With most offices remaining closed throughout the COVID-19 pandemic and many consumers still working from home every day, apparel shopping habits have changed as fewer people need to wear formal or business casual clothing. Installment payments platform Afterpay is the latest company to suggest this, with the millennial-friendly pay-later provider noting a significant increase in demand for casual fashion items such as T-shirts, shorts, sneakers and leggings.
During quarantine, Afterpay says that while casual fashion has gained popularity, its platform also has experienced four times as many clicks on fitness products and 1.2 times more clicks on beauty items.
Afterpay revealed this alongside news that it is partnering with five new retailers including U.K.-based online fashion retailer Asos and footwear brand New Balance. Other new retail clients include online skincare seller Drunk Elephant and online beauty brands It Cosmetics and Living Proof. The company said it felt the shift in consumer spending demonstrated an interest from shoppers in products that promote a casual lifestyle, wellness and self-care, making it an appropriate time to partner with these brands.
Asos is demonstrating an appetite to experiment with the growing popularity of buy now, pay later platforms. The British fashion e-tailer already has a partnership with installment payments rival Klarna, the Swedish fintech firm. Using Klarna, shoppers can split purchases made on Asos into four interest-free payments that automatically get charged every two weeks. Like Klarna, Afterpay enables users to pay in four separate interest-free payments, also due every two weeks.
Shoppers will now see the Afterpay logo alongside other payment options on each product page, including Visa, Mastercard, PayPal, American Express, Klarna and Apple Pay.
“We know choice is important to our 20-something, fashion loving customers and the addition of Afterpay as a payment method in the U.S. will help to provide the best customer experience for our U.S. customers,” said Eve Williams, brand experience director of Asos.
Afterpay, which is currently available in its home country Australia, New Zealand, the U.S. and the U.K. where it is called Clearpay, already collaborates with major apparel and footwear retailers including Birkenstock, American Eagle, Urban Outfitters, Steve Madden, GOAT, Shein and Finish Line, among others. In total, Afterpay can be used at 48,400 retailers worldwide and 15,000 globally.
The company says its merchants globally see customer conversion rates increase by more than 20 percent when shoppers use the platform, while average order values increase by more than 25 percent compared to all other payment methods.
Afterpay also partnered with Apple Pay and Google Pay, and starting this month retailers including Forever21, Fresh, Skechers and Solstice Sunglasses will accept this new approach to installments. To use Afterpay via Apple Pay, customers select the card icon in the Afterpay mobile app, which links to the Afterpay app in Apple Wallet. Android phone users tap their device at the point-of-sale to trigger the Afterpay service.
“As we enter the second half of the year and retail re-emerges across the world, it’s critical we help our partners drive business growth, both online and offline,” said Nick Molnar, who co-founded Afterpay and now serves as U.S. CEO. “As a proven solution for driving incremental sales and new customer growth, we are thrilled to introduce our new omni-channel solution to U.S retailers as they begin to open their doors and bring shoppers back to their physical stores.”
A recent Bank of America analysis of Afterpay users in the U.S. found that 83 percent of customers use the service because of its product features, specifically budget management and the lack of incurred interest. The same report found that more than 50 percent of Afterpay customers visit the Afterpay app/portal weekly, and 93 percent expect their usage of Afterpay to either increase or stay the same.
On the whole, installment payments services, often referred to as “buy now, pay later” platforms, are seeing greater adoption across industries as more people continue to shop online or through their mobile devices and shun credit cards. In total, the installment payments market is set to grow at a combined annual rate of 28 percent over the next five years, a February report from Worldpay FIS found.
Afterpay is used by more than 8.4 million active customers globally, with the company recently crossing the 5 million active shopper mark in the U.S. One million new customers joined the platform between March 1 and May 22, and as of June 30, Afterpay had 5.6 million active U.S. users.