Hold them shares.
Option's are playing their usual games. The recent news about Amazon caught many off guard and now they are trying to steal your shares. Don't let them.
A mere month ago, digital payments giant Square announced its purchase of buy now, pay later leader Afterpay in a $29 billion move that rocked the emerging industry.
But in an eyebrow-raising announcement after the market close on Friday, Affirm Holdings told investors it's partnering with Amazon to offer its customers financing at checkout. It's a spectacular counterpunch that could see Affirm take the top spot from Afterpay among global BNPL providers.
At the moment, Affirm's addressable market is confined to the customers of its merchant partners, but in a move to take more business from the credit card industry, it plans to debut the Affirm Card -- a digital credit card-like product that will incorporate the benefits of BNPL, except consumers will be able to use it anywhere.
What the Amazon deal means
While the deal is still in its very early stages pending a pilot program, for Affirm's merchant-integrated business model, Amazon is the crown jewel of retail partners. It's the largest online retailer on the planet, generating $221 billion in sales during the first six months of 2021 alone, and it's expected to capture 50% of all U.S. e-commerce sales this year.
Each customer who checks out with Affirm through Amazon will likely need to establish an Affirm account. Right now, Affirm has approximately 5.4 million customers, but through this deal, it gains exposure with Amazon Prime's 200 million members.
Amazon gets the benefit of boosting some of its customers' spending power. Affirm has an existing partnership with Shopify to offer a similar checkout option, and Amazon can draw some key lessons from that deal. Shopify found that using Affirm's BNPL solution resulted in conversion rates up to 50% higher, up to 28% fewer cart abandonments, and checkout times that were 27% faster.
BNPL is also popular with young shoppers, so Amazon might be drawn to the fact that 50% of Affirm's customers are either millennials or Gen Z. These age cohorts will power e-commerce into the future, so it's important for Amazon to offer the financing options that they prefer.$Affirm Holdings, Inc.(AFRM)$
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