Can Square Create a Better Marketplace for Small Retailers?

Jun 27, 2013

Square, the mobile payment company, is looking to be involved in every retail transaction it can. Towards that end, the company is setting up a free online marketplace for local shops where consumers across the nation can shop and make purchases using a Square account.

"We’re focused on making easy-to-use tools for merchants that create an incredible experience for their customers — no matter where they are. Creating an online marketplace is our next step in making commerce easy for everyone," Ajit Varma, Square’s director of discovery, said in a statement. "Square Market makes local businesses accessible to customers down the block and across the country."

The company, which is known across the U.S. for its Square Reader, enables sellers to set up a free online shop complete with product photos and a business profile. Retailers can list their inventory and Square takes its usual 2.75 percent cut for every item sold.

"A lot of people think of Square as a payments company, but Square is focused on selling. It wants to help small businesses sell online as well as in stores," Rick Oglesby, senior analyst with Aite Group, told the Los Angeles Times. "They are much more interested in being a comprehensive marketplace and selling solution than a payments company. They want to be a business in a box."

Standard & Strange, an American-made men’s clothing retailer, is one of the mom & pop businesses that have already joined the Square Marketplace.

"We’re small and it would have been really tough to make a go at ecommerce on our own," said owner Neil Berrett. "Running an online store is like having a whole other business. Square makes it easy with a simple solution, and we are featured along with other great brands."

Ultimately, the success of Square’s Marketplace will depend on its ability to attract merchants. While the free service is a natural for small merchants, Square spokesperson Katie Baynes told RetailWire, "We process transactions for everyone, from the individual, to brick and mortar chains, to Starbucks. We anticipate that Square Market will be a wonderful marketplace for businesses of all sizes as well."

What do you think of the Square Marketplace? Will the Square payment system give Marketplace enough of a competitive edge against the likes of Amazon and eBay?

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11 Comments on "Can Square Create a Better Marketplace for Small Retailers?"

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Dick Seesel
8 years 10 months ago

This sounds like an idea worth watching. Square already has the name recognition (especially with small merchants) to attract retailers willing to give e-commerce a shot without having to invest deeply in their own systems development. It may not be a threat to Amazon—which is still more committed to its own brand than to its participating retailers—but it can provide an alternative, more specialized group of niche businesses. Of course, it’s still up to the individual retailers to execute well and to keep up with the logistics of accelerated demand.

Max Goldberg
8 years 10 months ago

This is a great idea for small merchants, provided that they have the infrastructure to handle online orders. Square seems to be creating a marketplace like Amazon and eBay during their early days. Whether this marketplace will ever compete with Amazon and eBay is unknown.

Mark Heckman
8 years 10 months ago

There is often a void of affordable technology and programs that smaller retailers can afford to take advantage of. Square is attempting to fill those voids with some innovative ideas regarding building some economy of scale through a cohesive community of smaller retailers.

To the extend these smaller retailers are inclined to promote this payment service and begin to leverage the customer data that this system should create, there is excellent potential for loyalty programs and engagement rewards for these retailer’s collective customer base.

Without targeting, customized service, and incentives, these alternative payment systems will all struggle to reach any semblance of critical mass as they are competing with the big, traditional payment systems that provide points, air miles and rebates. Further, without these enhancements, these smaller shops will also have a tough time competing with eBay and Amazon.

Gordon Arnold
8 years 10 months ago

What we are being shown here is a 2.5% added cost for sale of “in house” inventory. This plus overhead burdened with additional shipping and handling costs may just set the business in play further away from competing with the e-commerce giants. Very few small retailers understand direct ship and the deals they need to make for success.

Ted Hurlbut
Ted Hurlbut
8 years 10 months ago
On the face of it, this looks like a good idea and an excellent opportunity for small retailers, but like many things in small retail, the devil’s in the details. I’ve seen other, more targeted attempts to set up ecommerce portals for small retailers, and the results have been underwhelming. The problems seem to have fallen into 2 broad categories. The first is in navigation, the organization of like items and ability to move among them easily, regardless of seller. This may seem like ecommerce 101 stuff, but it’s been an issue. The other issue relates to the ability of retailers to establish their own brand identity in their postings, above and beyond the ecommerce site itself. This “identity” includes photography, copy and logo. This is not something that Amazon supports, and that’s an issue, for it denies the small retailer the ability to create synergies between their physical presence and virtual presence, and turns them into mere price competitors with one another. My clients have fairly quickly recognized that they are competing strictly on… Read more »
Doug Fleener
8 years 10 months ago

I’m actually a Square user and played around with the Marketplace. My thoughts:

* Low fees. No hosting costs, and only 2.5% credit card fee with no monthly charge. Great deal for a small company. (Why I also use it.)
* Get online fast. You can literally be selling online in a matter of minutes.
* Super easy to set up.

* Zero bells and whistles. Biggest one is no auto-responder.
* Limited inventory controls. Could easily sell what you don’t have.
* Except for the logo there’s zero branding.
* Location map overpowers the page.

My take. I think this is a great way for a retailer who isn’t selling online yet to get up and running. Also terrific for an independent retailer to promote products in newsletters and social media and then point the customers directly to the product page to sell.

I look forward to seeing what else Square does to the Marketplace as they go.

Craig Sundstrom
8 years 10 months ago

Standard & Strange @ Square: now isn’t THAT an interesting name? My initial reaction is that this is rather bassackwards—like Mastercard opening up a shopping mall—but my more lasting reaction is “who?” Unlike Mr. Oglesby, and many of the commenters here, I don’t “think of Square as a payments company” as much as I don’t think of them at all; and I suspect they will have name recognition problems in general. It’s tough to stand out in the world, and online isn’t any different…particularly when you’re sharing it with not just one but several 800lb gorillas.

Mel Kleiman
8 years 10 months ago

Great move that will help expand the brand, and provide help and more needed exposure for smaller retailers.

W. Frank Dell II, CMC
8 years 10 months ago

Square has a better idea and approach. Recently I looked in the Yellow Pages for a carpet store and found none. Then I went to my smartphone and found 12 with directions.

Just charging a fee to process a transaction will not cut it long term. Banks are offering payment by phone today. Bringing together the largest possible group of businesses will provide Square with a large market that chains can never take away. Square may compete with Amazon and eBay some, but most of their business will be transacted in person. Once the consumer gets accustomed to doing business with very small business, they will accept doing transactions with even larger ones.

Alexander Rink
8 years 10 months ago

I think it is a good idea to make it easy for retailers to get up and running quickly, and raise exposure for the brand. That said, running a marketplace would not seem to be their core competence, and unless they execute on it extremely well, there are numerous other marketplaces where retailers can sell their wares.

At the end of the day, retailers will need to choose where to focus their selling efforts based on a number of factors such as traffic, costs, ease of use, and the question is whether Square’s Marketplace will have the right combination of factors to make it worth the retailer’s efforts.

Dan Frechtling
8 years 10 months ago

Square Marketplace will never win head to head against Amazon and eBay because they can’t compete on selection, brand and traffic. They may not even be able to match Etsy.

But Square’s merchants are mostly local, so they’re competing in a different segment. Unfortunately, the local marketplace for goods isn’t easier to win.

Competing for traffic at the local level is a long game, market-by-market. And doing so puts Square squarely in competition with their merchant customers.

Local retailers already have an advantage marketing to local shoppers. It’s their local presence. So Square would need to demonstrate an ability to attract more local customers or open up regional or national markets.

Early adopters don’t necessarily indicate mass interest. Why local Oakland clothier Standard & Strange would sell goods on Square—surrounded by competitors—yet not from their own website is, well, strange.


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