Square hitches its wagon to an ecommerce star with TikTok tie-up

The news: Square partnered with TikTok to let its merchants promote and sell through the short-form video app, which recently hit 1 billion monthly active users, per a press release.

• TikTok for Business users can set up free Square Online stores.
• Square Sellers can sync their store catalogs to TikTok in dedicated shopping tabs on their profiles.
• They can also include product links in content that directs buyers to their Square Online stores.
• Sellers can also run ads using TikTok Ads manager.

Why it’s worth watching: Social commerce is booming, and growth won’t slow down anytime soon—US retail social commerce sales are expected to grow 35.8% year over year (YoY) in 2021, hitting $36.62 billion, per our forecasts. Sales are expected to top $45 billion next year.

TikTok is quickly becoming one of the top selling destinations thanks in part to its large base of users, many of whom are Gen Zers and millennials: 48% of US TikTok users are between 18 and 29 years old, per Pew Research Center. And Gen Z and millennials possess nearly $3 trillion in spending power, according to YPulse—so retailers and ecommerce providers are running to take advantage of their revenue-generating opportunity.

• In December 2020, Walmart hosted a livestreaming shopping event on TikTok.
• Shopify has had a long-standing relationship with the video app—the ecommerce provider recently launched a pilot program that lets merchants enable more shoppable content on TikTok.

Social commerce is booming beyond TikTok as well—Square’s rival PayPal recently forged a partnership with “link in bio” social media service Linktree to let creators take direct payments on Linktree globally.

The opportunity: TikTok opens the door for Square to sustain the dramatic growth it reported last quarter.

• The TikTok tie-up creates a merchant acquisition opportunity. Merchants using TikTok for Business may be inclined to set up a Square Online store to open up a new channel to maximize their sales potential. And new sellers let Square reach more customers. It also presents an upsell opportunity—new merchants might be interested in using Square’s other online or brick-and-mortar solutions.
• And it should also help Square boost payments volume and revenues. As an increasingly attractive shopping destination, Tiktok will likely give Square a jump in gross payment volume, which surged 88% YoY in Q2. Square’s merchant upsell opportunity will likely also cushion revenues, which hit $4.68 billion last quarter, a 143% YoY increase.

Related Content: Check out our “Social Commerce Forecasts 2021” report for a look at the industry’s history, opportunities, and challenges—and where it might be headed next.