Its A War Folks
It was a very hot day on August 11th, 2013 and I just got the official news that Square had announced the Square market. I got private message from a Square employee who is a great friend to answer to a question on why Square developed Square market. It was a hard thing for me to write because I knew at the time Square had drifted far, far from the foundation that propelled the company to greatness. Square Market, I knew was a spectacular abstraction and distraction of time, talent and money. To anyone with true domain experience and direct empirical praxis, the moment the idea came up, the famous editing Jack Dorsey is known for, should have leaped to the floor and said no! Sadly that did not come to pass.
I pointed out that Square is not improving upon Amazon and Etsy. I knew thing would become complicated for Square if they agitated companies that they could have worked with rather then against. Perhaps if there was a huge potential it may be ok to agitate Amazon and Etsy, but there was never even the slightest chance Square would be successful with Square Market. Back in the August, 2013 posting I said:
The two largest are Amazon and eBay with Etsy also in the top ten for micro-merchants. Lets forget about the other thousands of options and focus on these three venues. None of them are broken, and moreover they are all growing wildly. They all make it elementary to present products from micro-merchants. To be clear Square Market is really well designed and easy to use. From a technology standpoint it is a really great product.
Yes, Square Market did feel like a great product but it was not enough. The sum total was to motivate Amazon, who released the Amazon Register undercutting Square’s 2.75% to 1.75% and today, Etsy piled on with Direct Checkout at 2.75% matching Square’s frozen price point.
The big thing about Etsy when compared to Square, is they already have a prior relationship with millions of micro-merchants that Square had targeted from the very first days on to today. Many of these merchants were also Etsy sellers and when Square opened its Etsy copy the company went in to attack mode. Etsy will also share the inventory and data from the online store with Direct Checkout. This makes Etsy a far easier solution then maintaining two relationships and two inventory systems.
There is no doubt that Square will lose a reasonably large number of Etsy merchants because of Direct Checkout. Square Market has not set any records and seems to be in rapid decline based on number of web analytical tools.
Back to my posting about Square Market in August 11th, 2013 I asked what the point of Square Market was, other then invite Etsy to compete:
The Online Indie Boutique
And there is always the very successful and quite beautiful Etsy platform for the merchant that wants a smaller boutique selling experience that has a huge market reach in some product types. The Etsy platform offers merchants a far more rich set of tools. It also offers the highest customer traffic for boutique shoppers.
Square missed the real reason we all go to Etsy, it’s all about the artists and artisans, not just the product. In the images below, one can see many reasons why Etsy is so successful but one profoundly important element is the artist and artisan is weaved into each selling page. With Square Market it is missing, replaced with empty open spaces and an almost generic presentation of a single product. The Square Market is not an improvement in any way over the Etsy experience.
Same product Square Market vs. Etsy. Clearly Etsy has a more mature and rich approach. Note the many viewing options of the product along with serendipitous display of similar products from the store owner.
Does It Do It Better?
In the face of these realities, it is really quite fascinating that Square feels strongly enough that they can compete with Amazon, eBay and Etsy. It is interesting that the Exposure Problem and the Fulfillment Problem were not addressed before the launch of the Square Market. Without the tremendously large volume of potential customers that Amazon, eBay and Etsy produce, Square Market is not solving the Exposure problem. In addition without inventory, packaging, labeling, shipping, tracking, and customer service, Square is not solving the Fulfillment problem.
Etsy will make it a very easy decision to shift existing Etsy online merchants that are using Square over Direct Checkout. With a single setup procedure all of the Etsy merchant information and inventory is loaded into the app. Here are some important points:
What are the fee details?
There is no Etsy transaction fee for in-person sales, just a credit card processing fee: 2.75% per swipe (or 3% + $0.25 if you manually enter the card number). Requesting a card reader, downloading the app, and processing cash payments are all free. There are also no sign up fees or monthly minimums. Visa, MasterCard, American Express and Discover cards are all accepted.
How will this benefit my Etsy shop and my brand?
The Sell on Etsy App lets you sell items from your Etsy shop as well as items you haven't listed yet. The total number of sales displayed in your Etsy shop will increase with each in-person sale. Email receipts will highlight your brand and showcase items from your Etsy shop. And if an in-person buyer has an Etsy account, we'll invite them to review their purchase. These reviews will appear alongside your reviews from online sales.
How do I get paid?
With Etsy's Direct Checkout, money from your in-person sales will appear in your Shop Payment Account, alongside your online sales. We'll deposit the funds directly into your bank account every Monday, just as we do today. You can also request earlier deposits in your Shop Payment Account, if you'd like.
I have no doubts that Etsy’s Direct Checkout will be very successful. The target market of potential users do not necessarily have any political agendas to support any payment startup over the company that has built a platform that is a foundation of their business. It is really quite surprising who is powering Etsy Direct Checkout and who is suppling the reader.
It Is Not Easy Being Square These Days
Things just seem to get harder and harder for Square these days. From Apple Pay to Amazon Register on to Facebook person to person payments seems Square can not get a break. I do not think that Etsy Direct Checkout will shut the company down anytime soon, however the attrition that it will cause will be rather high and noticeable. Combine this with the other abstractions and dissertations like Square Cash and Square Payroll, the company is entering in to a direction that is rather gloomy.
There are over 100 things that Square should be doing today. I said this on that hot August day in 2013, and I say it again here today. Thus far Square since 2010 has not done a single one of these 100 things. Competing against Etsy and Amazon was never one of them.
Please learn to work with and not against all in the payments ecosystem, this is what Apple did. There is wisdom here.