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Afterpay and the Australian Economy – Key Takeaways
A report from Accenture has highlighted the impact that the BNPL platform, Afterpay, has on the Australian economy following the pandemic.
Key Takeaways from the Report:
- Retailers reported a 7.7 revenue increase when partnering with Afterpay
- Afterpay Sales Channel generated $7.8b in total sales in 2020
- 90 percent of Aftyeroay users said the BNPL platform helped them with budgeting
According to the report, Afterpay has driven $6 billion in incremental sales for SMBs and retailers and $3 billion in net benefits.
Of that $6 billion, $510 million went directly to regional merchants. Furthermore, this represents a 75 percent growth in sales to metro and regional customers YoY.
Australian businesses had it tough from the end of 2019 and throughout 2020 – the horrific bushfires and closure of stores during the pandemic forced businesses to turn to online platforms.
The report found that Afterpay played a role in improving online checkout conversion rates, larger basket sizes, customer acquisition and an increase in customer engagement rates.
According to Andrew Charlton, the Managing Director of Accenture, the BNPL platform benefits consumers and merchants.
“This report reinforces that both consumers and merchants win in the Afterpay revolution,” he said. “For consumers, Afterpay offers the ability to budget and simplifies purchasing without the payment of interest and credit card fees.
“For retailers and small business during the pandemic, Afterpay was an invaluable sales channel, allowing them to connect to internet-savvy, budget-conscious consumers while at the same time, growing their topline and improving operating efficiency,” he explained.
Out of 1.2 million orders, the leading categories that Afterpay generates within retail include fashion (34 percent) and department stores (22 percent). There isn’t much to separate the next three, with recreation (14 percent), ‘other’ (12 percent) and Health and Beauty (10 percent) following behind the leaders.
Another interesting takeaway from the report by Accenture was the spread of Afterpay users as a breakdown of household income.
The report found that Afterpay users are typically female, aged between 18 to 34 (55 percent). Furthermore, Afterpay users typically have a higher household income than the general population.
In a report from Power Retail, 90 percent of Australian BNPL users have an Afterpay account – this is compared to 36 percent of people who have a ZipPay account, ten percent have an account with Latitude Pay and ZipMoney.
What would drive a shopper to increase their spending online using a BNPL platform, such as Afterpay? An overwhelming 77 percent of Australian respondents said they would increase their spending because they prefer BNPL options to credit cards.
This is backed up in the Accenture report, with Afterpay reported $110 million ‘saved’ in credit card fees in 2020. In fact, the average cost for Afterpay users was 0.6 percent of their purchase price, compared to 2.1 percent for credit card users.