Earlier this week, I had a chance to catch-up with Christian Lang, CEO of Tradeshift regarding this major step forward. According to Christian, “There is a lot of innovation happening right now in the financial data and payment space but one of the big barriers is being able to unlock all the stuff that already there (in the accounting system)”.
For a long time now, Christian says it has been Tradeshifts goal to bring a product like QuickBooks onto the platform. This is because having direct access to the data from an accounting system and being able to build processes and apps that can interact with that data creates great value for Tradeshift users. For those using QuickBooks, this partnership will allow them to electronically connect with their trading partners via the Tradeshift network, enabling them to transact, communicate and exchange information online.
As part of the announcement last week, Tradeshift released a QuickBook Connect app on its platform. Once installed, this app syncs QuickBooks with Tradeshift and allows QuickBooks users to transact with anyone on the Tradeshift network. The app lets users export Tradeshift invoices to QuickBooks Online to automatically update latest invoice details in their accounts. It also imports customer details from QuickBooks Online to Tradeshift invoices, eliminating the need to re-enter data.
This partnership will enable 5 million businesses to transact electronically with their trading partners. They will be able to automate their largely manual business processes (e.g., submitting and receiving invoices and payments electronically) without having to make a huge investment. On the flip side, it will also help Tradeshift’s larger enterprise clients to electronically transact with their SMB suppliers (the long-tail), many of which tend to fall outside of any eInvoicing initiatives. This is a significant differentiator for Tradeshift, because most other business networks have for the most part ignored the SMB market.
According to the CEO, the Tradeshift strategy has always been focused on reaching a critical mass for the number of businesses on the network, which for them is around 20% of a market – in other words they are trying to reach a place where the “network effect” takes hold. As with the telephone, the fax and more recently social networks, the network effect is present when the value of a product or service is dependent on the number of others using it and when a network reaches a critical mass, the network effect kicks-in to high gear as it now offers significantly more value for others to join. QuickBooks is of course a big part of the strategy to reach critical mass, however, there is still more to come over the next few months, so stay tuned.
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