With the biggest holiday shopping week of the year fast approaching, brands and retailers are looking for any advantage to capture additional sales. Usually, that takes the form of consumer-facing campaigns and eye-popping discounts, but some companies are hoping small behind-the-scenes changes can help overall revenue.
In the last two months, a number of new brands and retailers have adopted Afterpay in anticipation of holiday shopping. They include Nordstrom, Aldo, Alo Yoga, J. Crew, Madewell, Morphe, Le Creuset, American Eagle and Aerie.
According to Zahir Khoja, gm of Afterpay North America, buy-now, pay-later services are ideal in periods of increased spending in a short time. And many of the retailers that have joined Afterpay in the last three weeks are offering the option for customers to use Afterpay in-store. Afterpay provides users with a physical card, which is used by more than 6 million people and can be used as a mobile payment in-store.
In 2021, Afterpay’s partners have already seen $4.5 billion in net benefits from being part of the platform, said Khoja. Those have come in the form of increases in average order value, increases in basket size total sales volume and decreases in returns. Afterpay facilitated more than $10 billion in sales in the first half of 2021 alone. And brands see a particular benefit around the holiday. Last year, Afterpay ran a holiday campaign featuring brands like Levi’s that was centered on shoppable social media posts across platforms. Those retailers saw a 121% increase in Black Friday sales over the year before. Fashion brands using Afterpay typically see a 50% increase in new customers in the first six months, said Melissa Davis, Afterpay chief revenue officer.
According to the National Retail Federation, American consumers are planning to spend an average of nearly $1,000 on holiday gifts, a 5% decrease from last year. And Goldman Sachs found that one in six people in America will use a buy-now, pay-later service this holiday, and more than one in four for Gen Zers and millennials.
“We’ve seen strong growth in usage of these BNPL services over time and anticipate this accelerating into the holiday season as people become more familiar with how they work,” said James Aquilina, svp of international and global commerce at MAC Cosmetics, an Afterpay partner. “These services can be especially appealing to consumers looking to get their holiday shopping done early this year and enables consumers to participate in special limited life sets that allow the consumer to try new product categories like our advent calendar.”
Fashion, in particular, has been a big adopter of buy-now, pay-later. Rebecca Minkoff told Glossy in February that more than 20% of her customers use buy-now, pay-later, specifically Klarna. She said that extending partnerships with BNPL platforms makes sense, as that’s where consumer behavior is heading.
Some of Afterpay’s biggest competitors, like Klarna and Affirm, are also gearing up for the holidays. Bed, Bath & Beyond, for example, is holding a pre-Black Friday sale from Monday to Friday with Klarna, making the last of four payments made with Klarna free. Meanwhile, Affirm signed Target onto its platform in October, to coincide with the start of its holiday season.