In 2015, Afterpay revolutionised shopping with its Buy Now, Pay Later systemâand yep, itâs exactly what you think it is. This payment model lets customers shop and pay later, enjoying their purchases without the immediate financial stress. This game-changer quickly caught on, with experts dubbing it the “new and improved PayPal” and even speculating that Apple might take interest. It wasnât just a win for shoppers, retailers jumped on board, seeing major benefits, and this payment option soon became a staple in the e-commerce world. đą
While everyone was buzzing about the benefits Afterpay brought to consumers, not many were talking about how it was changing things for retailers. As the service gained momentum, it became clear that Afterpay wasnât just a trendâit was paving the way for a new era in buying. With its impressive growth, some even began calling it the future of online shopping. Retailers also started to see the real value in this new payment method, transforming how they approached sales.
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ToggleThe TL;DR (too long, didn't read) đ
- Afterpay flipped shopping on its head, letting people buy now and pay later, and it took off super quickly.
- It wasnât just a win for shoppersâretailers loved it too, with big boosts in sales and customer interest.
- Afterpay pumped billions into the Australian economy, and shoppers spent more than they would with regular payment methods.
- Afterpay started a whole new trend, and now there are heaps of similar services, making âBuy Now, Pay Laterâ a must-have for online shopping.
Help! I donât know how Afterpay works đ
Afterpay is like lay-by’s cool, modern cousin â you can grab what you want now and pay later in four easy instalments. Unlike the old-school lay-by, which made you wait for your goodies, Afterpay lets you walk out of the store with your new purchase while the payments roll in over time.
While lay-by’s been fading away (sorry, Target), Afterpayâs been thriving, becoming a go-to option for retailers everywhere. Itâs a win-win â you get your stuff right away, and the payments are spread out, making everyone a little happier at checkout. đ°
Since its founding in 2014 by two Australians, Afterpay has expanded to hundreds of stores and checkouts across Australia. Itâs now hard to find a retail or e-commerce store that doesnât offer Afterpay. đ
How an Australian predicted the future of e-commerce đŽ
Founder and tech entrepreneur, Nick Molnar, said the launch of Afterpay was filling a fundamental market gap.
“‘[There was an] obvious gap in the market for the ability for an online customer to try the goods before they have to pay, coupled with being able to spread their payments over a short period of time,’ Molnar told Start Up Daily”.
Molnar was inspired after noticing worrying statistics about how many customers never completed their online purchases. While online stores often attract more visitors than physical shops, they struggle to turn that traffic into sales. đ
Molnar explained how simple the idea behind Afterpay was, âImagine in a retail store if only three out of every 100 customers who entered the store actually made a purchase and if 75 percent of all customers waiting in the checkout line with their credit cards out decided to put their items back on the rack and leave. Afterpay does not accept that this should be the norm and set out to change how we think about online payments.â
Talk about turning the tables on traditional payments. đ¤Ż
A graphical representation of the 4-payment process used by Afterpay.
Weâre spending more â and we’re happy about it đ¸
The numbers are in, and itâs clear that Afterpay is making a real difference for retailersâand the Australian economy is feeling the impact too. Eight years after its launch, the stats speak for themselves:
- Afterpay contributed an impressive $3.9 billion to Australiaâs GDP in 2023.
- The platform supported 39,000 jobs that year.
- Afterpay Australia saw $5 billion in merchant activity in 2023.
- 65% of merchants shared that Afterpay helped them reach new customers.
Customer Service Manager for Black Milk Company, Emma Jacobson, states that Afterpay enables customers who wouldnât usually be able to afford their product to start purchasing.
âWe have things like âFuntimes Fridayâ here where weâll announce weâre selling a product just for the weekend,â she says. âA lot of people would say âI wish I had it longer, itâs not my payday this week!â This is really a saving grace for them,â Jacobson told SmartCompany. âWe know the average Afterpay sale is about 30% higher than for normal orders, so we see it driving sales.â
The future of e-commerce đ
Since its launch in 2015, Afterpay has transformed the e-commerce landscape. While most of the focus has been on customer benefits, the impact on merchants has been just as significant. With many corporate giants jumping on board, it became clear that Afterpay was on track to dominate the industry. While it did come with a cost for retailers, the platformâs higher conversion rates and increased sales orders made a strong case in its favour. đĄ
At the time, there was limited information about how Afterpay made a profit and how that impacted retailer margins. But over time, it became clear that the platform had a major positive effect on merchants. After almost 10 years, the benefits are undeniable.
Back then, Afterpay couldnât just be added as a simple plugin to your website. You had to reach out via their website, answer a few questions about your industry and annual sales. Now, you can even use Afterpay in-store, letting you walk away with your purchase while only paying the first instalment. Talk about instant gratification đď¸
For emerging online stores, Afterpay quickly became a valuable tool for standing out from competitors and boosting both online and offline sales. It’s weird to think there was a time when this wasn’t an option, but today, with various Buy Now, Pay Later options available, itâs an essential part of the shopping experience.Â
The Rise of Pay Now, Buy Later đ
Afterpay kickstarted an industry that has truly transformed e-commerce, retail, and consumer spending. Today, itâs not just Afterpay that merchants are offeringâthey now have a range of buy now, pay later options to choose from. Services like Zip-Pay, Klarna, Latitude Pay, and even PayPalâs Pay in 4 system have all jumped on board, each bringing their own twist to the buy now, pay later model.
These options make it easier for people to justify their purchases, with the ability to break up payments into manageable instalments. Itâs no wonder this payment method has become a shopperâs dream, making it easier than ever to check out without a second thought. đ