Shopify has a competitor that has a little mention in e-commerce conversations. It’s not Facebook, PayPal (could be), or Amazon, but it is a company methodically creating an end-to-end commerce business. Tobi Lutke, I suspect either is following this business or is completely unaware of this company. Square will make Tobi have sleepless nights.

As 2020 evolves, consumers and retailers are experiencing change at a rate of knots. What could take ten years is now accelerated in three months. I continue to believe that Square could be Shopify’s new rival that can hurt them.

Square is a middleware company

Payments are an essential part of e-commerce that, in no small degree, has been solved. In developed markets like the U.S., the massive credit card processors and issuers, Visa and Mastercard rule the payments layer. What is until Square developed its credit card reader that attached to a tablet or iPhone becomes a mobile POS. Mom and Pop traders could collect payment from cards, and it made waves.

Payments are a volume-based business that provides headaches to entrepreneurs who are always looking for a cheaper solution. Finding a more affordable solution that enables small businesses to trade online is hard and, in most cases, expensive. I remember my first reaction seeing a Square reader in a U.S. coffee shop, and my mind was blown. Something so small transformed a market and disrupted a sector.

Square has since evolved into a listed company. It offers point of sale solutions, loans to small businesses based on processing data. I have not mentioned Shopify, who has become the de facto solution for SME commerce infrastructure. Square acquired Weebly, which enables website creation that includes an e-commerce solution. In saying that, the solution is not suited for merchants that have more than 20 SKU’s.

Commerce ambitions

Square acquired Stitch Labs this week, which for me, is a big deal as it offers it more data and a new seller demographic, DTC, and small brands. Most telling, Stitch Labs won’t be taking on new customers and will stop in 2021 as the business will join Square’s Seller group. Once the acquisition closes, in 2021, Square could offer small businesses with tools. These tools can manage inventory, order management, channel management, and fulfillment solutions.

What happens if Square purchases BigCommerce before it IPO’s? Square has the capital and would provide BigCommerce with a logical end-game and adds value to more merchants. BigCommerce can go public, but then we will see their finances (which is nothing like Shopify’s). BigCommerce, as a part of the Square ecosystem, would legitimize its e-commerce chops and make it a real end-to-end business for any SME.

Is this why Shopify launched Shop Pay?