Square Inc.—valued at some $3.25 billion—just launched Square Market, an online storefront and small business payment processor expected to increase the market’s competition. Founder Jack Dorsey says the new venture is Square’s so-called “capstone” product and explained that small businesses that currently use Square to manage inventory and accept credit cards, will now be able to bring their business online. “We want to make every commercial transaction easier,” Dorsey told Reuters. “What you’re seeing here is the completion of that picture.”
Square makes its money by charging a 2.75 percent cut for every payment it processes and is expected to increase the competition for ecommerce giants such as eBay, Etsy, PayPal, and Amazon.com. PayPal, a subsidiary of eBay, is a key online payment operator.
Although Dorsey acknowledged that Square Market is not as large eBay and Amazon today, he believes that by utilizing social media, such as Facebook Inc. and Twitter, Square merchants will reach millions of consumers. “I don’t know if a buyer is thinking: ‘Should I go to eBay, or should I go to Etsy, or Square?’” Dorsey said. “In the end, it’s about what the merchant is selling. If you can present excitement around an item, and that item goes viral, it becomes huge.” The benefits for Square Market are huge, as well. Dorsey says he seeks a smooth collaboration with Square Market and Twitter, Facebook, and Pinterest.
Square maintains credit card information, so when a consumer clicks on a tweet that links to a Square Market product, that consumer only needs to click a second time to make the purchase. What’s more, businesses using Square’s iPad software to process their payments and track sales can now upload their inventory, at no cost, to a Web page that displays the products in a grid. “Flip a switch and suddenly you’re online,” Dorsey said.
Square launched with what Reuters described as an offering of urban chic products that include a number of fashion boutiques; one indie rock band; a Park Slope, Brooklyn, bakery; and a designer hand axe seller. Ajit Varma, Square’s product director pointed out that a number of small service providers—from lawn mowers to massage therapists—have signed on, as well. Square’s launch is at least as big, and certainly more diverse, than Amazon, which started out as an online bookseller.
Given that the majority of small businesses lack an ecommerce presence—about 67 percent—Square could reach an enormous market, said Rick Oglesby, a mobile payments analyst at AITE Group. Consider the small business presence that includes dry cleaners, coffee shops, luncheonettes, bakeries, and ice cream parlors. “There’s a very big opportunity to help these businesses create an online channel for the first time,” he said. “This is a neat solution for the small guys.” Square hopes to build its business in the online and offline sectors and increase its merchant base.
“Ultimately, they need to get more consumer eyeballs so that they’re more and more attractive to merchants,” Oglesby said of Square Market.
Cory Verellen, who owns a Seattle-based boutique shop that sells and repairs Polaroid cameras, intends on maintaining his website that accepts PayPal and, while he’s not looking to give up that website for Square Market right now, he’s happy that Square was sending new customers his way the day the site launched. “Even today, I’ve had so many people get a hold of me and say: ‘I can’t believe a store like this exists,'” Verellen said. “So the biggest benefit to me is advertising. Square’s building its own small business ecosystem and I think we could be seeing something big.”
Shih, Gerry. “Small Business Site Square Takes on E-Commerce Giants“; Fox Business News. 6/27/13.