Paypal Goes Shopping for Pinterest, Moving Closer to “Super App”

Why Pinterest?

Pinterest, unlike other e-commerce enablers or marketplaces, captures consumers early in their shopping journey. From building vision boards to sharing inspiration to product discovery and conversion, Pinterest has a unique value proposition that both engages consumers organically and funnels high-intent consumers to participating brands and merchants.

In our past statement about the race to “super app” success, we argued that Paypal must overcome its lack of habitual shopping offerings in order to win in this space.

Acquiring Pinterest could be Paypal’s answer to engage with consumers early, frequently, and in a fully integrated fashion.

“PayPal will need to double down on developing lifestyle-oriented native offerings (e.g., entertainment, food delivery, shopping) that will cement habitual consumer usage.” — “Introducing the Great American ‘Super App’”

Pinterest experience for brands and buyers

Pinterest made moves in the past year to break out of the social media mold, increasing its promotional capabilities for brands that list products. Currently, the platform lacks native checkout but directly links listed products to checkout on the retailer’s website. With merchants and brands fleeing marketplaces like Amazon and Shopify, Pinterest positions itself as a brand-friendly alternative to traditional e-commerce giants.

In this context, Paypal could fill Pinterest’s significant payment infrastructure gaps and fuel the platform’s foray into e-commerce. However, in Pinterest’s current state, Paypal would still lack a core e-commerce play. Visual discovery is a growing part of the shopping journey, hence our investments in Syte and Marpipe, making Pinterest a strategic primer should it continue to more closely resemble traditional e-commerce platforms.

“Driven by a near-limitless array of personal interest communities, social commerce is changing the landscape of how commodities are discovered, bought, and sold amongst a platform’s users,” says Daniel Eckert, a Commerce Ventures senior advisor. “Taking a social-first approach in developing a commerce platform that seamlessly handles all steps of the shopping journey could be the endgame play PayPal needs to become the U.S.’s first true “super app.”

What Does This Mean For the Market?

For Paypal, this acquisition would mean being one step closer to being the U.S. category leader. Other players have failed to either build or buy the relevant components of a “super app,” making Paypal even more advantaged in gaining traction.

This move would be extremely difficult to match by the vast majority of other competitors given that most financial companies don’t have the capital or leverage to make an acquisition of a similar size. We believe it’s unlikely that Square will react meaningfully considering its pending acquisition of Afterpay.

The question is: what will players like Apple, Shopify, and Amazon do to counter?

The path to success depends on Paypal’s ability to see this opportunity through by effectively connecting all of its services and acquisitions into a cohesive platform while gaining significant traction from the consumer.

Acquiring Pinterest could be the rocket fuel PayPal desperately needs to power its “super app” moonshot. With very few others able to compete with the speed of Paypal’s acquisitions, Apple and the remaining players will have to answer with developments of equal significance — or be left in the dust.

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Early-stage venture capital firm investing in technology innovators in the retail and financial services eco-systems.

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Commerce Ventures

Commerce Ventures

Early-stage venture capital firm investing in technology innovators in the retail and financial services eco-systems.

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