In 2020, leading buy now pay later (BNPL) service provider, Afterpay drove $3 billion in net benefits, including $6 billion in incremental sales for retailers and SMB owners, as they faced the significant challenges of the Covid-19 pandemic, according to new research from Accenture.
The Afterpay Economic Impact Report 2020 highlights how Afterpay has contributed to the Australian economy, including job creation, driving additional business for retailers, supporting the local fashion industry, and helping consumers avoid credit card fees.
The $6 billion in incremental sales for retailers in 2020 included $510 million for regional merchants – many of whom were already doing it tough following the bushfires of late 2019 – representing 75% growth in sales to metro and regional customers year-on-year.
The jump in incremental sales was driven by improved online checkout conversion rates, larger customer basket size, exposure to new customers, increased customer engagement and a rise in repeat purchasing. Of the merchants identifying increased sales, 43% reported that sales increased by more than 10% after adopting Afterpay.
The $3 billion in net benefits for retailers was driven through multiple channels including reducing customer acquisition costs, lower return rates, and cost efficiencies through online sales.
Accenture managing director, Andrew Charlton said, “This report reinforces that both consumers and merchants win in the Afterpay revolution. 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.”
A major user benefit of Afterpay is the ability to spread out payment without incurring interest and account fees charged by credit card providers. The report found Afterpay users saved $110 million compared to what they would have paid making the same purchases with credit cards.
Benefits were evident across every consumer profile, with vulnerable Australians benefiting most from switching to Afterpay and away from credit cards.
The ability to improve personal budgeting was highlighted by 90% of Afterpay users as a reason for choosing the platform. The report also calculated Afterpay spending helped support 63,000 jobs, including 11,000 jobs directly employed by merchants in sales operations and an additional 33,000 jobs supported indirectly in areas such as logistics, advertising, and market research.