My analysis
and channel checks suggest to me that Afterpay has reached a significant tipping
point in the US after only 11 months of operating in the country. While the
platform now has thousands of retailers on it, several hundred of them are of a
size that suggests to me that over the next 6-12 months, there will be some
serious growth in this business. I am of the view that the annualised underlying
sales rate in the US could see half on half (2H19 vs 1H19) growth rates in the
triple digits, despite the first half having the benefit of Christmas, but
offset by the benefit of increased awareness through time.
My research
also suggests to me that we are within weeks of the UK launch. I am hopeful that
they give a business update when they launch the UK operations, although I won’t
be totally surprised if they don’t.
Afterpay
have taken the buy now, pay later model global and are the face of the industry.
When people hear the term buy now, pay later, Afterpay is the first thing that
comes to most of their minds. I’ve read numerous posts in the US about the buy now,
pay later market, and Afterpay gets referenced first or is the only company to
be mentioned when that term gets mentioned. Of course, there will be times
where this isn’t the case, but it is the exception, rather than the rule based
on my research.
Most people
who have heard of Afterpay, have also heard of the term buy now, pay later. Many
of these same people also understand that Afterpay is interest-free. “Competitors”
will throw the buy now, pay later term around as a blanket term, in the attempt
to persuade people to thinking that their product is akin to Afterpay. The problem
is, many of these competitors end up charging the customer in some major way,
whether it be Zip, Paypal Credit, Klara, Affirm, or whoever else, none of them
are identical to Afterpay in terms of simplicity, transparency and cost to the end
user.
Klarna have
gone so far as to copy almost every single aspect of Afterpay’s marketing model
to the point where they also say “Klarna it” as one of their marketing phrases.
Snoop Dogg has also recently invested in the company and is now the face of it.
But what has this done to dent Afterpay’s growth in the US? Little in my opinion.
Putting customer related numbers aside, one of the easiest ways to see who the
real competitors are (if they do exist) is to look at which retailers are
signing up with them. After only 11 months of operations, Afterpay have signed
up some of the biggest brands in the world including: Forever21, Urban
Outfitters, Revolve, Steve Madden, boohoo, Skechers, Kylie Cosmetics, Designer
Shoe Warehouse, Colour Pop Cosmetics, Dose of Colors, Morphe Brushes, and Ray-Ban
just to name a few. Who have the “competitors” signed up? That’s what you’ve
got to ask yourself. Time will tell but unfortunately, I think Snoop has backed
the wrong dog.
This article is general advice and is not intended to be personal advice. Before making any decisions, consult a licensed professional.
