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Many-stop Shopping? How Niche Retailers Are Thriving on Internet 2.0

Published: May 11, 2011 in Knowledge@Wharton

A decade after pets.com and a string of other early Internet specialty retailers collapsed, a new wave of start-ups — enabled by the power of cloud computing, advanced delivery systems and deep social relationships with customers — is shaping e-commerce.

From diapers and eyeglasses to pool tables and, yes, pet products, entrepreneurs are developing specialty businesses to compete alongside one-stop shopping giants like Amazon.com and Walmart.com.

“There is a new generation — Internet retail 2.0,” says Wharton marketing professor David Bell, noting that after the 2000 dot-com bust, activity in online specialty retailers dried up as financing became difficult, or impossible, to get and industry executives struggled to evaluate failed business models.

Now, engineers have dramatically reduced obstacles to creating web-based businesses, and entrepreneurs have learned more about how to capture online consumers.  Many of these small players are working in affiliation with Amazon or other major online retailers that assist with the marketing platform and/or delivery fulfillment.   …read more on Knowledge@Wharton website.

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[BLACK] TOOL: Square Payment System

What is it?

Rated as one of the 50 best inventions of 2010 by TIME magazine, Square is the easiest way to get paid.  Better yet: it makes it easier for your customers to buy.

Their app enables you to accept credit cards quickly and easily using your mobile device — and get NEXT DAY payout to your bank account!

It’s the perfect tool for small businesses.

When you sign up for a Square account and download the app, they ship you a free card reader (a “square-shaped swiper” that plugs into your phone to swipe credit/debit cards; see product photo below).

Square 2.1 just launched which help users better run their business.  New improvements include faster transactions (4 second transactions!), easier tipping (add gratuity with a single tap) and the ability to skip signatures on purchases under $25.

As of May 2011, the company had shipped 500,000 card readers and is on pace to process $1 billion in payments this year.

Why Do I Like It?

Because Square will be around a while: they just raised another $100 million in June 2011.  Because Jack Dorsey who was co-founder of Twitter also founded Square so it’s got some credibilitiy.  Because it’s a cool little gadget.  Because it works.  Because you can collect money and avoid ‘check in the mail’ or ‘I forgot my wallet’ excuses.  Now you can just reply to those excuses with: “No problem. I take credit cards right here and now.”  SWIPE.

What Is The Cost?

Free.  You pay a transaction fee of 2.75% for each swipe (no commitments).  If you enter credit card numbers manually, Square costs 3.5% + 15¢ per transaction.   More details re: pricing.

Who Are The Competitors?

Most competitors out there require a merchant account, a credit check, have hidden fees or require its own system.  Word on the street is that Google is planning a new mobile payments service which would allow consumers to tap or wave their mobile phones at a cash register to pay for their purchases.

Although this is a unique solution without direct competitors, some similar companies are:

More Information:

Product Screenshot:

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Live and Learn.

~ Connie Hammond ~