BNPL - Amazon + Affirm, is Klarna and Afterpay’s Worst Nightmare

Single Purpose BNPL Apps Are Under Increasing Siege?- Mounting Losses and Credit Risk Will Sink Many ?– Now Amazon Partners With Affirm in USA!!

Globally BNPL apps are strictly an online payment play (part from Australia/New Zealand)

The major online markets are: China, 4 European countries, USA, Japan, South Korea, Canada and India. ?China is the largest online market by far with 49% of retail sales now online.

BNPL apps really only compete in 3 European markets and USA – China, Japan, India, South Korea and Latin America are no go zones.

Success in USA and Europe is therefore critical to the long term survival of these unregulated niche lending apps.

USA ONLINE MARKET

US retail sales totalled $4.04 Trillion for 2020.

Online sales across all sectors totalled $861 billion up 44% from 2019.

Amazon headed usage with 69% of Americans starting an online search at their site – with 2 billion visits a month.

eBay was second with 689 monthly million visits, Walmart third 388 million and Esty 238 million, Target 175 million.

The top US 10 sites have 4.7 billion a month – guess what percentage BNPL has?

Your right if you say less than 1%.?

Amazon is the clear leader in USA with 31% of all online sales and top performer UK, Japan and Germany – its global reputation is far bigger than its actual share.

Will Affirm follow its Peloton lead and follow Amazon to other markets?

Also important,?grocery sales now comprise 16% of all US online sales - no grocer accepts BNPL.?

USA POS LENDING MARKET

BNPL US sales totaled $25 billion in 2020 according to Oliver Wyman - as such they are not one basis point of lending.

AMAZON + AFFIRM HOW IT WORKS

Amazon has 147 million US prime account holders reflecting 65% of Amazon shoppers – gives 225 million Amazon shoppers – not bad for a country of 329 million ( including kids)

Selected Amazon customers will have the option to split the total cost of purchases of $50 or more, into simple monthly payments using Affirm, who wear the servicing and credit risk.

Affirm says approved customers will be shown the total cost of their purchase upfront and will never pay more than what they agree to at checkout.

Affirm says consumers will not be charged any late or hidden fees.

“By partnering with Amazon we’re bringing the transparency, predictability and affordability that Affirm provides today to the millions of people who shop on Amazon.com in the U.S.,” said Eric Morse, Senior Vice President of Sales at Affirm. “Offering Affirm’s alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want.”

A few questions -

How will Affirms partnership impact Citibank's BNPL play with Amazon?

Does the Affirm deal have an exclusive period?

Affirm now has Amazon and Walmart which gives them access to 42% of online - you can bet they are not paying the extortionate rates Afterpay 4-6% or Klarna charge 2.75-6%?

Will Amazon be antagonistic allowing other BNPL apps to join at super low cost to them?

They will sure be queuing up trying to get Amazon to accept them.

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Affirm shares soar on news of Amazon partnership for buy now, pay later

AUGUST 27 CNBC ??Kate Rooney @KR00NEY

Affirm’s buy now, pay later checkout option will be available to certain Amazon customers in the U.S. starting Friday with a broader rollout in the coming months.

The partnership will let Amazon customers split purchases of $50 or more into smaller, monthly installments.

Friday’s partnership is the latest sign of the booming installment lending space as younger consumers move towards these alternative lines of credit.

Amazon ?is getting into the buy now, pay later space.

The e-commerce giant is partnering with?Affirm ?for its first-ever installment payments option on the popular e-commerce site.

Affirm’s buy now, pay later checkout option will be available to certain Amazon customers in the U.S. starting Friday with a broader rollout in the coming months, the companies said in a statement. The partnership will let Amazon customers split purchases of $50 or more into smaller, monthly installments.

Affirm’s stock spiked as much as 48% after-hours Friday on the news, adding more than $8 billion to its market capitalization, later settling up around 33%. Amazon shares were unchanged.

Friday’s partnership is the latest sign of the booming lending space as younger consumers move towards these alternative lines of credit. Earlier in August, Square jumped into the space with a $29 billion?deal ?to buy Australian fintech Afterpay.

So-called installment loans have been around for decades, and were historically used for big-ticket purchases such as furniture. Online payment players and fintechs have been?competing? to launch their own version of “pay later” products for online items in the low hundreds of dollars.

Affirm is one of the best known installment payment options. It works with more than 12,000 merchants, including?Peloton ?and?Walmart .

PayPal , Klarna,?Mastercard ?and Fiserv,?American Express ,?Citi ?and?J.P. Morgan Chase ?are all offering similar loan products.?Apple ?is planning to launch installment lending in a partnership with?Goldman Sachs , Bloomberg reported last month.

Affirm said some of the Amazon customer loans will bear interest, but some will come with 0% APR.

“By partnering with Amazon we’re bringing the transparency, predictability and affordability that Affirm provides today to the millions of people who shop on Amazon.com in the U.S.,” Eric Morse, Senior Vice President of Sales at Affirm, said in a statement. “Offering Affirm’s alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want.”

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