The news: Starting this fall, buy now, pay later (BNPL) provider Afterpay will let US customers make purchases at 13 popular retailers—including Target, Nike, and Sephora—that the firm isn’t partnered with, per PYMNTS. Customers will be able to use Afterpay’s app to shop at these retailers. This comes shortly after Afterpay announced plans to open its North American headquarters in San Francisco.
The opportunity: The app solution can help Afterpay capture more volume and open a pathway to increasing revenues.
- Afterpay can further capitalize on a popular BNPL market. The number of US BNPL users is projected to rise 81.1% year over year (YoY) to hit 45.1 million in 2021, per Insider Intelligence forecasts—making it a prime market for Afterpay to expand into. And with BNPL appetite continuing to climb, the new app solution will likely boost Afterpay’s sales volume, which surged 167% in North America in its fiscal Q3 2021 (ended March 31, 2021), and its North American user base, which hit 9.3 million in the same period.
- It can also increase engagement: Offering its BNPL product at a wider selection of merchants might encourage more consumers to use Afterpay, especially those that may want to shop at specific retailers that Afterpay doesn’t currently work with. This should help it grab more US market share and keep up with competitors like Klarna, which already offer a similar solution.
- The solution will come in time for holiday shopping. A fall launch would let Afterpay maximize its presence during the holiday shopping season, when customers may be more willing to use a BNPL product to help pay for expensive gifts. This could result in a lucrative payoff for Afterpay: Holiday ecommerce sales are expected to hit $206.88 billion this year, according to eMarketer forecasts from Insider Intelligence. Afterpay could also pull more customers into its platform that may end up staying with it after the holiday season.
Why this matters: Afterpay’s upcoming launch should help it grab more market share in the competitive BNPL space. This comes as providers like Klarna rapidly expand their global footprints and issuers like JPMorgan Chase and Citizens Bank offer new flexible payment solutions to capture consumers who are increasingly opting for BNPL products over credit cards.