Younger U.S. Consumers Are Supporting Small Medium Businesses Through Afterpay

Rhea-AI Summary

Younger U.S. consumers are increasingly supporting small and medium businesses (SMBs) through Afterpay, which has seen its SMB merchant network grow by 55% in 2023. Gen Z spending grew by 11% year-over-year, with top purchases including outdoor furniture accessories (+236%), baby and toddler furniture (+111%), and jewelry (+18%). This shift indicates a broader trend towards supporting SMBs for traditionally big-box purchases. Afterpay provides SMBs with an improved omnichannel checkout experience, enabling responsible spending and helping them compete with larger businesses. The platform has generated $8.6 billion in retail sales, enhancing job support and economic activity.

Positive

• Afterpay's SMB merchant network grew by 55% in 2023.
• Gen Z spending through Afterpay increased by 11% year-over-year.
• Fastest growing items: outdoor furniture accessories (+236%), baby and toddler furniture (+111%), jewelry (+18%).
• Afterpay generated an incremental $8.6 billion in retail sales.
• Increased average order value and reduced return rates for SMBs.
• Afterpay discovered a new merchant every 5 seconds in Q1 2024.
• 180,000 SMBs across the US are part of the Afterpay community.

Negative

• Challenging economic times for SMBs.
• SMBs squeezed by macroeconomic pressures.

Insights

Financial Analyst

The significant growth of Afterpay's SMB merchant network by 55% in 2023 indicates a strong adoption rate of the platform among small and medium businesses. This expansion can be beneficial for Afterpay's revenue streams, as it increases the volume of transactions processed through their system. From a financial perspective, the $8.6 billion in incremental retail sales generated by Afterpay-supported SMBs signals substantial economic activity and value-add. However, it is essential to consider the economic pressures mentioned in the article. While the platform's adoption rate and the increased spend by younger demographics are promising, the overall market conditions and consumer spending habits could impact future growth. Investors should weigh these factors to understand the sustainability of Afterpay's growth in the SMB sector.

Market Research Analyst

The article highlights the growing trend among younger consumers, particularly Gen Z, who are increasingly supporting SMBs through Afterpay. An 11% year-over-year increase in Gen Z spending is noteworthy as it signifies a shift in consumer behavior towards more flexible and transparent payment solutions. By meeting these demands, Afterpay is positioning itself well within this demographic. The focus on diverse product categories such as health and beauty, home and garden and electronics suggests that SMBs can tap into a broad range of consumer needs, enhancing their competitive edge against larger retailers. This trend can translate to sustained demand for Afterpay's services, particularly if they continue to innovate and cater to the evolving preferences of young consumers.

Afterpay’s SMB merchant network has grown by 55% in 2023, helping more businesses connect with younger consumers.¹

DISTRIBUTED-WORK-MODEL/SAN FRANCISCO--(BUSINESS WIRE)-- Amidst challenging economic times, younger consumers made up the largest segment of those shopping small and medium sized businesses (SMBs) through Afterpay over the past year. While all generations showed a strong intent to support more SMBs in Q1 2024, Gen Z spend increased the most, up +11% year-over-year.²

Afterpay helps growing merchants stay ahead of the competition by meeting next-gen customer demands for an improved omnichannel checkout experience while enabling responsible spending. This is especially important for younger, conscious Americans, who want to engage with merchants that align with their values of transparency and flexibility, where Afterpay was recognized as one of the most trusted offerings among those who tried it.

While apparel and accessories remain top of mind, younger consumers are looking towards SMBs for broader categories including health and beauty, home and garden, arts and entertainment, hardware, and electronics, which are traditionally thought of as big box purchases. Next-gen consumers are also choosing Afterpay to alleviate financial stress related to life moments including preparing for a baby or buying a home. Some of the fastest growing items purchased from SMB were outdoor furniture accessories +236% year-over-year, baby and toddler furniture +111% year-over-year, and jewelry +18% year-over year.²

As an omnichannel solution, Afterpay has delivered meaningful value to SMBs, giving them a better chance to compete with bigger businesses while receiving all payments made through Afterpay upfront. SMBs that partner with Afterpay have unlocked growth through increased average order value, reduced return rates, and increased brand relevance with next gen shoppers. In Q1 2024, a consumer discovered a new merchant through Afterpay every 5 seconds.³

“While SMBs have been squeezed at every turn by macro pressures, they’ve been able to leverage solutions like Afterpay to meet the demands of younger consumers who want more flexibility in how they shop and pay. As a result, Afterpay has become an important asset for SMBs and we take pride in being part of the journey as these businesses grow and become even more profitable,” says Heawon Kim, Head of SMB and Mid Market Partnerships, Afterpay and Cash App.

The Afterpay community is currently made up of more than 180,000 small and medium businesses across the US, with Afterpay’s SMB merchant network growing by more than 55% in 2023.¹ Afterpay has helped generate an incremental $8.6 billion in retail sales, which allows merchants, especially SMBs, to support jobs and economic activity directly within their businesses as well as reducing costs of attracting and serving customers.⁴

About Afterpay

Afterpay is transforming the way we pay by allowing customers to buy products immediately and pay over time - enabling simple, transparent and responsible spending. We are on a mission to power an economy in which everyone wins. Afterpay is offered by thousands of the world’s favorite retailers and used by millions of active global customers. Afterpay is currently available in Australia, Canada, New Zealand, the United States and the United Kingdom, where it is known as Clearpay. Afterpay is a wholly owned subsidiary of Block, Inc. (NYSE: SQ).

¹Afterpay data analyzing CY 2023
²Afterpay data comparing Q1 2024 to Q1 2023
³Afterpay data analyzing Q1 2024
⁴Oxford Economics, Economic Impact of Afterpay in the US, 2023

View source version on businesswire.com: https://www.businesswire.com/news/home/20240514290754/en/

media@afterpay.com

Source: Block, Inc.

FAQ

How has Afterpay's SMB merchant network grown in 2023?

Afterpay's SMB merchant network has grown by 55% in 2023.

What was the year-over-year increase in Gen Z spending through Afterpay?

Gen Z spending through Afterpay increased by 11% year-over-year.

What are the fastest growing items purchased from SMBs through Afterpay?

The fastest growing items are outdoor furniture accessories (+236%), baby and toddler furniture (+111%), and jewelry (+18%).

How much in retail sales has Afterpay generated for SMBs?

Afterpay has generated an incremental $8.6 billion in retail sales for SMBs.

What is the impact of Afterpay on SMBs' average order value and return rates?

Afterpay has increased average order value and reduced return rates for SMBs.

How frequently did consumers discover new merchants through Afterpay in Q1 2024?

A new merchant was discovered through Afterpay every 5 seconds in Q1 2024.

How many SMBs are part of the Afterpay community in the US?

The Afterpay community is made up of more than 180,000 SMBs across the US.