Afterpay lands in the US, keen for a slice of $3.8 trillion market
Written on the 16 May 2018 by Paris Faint
Afterpay (ASX: ATP) has taken its first steps into the United States market through a landmark deal with the parent company of consumer lifestyle brand Urban Outfitters.
This week the company launched its payment plan services across the URBN network, which includes brands Anthropologie, Free People and Urban Outfitters, comprising one of the largest fashion and lifestyle retailers in the US.
URBN boasts a total sales volume of US$3 billion across its bricks and mortar and digital channels, a figure equal to roughly the size of the entire Australian online fashion market.
Afterpay says the US market represents a substantial opportunity for its business, as retail sales exceeded $3.8 trillion in 2017 alone with more than $480 billion in online purchases.
Initially, the company will only run its services online with the intention to introduce in-store capability in due course.
The news follows Afterpay's announcement in January that venture capital firm Matrix Partners, based in Massachusetts, had invested $19.4 million in the company to aid its debut in the US.
"While [$19.4 million] is currently considered sufficient," says the group, "Afterpay has a strong balance sheet with significant excess cash on hand and maintains diversified funding sources."
To date more than 1.8 million customers in Australia and New Zealand have transacted through Afterpay, which was co-founded in 2014 by 28-year old entrepreneur Nick Molnar.
Molnar is leading the US market expansion which includes several new appointments overseas, including Uber's former director of engineering Akash Garg and Uber's head of risk management Xin Ge.
In the year ahead, Afterpay will build on its market development strategy in the US and focus on encouraging new customers to respect the system and practice responsible spending.
"As Afterpay assumes all customer non-payment risk and doesn't allow customers to keep transacting if they can't make a payment, our business model only works if customers use the Afterpay product responsibly and our systems and processes are therefore focussed on achieving that outcome," says the company.
"We are absolutely committed to encouraging responsible spending and eliminating, to the greatest extent possible, misuse of the system."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Author: Paris Faint