Square Market launched as a means for Square’s small business sellers to quickly establish and online storefront and easily promote their goods with social media tools, but Market is showing signs of evolving into an independent online marketplace, competing with the likes of Etsy and Fab.
According to Ajit Varma, who heads up Market for Square, 20 percent of Square’s 500,000 listed merchants have never used its payments hardware, Reader and Stand – they’re solely selling and marketing online. The distinction between selling and marketing is important because only about 50,000 Market merchants are actually selling their goods online.
Instead, most Square merchants Market to establish an online and mobile presence – a place to display their goods, services and pricing. For instance, neighborhood grocery stores are using Market to list their beer inventories and current prices with the aim of attracting locals to its store. Most of those retailers use Square payments technology at the physical point of sale, but as Varma pointed out, an increasing number are not. They’re only using Square online, some for e-commerce (Square is charging the same 2.75 percent transaction fee as it does for a Reader swipe) but others merely as a marketing tool.
Since Square doesn’t charge merchants to set up shop and list items in Market, it isn’t collecting any online revenue from the most of these merchants, so why bother with Market at all? A lot of it has to do with Square’s philosophy of taking the complexity of payment transactions and designing simple yet well-designed commerce products that all relate to one another – a philosophy that Square CEO Jack Dorsey will discuss in more detail at Gigaom’s Roadmap conference next week.
Varma explained that as Square’s core merchant base expands from small mobile business owners working in the field to larger retail businesses such as stores and restaurants, the company has had to expand its portfolio of commerce tools. That was the logic behind Stand, which is Square’s more sophisticated counter-top payments terminal. And that’s the same logic behind Market, Varma said, except extending beyond the physical point of sale onto the internet.
“Square is growing [to support] these larger merchants,” Varma said. “A lot of these larger merchants don’t know how to participate in the online economy.”
While many sellers might have their own webpages or a Facebook profile, most of them haven’t invested that much into web development. Market not only gives them the tools to set up simple yet artfully designed online storefronts in the PC browser, but also on the mobile browser, which is becoming increasingly important. More than 40 percent of Market’s traffic is coming from mobile devices, Varma said.
Market also gives them social media tools to promote their goods – for instance product cards to highlight a sale item in a Twitter feed. As with all of its Square’s merchant products, Market links back Square’s central dashboard, allowing businesses to manage their inventories and pricing across both online and physical stores. Meanwhile its analytics engine helps retailers identify both overall and in-store trends, which in turn can be tied back to Square’s social marketing tools.
Different businesses use a combination of different transaction methods, so the idea is to let them tailor their commerce model using Square’s different products. For instance both a boutique store and a custom furniture maker might use Stand or Reader to process in-store transactions, but only the boutique would use Market for sales. The furniture maker would just use Market as way to display and promote its ottomans and divans online. Conversely a retailer that deals solely online would have plenty of use of Market, but little use for its hardware.
Square benefits from Market because it’s generating more transactions, either directly or indirectly. While Market helps generate more transactions for Square’s existing merchants, Varma said, it’s also broadening its appeal among different types of sellers and putting many more buyers in front of those merchants. Varma’s last point is particularly telling: Half of all payments processed so far on Market have come consumers who have never made a Square payment before.