The Rise and Rise of Afterpay
Australians are changing the way they shop. Mothers, who control more than 80% of consumer spending, are seeking more flexibility from retailers. Astute marketers are recognising this trend and offering new payment options with great rewards. I spoke with Nick Molnar, Founder of Afterpay, and some Small Business owners to find out more about the rapid rise in popularity of Afterpay in Australia.
What is AfterPay?
The humble layby system has been officially disrupted as Co-Founder, Nick Molnar explains, “Afterpay unashamedly works in the customer’s favour – we offer shoppers the benefits of a layby service with an immediate take-home option. Customers can ‘buy now, receive now, pay later’ in four simple fortnightly instalments and pay absolutely no interest. At the same time, merchants are seeing significant growth in sales with the uptake of payments going via Afterpay. It is a win-win for customers and merchants.” In the three short years since Afterpay launched, there are over 700 thousand Australians using Afterpay and over 5,000 retail merchants offering Afterpay as a payment option.
What’s in it for consumers?
Mums are embracing Afterpay as it allows them to manage the household cash flow. Nick Molnar shares, “The majority of our customers use Afterpay as a budgeting tool – for mums, this is especially handy, particularly around big events during the year such as birthdays, school holidays, Christmas and back-to-school.”
Mum of two, Libby Carrick, is one mum who loves the flexibility Afterpay provides, “I absolutely use it as a budgeting tool, I set myself a limit every week on what I can afford on the repayments. I will not go over my limit no matter what though.” So enamoured with Afterpay she teamed up with another mum, Delwyn Lea Purcell, to create a closed Facebook group called Afterpay Obsession. Started in April 2017, they have quickly amassed more than 40,000 members. They provide a place for all Afterpay users, both consumers and merchants, to interact and promote their businesses. Mums love the group with personalised kid’s items, children’s clothing and home décor being some of the most popular categories.
What’s in it for merchants?
In the past few months, I have spoken with an array of Small Businesses who target mums, and they are reporting significant sales increases with the addition of AfterPay:
- “I started using Afterpay in August last year. It made sense to me that Lucas Loves Cars should offer a pay later option as many of our customers are purchasing for an event, such as a birthday or Christmas, and will often make a large purchase. They want the goods now but find it easier to distribute over a few payments, like the Lay-by of old. Since we have started working with Afterpay, we have had more orders, and the size of the order has been 20% higher than orders via traditional payment methods. We have also seen a large amount of traffic coming to our website directly from the Afterpay directory, and the number of orders via Afterpay are continually increasing. The cost of the service is well balanced by the traffic and the market capture that having the service provides.” – Helle Warming, Founder, Lucas Loves Cars.
- “Since I introduced Afterpay to my site at the very end of December last year I have enjoyed a 100% increase in sales since the same time last year. I have also begun to sell more of my high-end items which has increased the average total of each sale by about 50%.” – Kelly Jones, Owner, KJ Essentials.
- “I have had Afterpay for four weeks now. The immediate reaction I saw when installing Afterpay was a records sale day. The first day of Afterpay being at the checkout, I recorded sale numbers similar to my Boxing Day sales! The percentage of Afterpay sales for me are now around 30% after the initial flurry of announcing I had Afterpay on my social media channels. The first week would have seen AfterPay sales at around 70% as I did have followers waiting for me to get Afterpay and they jumped on and ordered as soon as it was available. I also announced it in an Afterpay Facebook group which really increased initial sales as well.” – Alisha Lynch, Founder, Naughty Naturopath Mum
It is critical that Small Business owners stay abreast of the changing shopping trends of mothers in Australia. It seems clear that consumers and merchants are embracing Afterpay. As many Small Business owners prepare for the Christmas selling season, I strongly suggest that flexible payment options are considered to increase your sales and reduce cart abandonment.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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