Venmo is expanding into everyday retail transactions

Venmo is evolving beyond a tool to pay friends for beer or rent.

Retail brands are adding Venmo as a checkout method to attract younger customers. A Venmo payment button on merchants’ online stores has available wherever PayPal is accepted for more than a year, and Venmo debit cards can be accepted at checkout counters of participating retailers.

For PayPal, it’s a strategy to monetize Venmo, whose peer-to-peer payments capabilities aren’t a money maker. Over the past year, PayPal has increased its emphasis on driving profitability for Venmo, in part through retailer transactions. According to PayPal, more than two million merchants support payments from Venmo, and recent additions include Uber, Hulu, Grubhub, Shopify and Williams Sonoma. Twenty-nine percent of Venmo users made a “monetizable transaction” in the fourth quarter of 2018, PayPal CEO Dan Schulman said on a fourth-quarter earnings call in January. “Monetizable transactions” are counted by PayPal as revenue from instant transfers, as well as retail partnerships.

Retail brands, meanwhile, want to make online checkouts as easy as possible, and Venmo’s popularity among younger customers make it a shoo-in. Direct-to-consumer home goods and grocery retailer Boxed has had Venmo payments available for nearly a year. It’s partnered with Venmo on paid and organic social media marketing campaigns on Twitter, Facebook and Instagram. Venmo is about being where target customers, particularly younger ones, are, said Seiya Vogt, vp of growth at Boxed, though it’s too early to tell if it has staying power.

“We’re trying to find the best and most seamless way for customers to have a good experience on our site — it depends on what technology they’re using on a day-to-day basis, but more people are using Venmo [on Boxed],” said Vogt. “It seemed like a really good fit; as we see more people using it for daily transactions, there will be more emphasis on Venmo.” Boxed also lets customers pay with Apple Pay and Google Pay.

For bedding brand Brooklinen, Venmo was added because customers asked for it.

“We want to make things as easy as possible for the customers and Venmo was an obvious choice for us,” Brooklinen CEO Rich Fulop said.

For retailers, being able to tie Venmo payments to the platform’s social feed has the potential to grow brand recognition among customers, their friends and family through organic content and paid ads. Neither Brooklinen nor Boxed does this, but they say they’re open to possibilities, depending on how quickly Venmo as a shopping payment method catches on.

“We love any way customers choose to share their experience with Brooklinen, be it word of mouth at dinner or on a social feed,” said Fulop. “[Venmo’s social feed] is not a marketing channel for us at this time, but we are excited to continue to watch how it impacts or improves the customer’s experience.”

Deep Dive: Amazon strategies

David Sica, principal at venture capital firm Nyca Partners, said Venmo is one way retailers can grow their brand positions and loyalty programs, but time will tell if customers use it as readily to buy goods as they do for peer-to-peer payments between friends.

“Merchants need to do something to create loyalty and remain competitive, and their efforts so far have had mixed results,” he said. “There’s this [potential] with Venmo — it has a highly desirable demographic that are users, and you have a social feed to build campaigns around.”
Digiday Top Stories
  • Member Exclusive
    After a quiet three months, DTC brands resume launches

    After months of Instagram posts about how "we're all in this together," and turning their factories into production centers for masks, direct-to-consumer brands are finally starting to return to business as usual. That's particularly evident by the number of new startups entering the market.

  • Member Exclusive
    The dream of the DTC exit is fading

    Last week Lululemon announced plans to acquire Mirror, a connected fitness startup, for $500 million. It may give a false sense of hope to DTC startups about what type of exits are possible in this environment.

  • Member Exclusive
    How DTC startups fall flat in marketing their values

    Direct-to-consumer startup founders have found themselves in a number of unprecedented situations over the past three months -- from having to keep their company afloat while stores were closed to having employees confront them about racism within the company. Many of these same startups have also found themselves in hot water for how they responded to these situations. The issue at hand is simple: customers feel like these companies aren't practicing what they preach.

  • Member Exclusive
    As cities reopen, the DTC store strategy is changing

    For digitally-native brands, Soho has often been the first place for digitally-native startups to open stores. Now, it's a ghost town, and is indicative of the challenges DTC brands will face going forward in plotting out their physical retail strategies.

  • Member Exclusive
    As calls for improving diversity increase, many VCs are silent

    Over the past two weeks, there's been a flood of direct-to-consumer startups issuing statements about steps they will take to better support the black community, and build more diverse companies. But venture capitalists have remained largely quiet.