Square, it appears, is just like any other company. Sure, it’s gotten a lot of free publicity over the years because its owner co-founded a popular social media site, but now its fate is not uncommon to those of any other company: it has to make money, and it has to adapt to changes in the marketplace.
In essence, the company is undergoing a string of ups and downs. Pretty normal stuff. Making the right transitions, however, is the tricky part.
As illustrated in a CNNMoney report, Square reportedly earns a gross profit of about $300 million annually, as it earns about $1 for every $3 it earns in card-processing revenue. Separate from that, Square also struck a deal to process transactions for 7,000 Starbucks stores in hopes of boosting interest in its Square Wallet, which didn’t happen. Square has now ditched that product. As such, both the Starbucks and Square Wallet initiatives haven’t panned out for the company as planned.
Square also says little these days about its all-in-one Square Register or its P2P funds-transfer product, Square Cash. More failures, or is Square simply shifting its marketing dollars elsewhere? Or is it just plain short on available dollars to play with? Hard to tell.
But, despite various setbacks, Square keeps plugging away with new products and ideas. CNNMoney, citing Fortune, reported that internally Square hopes to turn a profit in about a year. That very likely will depend on the success of some of its recent moves.
Earlier this week, shortly after it dumped its mobile wallet, Square pressed forward with its 2.0 reinvention, releasing a new feedback tool for Square merchants. At $10 per month, Square Feedback turns a company’s digital receipts into a merchant opportunity to solicit customer feedback by asking customers about their experience directly from the receipt.
In an interview with PYMNTS.com, a Square spokesperson called Feedback a great way for businesses to learn more about their customers’ preferences, possibility even giving them an opportunity to rectify a subpar experience.
“I read somewhere that for every star a business receives on Yelp, that increases its business by 8 to 9 percent, so this becomes pretty powerful,” the spokesperson said. “It’s completely integrated and is right there on the receipts and encourages customers to engage with the feature.”
The app partners with the newly released Square Order, which allows users to pick up orders from, and pay at, Square merchants right from their smartphone.
“We knew – we learned – from Square Wallet that people really loved paying with their name,” another spokesperson said in an interview, referring to the company’s geolocation service that ties its mobile app to store registers. “They thought that it was so cool and so easy how they don’t have to pull their physical wallet out. So we learned that was something we wanted to figure out how to retain. But there’s a lot more value that we can add to this process. We can help customers order in advance, to eat or pick up at a café or dine in at a restaurant.”
To create these new tools, Square decided it needed to build a new app built on a more agile, technological platform instead of building it into Wallet. “That’s why we made the tough decision to build this on a whole new app called Square Order, that we’re rolling out in phases,” the spokesperson said. “This is phase one; it’s only in San Francisco and New York right now.”
Square charges merchants 2.75% of the sale on most transactions, but it will charge 8% with Orders. Square’s competitors charge 10 percent to 15 percent, the Square spokesperson said. “Also, competitors require a marketing fee, and we don’t offer any other fees or contracts.”
In late April, it announced a Square Register upgrade, complete with new kitchen tickets and order-modification features. It also rolled out Square Pickup, which allow merchants to link to a menu and order-pickup feature on Square Market.
“This is what separates us from our competitors because most require a sidecar app, or an iPad on the side to take any pick-up orders, the spokesperson said. “So you would no longer need to go between your register and back, and make it more complicated than it needs to be. Then all of the sales from Register and Pickup get added into its analytics system for free, so you can see all of your orders regardless of how they came in.”
Also helping was a recently approved $225 million line of credit. With $367 million from investors, the company had about $155 million left on its balance sheet, according to CNNMoney, citing internal company emails.
Yes, Square keeps plugging along. Time will tell, however, if 12 months from now it’s in the black, or plugging holes in bleeding red ink. The company lost about $100 million last year, so it has a ways to go.