Afterpay was invented to make economic stress a little easier, offering a layby-like system where a total payment from a retailer is split into four equal fortnightly payments with no interest. Seems too good to be true? Hardly.
The notion of lay-by is an age-old concept and Afterpay have capitalised on through both digital and brick-and-mortar retailers. It allows customers the option to stagger out the payment of an item they really want but just wouldn’t be able to afford upfront.
Not surprisingly, 65% of users say that the small payment options influence them to purchase items they usually would not and almost 50% of users say they spent more using Afterpay than they would with their own debit card (Mozo, 2018).
From a marketing perspective, by offering Afterpay as a payment option can influence customers to purchase higher priced options as well as a higher quantity. Additionally, if a purchase is under $500 from an online retailer the first payment is due in two weeks – not dependent on how soon you receive the item as well. Meaning customers can wear the item for two weeks before having to pay anything, and similarly try it on and send it back without having paid a single dollar.
But how has this piece of mind impacted customers loyalty to the service? The Financial Review outlines that:
- 15% of all Australians aged 18-36 are its customers
- More than 90% are returning to the service monthly
- 86% of users say the option of Afterpay impacts if they purchase or not
- Afterpay holds more than 25% market share of all online fashion retail sales
These statistics demonstrate that Afterpay have a strong relationship with their customers, and in turn customers have with their retailers. By providing it as a payment option, customers are more likely to browse online retailers and make purchases.
Of course there’s the reality of late fees and the inability to pay for items, but 78% of all Afterpay users have never paid a late fee (The Financial Review, 2018). Retailers still get their revenue as Afterpay pay them the full amount of an item as well. There’s potential for the service to not work, but on a whole and currently, it’s doing very, very well.
Have any of you used Afterpay before? Does the option mean you browse more on online retailers sites? Let me know below!
Digital With Dee 
Hey Dee, great blog post! I have used Afterpay before, but not the typical intention of most users. Instead of using Afterpay because I have no money so am waiting for pay days, I use it to spread out payments for a huge clothing shop of a few hundred dollars. Even though it’s the same cost, I feel like it spreads the load. However I won’t avoid shopping on a site if they don’t offer Afterpay as it’s not a concern for me!
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Hi Sophie, thanks for the comment! I agree with you, I think it helps buffer the payment so the amount is easier to pay off and doesn’t affect other payments or financial commitments as much. Always helps!
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Hi there Dee, great topic! When Afterpay first came out, I made a small purchase with it to test it out and I quite liked it. But after some time, there was a lot of talk of people overestimating their finances and becoming unable to pay their instalments. I think the concept of Afterpay is really great as it does allow you to spread out your payments, however, personally, i prefer to pay off my items all in one go!
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Hey there, thanks for the comment! I agree as well, I think with a few smaller purchases the concept is great but when you start having multiple Afterpay payments at once you can get caught out. However I think that’s where Afterpay are doing a great job in making customers think that smaller, multiple payments are better than the full payment. Smart!
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Hi Dee, this is a really interesting topic. I think that we live in a society that lacks a lot of delayed gratification. We are so often told that we can have the things that we want here and now so a function that to be a reality is very appealing to consumers. I think that there are a lot of ways Afterpay is helpful for consumers, but I’m a bit worried that this kind of service is targeted at those who don’t really have money to spend on items and giving them a false sense of security because they can pay it off. What do you think?
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Hi Kate, this is such an interesting point of view. I believe that we are a society who wants everything now without repercussions, including immediate payment. Therefore I think it can be seen as targeting those who don’t have the money to spend on those items and uses that vulnerability as a target. For the most part though, the statistics show that it’s only a very small percentage of all Afterpay users who don’t finish the payments or are late with payments, but still a super interesting viewpoint. Thanks for the comment!
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