Square And Etsy Have What It Takes To Thrive Even More In The New Normal

Over the past decade, e-commerce and digital payments have changed how the world works. The COVID-19 pandemic accelerated the online shift and made sure they won't lose momentum over the following decade. According to research from Forbes, more than 13 million Visa Inc V cardholders made payments through e-commerce for the first time between January and March last year as consumer behavior started to change due to the pandemic, enabled by established e-commerce systems that created seamless experiences for the end-user. Square Inc SQ and Etsy Inc ETSY did a good job in contributing to that new world.

Square: Empowering Sellers And Consumers To Participate In The Economy

Square shares may have had an impressive run over the past year, but Wall Street says the best is yet to come for this fintech specialist. Its mission is to empower both consumers and sellers by providing the tools they need to participate in the economy.

Square provides sellers with the tools they need to run a business. Recently, it launched Square Online through which merchants can easily build an e-commerce storefront. Through its platform, they can also sell via Facebook, Inc. FB, Instagram, and Pinterest Inc PINS, or use its payment processing on third-party platforms like Wix.com Ltd WIX.

Most importantly, Square's comprehensive offerings work together as one solution so retailers can manage their entire business from the Square dashboard. This feature is what sets Square apart from many other payment processors, which often require merchants to use a combination of different products.

Just like PayPal Holdings Inc PYPL, Square has a digital wallet as consumers can use Square's Cash App to send, spend, and invest money as well as bitcoin. In addition to peer-to-peer transfers, Square now offers services like direct deposit and the Square Cash Card, a debit card that allows consumers to spend their Cash App balance in stores or online. The total balance of Cash App accounts skyrocketed 180% compared to last year's figure.

The Seller and Cash App ecosystems saw such adoption that they made gross profit and free cash flow to explode and Square's story is just beginning as management sees a $160 billion market opportunity.

Etsy: A Unique Marketplace For Unique Goods

Etsy is a global marketplace that connects creative sellers with buyers looking for unique items. Besides giving consumers the ability to get personalized goods, it charges its sellers less than competing platforms like Amazon.com, Inc. AMZN Handmade, and it invests heavily to help its sellers succeed. In 2016, it launched a service that allows sellers to build their own websites for $15 per month called Pattern so they can personalize and differentiate their brands.

Caring for sellers and helping them thrive is what helped Etsy grow its revenue. Etsy's gross merchandise sales, the value of all goods sold on the marketplace, accelerated in each of the last eight quarters, as the ecosystem expanded rapidly, and Etsy has been effectively monetizing each consumer on its platform.

During the fiscal 2020, Etsy's business shifted into high gear as GMS and revenue both skyrocketed over 100% in the first nine months of the year. Etsy also has plenty of room to grow with management estimating that the market opportunity will reach $437 billion by 2023.

2021

There's no doubt that the pandemic has depressed consumption, but there will be promising prospects for prepared merchants. The above two companies have disruption in their DNA and they are much more of a feel-good narrative. Rather than disrupting the brick-and-mortar business model, they enable small businesses to play against larger competitors. They are also well positioned to benefit from the gig economy. Prior to the coronavirus pandemic, the shift toward shifting professional ambitions from the office to a home office was already in full swing. The new normal forced many workers to get a side hustle – and several of them will undoubtedly explore this concept full time.

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