Square challenges eBay with new online marketplace

Jack Dorsey is at it again.

His company Square, considered by some to be the best invention of 2010, introduced on Wednesday an online marketplace to compete with Internet merchants such as Etsy and eBay.

Square started as a mobile payments platform — an app that lets anyone accept credit card transactions using a smartphone or tablet. The company, headquartered in San Francisco, is now pushing deeper into the world of online and mobile commerce.

Square Market is a platform for businesses to sell everything from handmade jewelry and furniture to yoga classes and iPad cases. Businesses can use the app on a smartphone or tablet to sell their goods, process payments and potentially reach new customers by expanding beyond their brick-and-mortar confines.

Square Market, which has a nice clean feel and easy navigation on mobile and web, comes on the heels of Square’s new in-store payment system. The company rolled out Square Stand last month, which is basically the iPad version of a cash register.

Sounds a lot like competition for PayPal, the internet payments company that eBay owns.

So, how big is the threat to eBay? Most analysts would agree never to underestimate Dorsey, a powerhouse innovator who also started Twitter. But for now, some analysts say eBay can rest easy.

Gene Munster, a Piper Jaffray analyst, told the Wall Street Journal that Square isn’t much of a threat to eBay in the short term because it caters primarily to the small, neighborhood shops that can’t afford to build a proper website, but need one to ship products worldwide.

Square’s new service doesn’t impact eBay’s lucrative partnerships with the big-time retailers such as Target and Toys R Us. And eBay does a lot more than Square — it offers same-day delivery, in-store pickup at local stores and data collection advertising agencies, and is in the middle of a huge expansion into Brazil, China and Russia. That’s a lot for a 4-year-old San Francisco company like Square to compete with.

The two companies will overlap, however, in their fight for local retailers and mom-and-pop merchants. eBay has a new shopping app customized by neighborhood to help customers find and buy merchandise from shops down the street.

Square’s online marketplace will have some advantages over eBay. For one, it will be much cheaper —  eBay’s marketplace comes with a hefty commission and additional fees for using PayPal.

Square already has a loyal following among  Bay Area mom-and-pop shops and food trucks, many of which use the company’s signature white credit card readers that attach to iPhones. Among the early sellers on Square Market are several small Bay Area merchants, including men’s clothing store Standard and Strange and T-shirt designer Outlandish, both in Oakland, and furniture design company Victor Goods and backpack maker Joshu+Vela of San Francisco.

So while there’s not much for eBay to fret about just yet, it may want to keep its eye on Square, and the battle to win over small and mid-sized merchants and their customers will only intensify.



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  • The market is huge and there will be an opportunity for alternatives to eBay and Amazon. It’ll be interesting to see how Square will play this one out and whether or not they will lock in using their payment system too.