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Square takes on eBay with lower-cost online selling model

June 28, 2013

Square continues to expand its offerings beyond simple mobile point-of-sale services, most recently with an online marketplace, as it looks to build a commerce business along the lines of eBay.

The new Square Market is geared toward small merchants and giving them a way to easily sell to consumers via their mobile and desktop devices. Sellers can also post items directly to Twitter for their followers to discover and share.

“Square wants to take eBay/PayPal business with a much lower cost model, the same way warehouse clubs took business from retailers with every day low price,” said Steve Timpson, president of Siteminis, Atlanta.

“With this lower cost model for businesses to start an mcommerce shop online and given the traffic already acquired by Square with a payment portal they have a tremendous opportunity to take the market,” he said. “Keep in mind Square developed a better mouse trap for both small businesses and consumers to transact business.

“Square’s entire strategy is portability through mobile, theater is just a natural add on for an easy end to end solution for small dollar every day sellers to use. EBay and PayPal should keep an eye on them.”

Controlling an ecosystem
The move puts Square in direct competition with eBay, which started out as online marketplace and has built itself into a successful mobile commerce and payments business over the past few years.

While Square was one of the first to market with an attachment for mobile devices that enables merchants to process credit card payments, PayPal launched its own similar service last year. Both also offer digital wallet services.

EBay expects its mobile commerce business to bring in $20 billion this year and for PayPal to do $20 billion in mobile payments transactions.

“Square’s move says volumes about the reality of technology and commerce today,” said Brennan Hayden, executive vice president and chief operating officer at WDA, East Lansing, MI. “And the irony of that reality is that the successful user experiences are provided by companies who control an ecosystem, rather than simply participate in one: Apple, Google, Amazon, eBay, Facebook and now Square.

“Enter the world of Square and never leave, that must be their goal,” he said. “The B-to-B market might still have a value chain, but consumers are picking a supplier that has it all, increasingly unwilling to piece a kit together from multiple suppliers for anything at all.”

Lower fees
Sellers will be able to open a store on Square Market for free with items, photos and a profile for their business. There is no charge to list items, but Square receives a 2.75 percent fee for every item sold.

In comparison, eBay often charges merchants what it calls an insertion fee in addition to 10 percent of the final sale value.

Users can browse Square Market from within the Square Wallet mobile app to find nearby shops, restaurants and services.

Users can tap on a merchant page or tap the map icon to view complete details on the business, tap a merchant logo to show the business address tap on a car icon to request driving directions.

Mobile is everything
Users can also visit the mobile-optimized Square Market Web site to make online purchases directly from merchants, view their payment history, redeem a gift card and manage their Square Wallet settings.

Users can also pay via the app once they visit a merchant by checking in.

Additionally, there is a share function enabling users to email, message or tweet a business link to a friend.

The online marketplace already boasts a variety of local merchants selling handmade jewelry, housewares, yoga lessons and beauty services, to name a few.

“Mobile is no longer a category within digital,” Mr. Hayden said. “Mobile is quickly becoming the encompassing paradigm, with the other pieces of the user experience fitting as a category within it; in that context, mobile is everything to Square.”

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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