Why you need to add AfterPay to your eccommerce website
Afterpay has 3.3 million customers in Australia and retailers who have adopted this "buy now, pay later" payment service has seen a 20-30% increase in online conversions.
A recent report by ABC, claims that Australian consumers are ditching credit cards for buy now, pay later services. In Autralia alone, Afterpay has 3.3 million customers. According to afterpay's customer survey nearly 50% of users said they spend more using Afterpay, than using debit or credit cards.
In May 2020 alone, Australians dumped more than 100,000 credit cards, taking the number of cards in operation back to levels not seen since 2009. - ABC News
Research firm IBISWorld expects online shopping revenue will grow by 6.4% in 2020-21, to $31.2 billion.
IBISWorld predicts the 'buy now, pay later' industry will grow from bringing in about $679.9 million in revenue this financial year to $1.1 billion by 2024-25.
The Afterpay business model allows customers to make instant online purchases and pay off the cost over fortnightly repayments. For Afterpay custsomers is interest free, as long as they pay on time.
As a retailer, it may cost more to have Afterpay than other payment services however many retailers are enjoying the benefits. Afterpay allows merchants to offer flexible payment options upon checkout. Instead of paying for an order in full, customers can now pay for an order in 4 equal payments. Afterpay has become of the premier payment services for many of Australian retailers and is used by merchants like Kathmandu, LensPro, ASOS, Platypus Shoes, Diesel, Peter Alexander, Myer, The Iconic, St Ali Coffee Roasters, T2 and more.
From the retailer or merchant end, when a user signs up and is approved for Afterpay, and they complete the checkout process, everything on your end looks like a normal conversion save the payment. You are paid within 48 hours by Afterpay themselves. Afterpay then takes on the responsibility of collecting ongoing payments from customers and pursuing those who do not pay up on time.
What will I pay as a retailer for Afterpay
From a cost perspective retailers / merchants are charged 30 cents plus commission for every transaction they make via Afterpay. The commission can range from 4 to 6%.
Does Afterpay integration with my current eccomerce solution?
Afterpay plays well with most CMS platforms. The Afterpay site boasts “instant integration” with Magento, WooCommerce, Neto, Shopify, Island Pacific, Infinity, Futura4Retail, and Commerce Vision.
Furthermore, Afterpay offers “comprehensive technical support for initial integrations and ongoing maintenance whenever you need it.”
At Speedwell, we’ve integrated a number of Shopify, Big Commerce, Woocommerce and Magento sites with AfterPay. While the integration isn’t entirely instant, most of the core functions do work out-of-the-box, however some customisation is needed to match the styles of your website 100% and to resolve any conflicts in the checkout. AfterPay’s integration steps are very clear and their technical support is excellent to help with the set-up.
Does it increase my conversion rate?
Research shows that retailers see an average of 20–30% increase in customer conversion rates after Afterpay was implemented. - IBISWorld
This is because Afterpay encourages two things out of your users. The first is that, since they can buy immediately and pay over time, they’re encouraged to make purchases that they wouldn’t normally make. The second, is Afterpay minimum order size. This encourages your bottom line to increase as Afterpay has a minimum order size. In order to qualify for Afterpay, the shopper must have at least $35 worth of product in their cart. This can be one more expensive product or multiple less expensive products.
Afterpay a hit with millennials and young professionals
Afterpay has now has around 10 million active customers globally. A large chunk of Afterpay's customers (5.6 million) are in the massive US market, 3.3 million are in Australia and 1 million are in the UK.
The company, incredibly, has signed up more than 1.6 million US users since March alone. Across all its markets, it signed up more than 20,000 customers a day in the fourth quarter.
Afterpay has been especially popular with millennials making quick purchases that, on average, are worth about $153. The company says its average customer in Australia is 34 years old. Playing to Gen Z's physiological desires, payment platform Afterpay has seen significant growth, recording a 289% increase in sales in the year to June 2018.
"We think there's a major generational shift going on here," says Afterpay head of public policy Damian Kassabgi.
Gen Z are a generation shaped by social media and raised in the aftermath of the 2008 global financial crisis, when they witnessed their parents suffer in the recession. As the biggest generation of shoppers with more than 2.6 billion globally, Gen Z’s shopping preferences aren’t just important -- they are setting the trend for the future of retail.
Gen Z seek brands that connect with them on an emotional level, alleviating financial stress while being aesthetically tailored to their tastes.
25% of 18–24-year olds say they trust brands – a greater percentage than they trust the government, media, the Church, influencers and social platforms (2UM Agency, 2019).
Generation Z and Millennials are generations that instincively look for low-commitment, straightforward solutions that are budget-focused, customer-centric and empower rather than entrap in their life and this is paramount when it comes to their finances. They want apps that proactively monitor their spend, capture lifestyle data and advise on the best ways to save or optimise their finances.
94% of Afterpay’s Gen Z customers use their own money, linking their account to a debit card and use brands like Afterpay to manage their budget, minimise inconvenience and monitor their money in real time. So when it comes to strategies to attract these consumers, digital retailers need to play to this flexibility mindset when considering payment gateways.
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|John King, Digital Marketing Technologist, Speedwell