Emerging fintech star Afterpay lands major contract with Myer
Thursday, March 16, 2017/
Afterpay, the “take now, pay later” platform that’s quickly forming partnerships with some of Australia’s biggest retailers, has secured a two-year contract with Myer.
The publicly-listed payment platform, which lets shoppers receive products immediately from participating retailers and then pay Afterpay for their purchases through a number of instalments, announced to the Australian Securities Exchange yesterday that it had entered into a two-year agreement with the department store to allow shoppers to use the platform when shopping online at Myer from May.
Afterpay managing director Nick Molnar told SmartCompany this morning the deal is another step in the company’s quest to dominate the Australian retail market.
“I think with a department store like Myer, from a millennial shopper perspective [the deal is] exciting, but it extends us out as well, over to baby boomer customers,” Molnar says.
“It’s a really attractive opportunity for us as we’re focused on expanding out across Australian retail.”
Meanwhile, Myer said the partnership is an opportunity make it easier for its customers to shop online.
“We want to make it simple and easy for our customers to shop with us and partnering with Afterpay will give our customers more ways to purchase their favourite items online,” the company’s chief digital and data officer Mark Cripsey said in a statement provided to SmartCompany this morning.
The partnership comes off the back of months of customers begging Myer, as well as other discount department stores and retailers including Kmart, Big W and Target, to start using the platform. In 2016, the hashtag #afterpayit took off on Facebook, with shoppers posting to the pages of Australian retailers, asking that they integrate the platform.
Molnar told SmartCompany at the time that customer enthusiasm was helping to build a stronger base of brands.
“Customers like our product, because they know we’re genuinely in their favour,” he said in August 2016.
Molnar and his team have been focusing on shoring up the number of big retailers on the books to increase the customer base, and the business says the plan has been working.
It says it now has 3100 retailers on board and more than 500,000 active shoppers on the books, which is up from the 356,000 it estimated in December 2016.
Along with the likes of Myer, it has recently signed up the likes of the Super Retail Group, Booktopia, Telstra and Alannah Hill.
Businesses using the technology pay Afterpay a commission for transactions made through the platform, and according to the company’s most recent half year report, the increase in users and retailers has led to a 2629% increase in revenue from ordinary activities for the half year to December 2016, compared with the half year to December 2015.
Over the past six months, the company has booked $6 million in revenue.
Molnar says that while Australia is absolutely still the focus for Afterpay, there could be future plans to take the technology abroad.
“We’ve stayed mainly focused on Australia, but the logical next step is New Zealand,” he told SmartCompany this morning.
The power of the platform for impulse purchases
Early adopters of Afterpay have previously told SmartCompany that integrating their systems with the payment platform worked to increase online sales for their brands, most of which are in the consumer goods space.
Retailers like Black Milk have been employing the technology to encourage shoppers to jump on limited edition sales and events, where not all shoppers might have the cash up front.
Smart50 alumnus Adore Beauty is one online retailer that signed up to Afterpay early on, and founder Kate Morris tells SmartCompany that while it might not be for every brand, it has served a purpose to boost customer spending at Adore.
“We notice that our customers will shop more often. It kind of just removes a bit of a mental hurdle, and obviously we have a very passionate customer base of beauty junkies who spend most of their disposable income on beauty,” Morris says.
“Anything that enables them to get the product they desperately need, then having a payment method that facilitates that, certainly helps.”
While getting set up with the technology early on meant Adore Beauty got to discover all the usual bugs that go along with integrating a new platform, Morris says that for her company’s business model, having the Afterpay option works well.
That said, she believes not all other retailers may be as well suited.
“I know other businesses it hasn’t worked as well for. It lends itself to products where there’s a sense of impulse purchase, where people say, ‘Oh! I’ve got to have it!” she says.
For those who might be considering the jump, it’s also worth considering the size of the expense, Morris says.
“The main thing to keep in mind is that it does come at a cost — it costs more than credit cards and Paypal — though it does work very well for beauty,” she adds.
This article was originally published on SmartCompany.