AfterPay Armageddon
A common theme of ours here at White Box has been to talk about the rise of AfterPay. The key theme has centered around the target market that has taken advantage of the Buy-Now Pay-Later service, and the businesses that have benefited from these behaviours.
With ongoing economic growth and no foreseeable short-term changes predicted, AfterPay’s expansion from Australia into the US has seen its customer base rise exponentially, along with its share price.
However, with the onset of the Coronavirus, and the inevitable impact it will have on the global economy, markets have responded with fear towards the feasibility of AfterPay’s business model as younger generations in part-time and casual jobs have hours cut and are most at risk of not being able to make repayments, particularly on non-essentials like retail products. Social distancing measures including self-isolation and work-from-home initiatives exasperate these issues, with demand falling as people shop less and increase their frugality as the realities of Covid-19’s economic impact set in.
Afterpay share price over last 3 years
As you can see, compared to our last post just 11 days ago, AfterPay’s share price has fallen off a cliff, going to show that markets are not optimistic for the retailers of AfterPay and the solvency of its customers.
Some helpful optimism in a time of uncertainty
Despite the negative trajectory of the latest global trends, there are always opportunities to be had in times of chaos. For many retail businesses, these changes present a chance to understand the most crucial elements that hold up the business. Who are your strongest and most loyal customers? What products can your customers simply not go without? Where is the deadwood in your business, and how can we change it or shift it to being more productive?
As we pose these questions, we’re not suggesting you add toilet paper or high quality pasta to your product line, and we’re not suggesting that this virus will not have a negative impact on many lives and livelihoods. What we are suggesting is that even in times of strife, there are opportunities to be had that can set your business up for future robustness and success. These opportunities lie in the art of really understanding your customers, understanding where your core value lies, and ensuring you have an action plan to continually improve your offering, particularly in times like these.
Sources:
https://au.finance.yahoo.com/quote/APT.AX
https://tradingeconomics.com/australia/interest-rate
Thumbnail source: https://www.valuewalk.com/2018/09/7-possible-causes-next-market-crash/
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