Anatomy of a Startup Venture

Individual Assignment 2
‘Anatomy of a Startup Venture’
‘After pay Touch Group Ltd’
1. Introduction and Background Information:
Afterpay is a smart and simple, interest-free payment program service provider that has been rising
payment channels across Australia, New Zealand, and the United Kingdom. Afterpay is an Australian
Start-up company dealing with financial technology and provide financial support to the customer to
purchase goods or services. The company Afterpay Holding Limited was founded in 2014 in Sydney,
Australia by two Entrepreneurs name Anthony Eisen and Nicholas Molnar. The firm later to merged with
TouchCrop in June 2017 to form Afterpay Touch Group Ltd. The key activities of the firm are to offers
portion instalment payments services to customers in various online stores and some physical shops, most
of them being retailer stores. Afterpay conveys an incentive by filling in as a mediator among retailers
and clients. It benefits the two gatherings because the portion instalment technique empowers clients to
'attempt before you purchase' and untimely utilization, which gives adaptability to clients and lifts deals
for shoppers simultaneously. Afterpay mainly operate with three main business units namely retail-
service, health and government, and mobility and payments
Afterpay has helped a broad scope of retailers to grow the size of business and to enter the market
forcefully. Afterpay is developing at a quick rate, with over 700,000 clients broadly shopping at more
than 5000 retailers including notable Australian style stores like Myer, Cotton On, and Sportsgirl. Also,
some electronic items and adornments are canvassed in Afterpay portion administration. Somewhat,
Afterpay is not thoroughly accessible to all shopping exchanges. Afterpay also charges a $10 late
payment fee in case the customer failed to submit payment on time.
Additionally, Retails are also being charged 4% service fee of the retail price by Afterpay, as compared to
big and vast market it is a small amount. However, Afterpay created substantially stable profit over the
year.
2. Targeted Customer:
Specifically, Afterpay has the main three types of customers. The primary one is the individual customers
(millennium) that uses Afterpay. Clients are permitted to utilize Afterpay to pay their buy into four
instalments paid week by week or fortnightly. No additional charges apply when clients make instalments
as per their instalment plan. As indicated by the Afterpay report 2017, it right now has 1.5 million
individual clients and yet developing. About 0.9 million clients are millennials, over of total of 6
millennials, it is about 15%. These customers are high school and university students who has significant
jobs enough to pay salaries.
The significant amount of Afterpay's revenue comes from its second type of customer, which is merchant,
and this includes retails that operate online or in-store. The retailers pay Afterpay for using its platform to
boost the annual sales. Merchant fees contribute a significant sum of amount in Afterpay revenue. It is
recorded that more 82% of revenue has generated from merchant fees (MarketLine 2020).
The third customers are one of the main clients as it strengthens the foundation of Afterpay. The third
customers are small-medium enterprises, which are not only paid for Afterpay service but also invested in

Afterpay. For example: In 2017, two most big retailer giants decided to partner up with Afterpay, and the
study shows that 1 out of 8 of their online customers use Afterpay service to check out. Ever since then,
Afterpay has experienced significant expansion in its share price appreciating from $5.45 to nearly $15 in
a short span of period. It has helped become Afterpay to be recognized worldwide.
Competitive Advantages:
In the Initial days when Afterpay just started to gain its growth, it was one of its kind services that
allowed its consumers to buy now and pay later with no additional charges or interest.
However, some other factors have helped Afterpay to gain many competitive advantages over its
competitor with some of the successful marketing strategies among millenniums. The success of Afterpay
was within a short period, and the company's potential growth was booming. One of the many advantage
company has gained ease terms by which merchants can form a partnership. The easy partnership
agreement has helped many companies to rapidly develop their business and increase their customer base
in an operating market. Few successful collaborations are Rebel, City Chic, and Mimco (Carayannis,
Sindakis and Walter 2015). The Afterpay has first-mover advantages as when introducing the company
has built strong trust with merchants as such financial technology was unique to their targeted customers
compared to its other competitors Zip Co. Aside from allowing customers to better finance and budget for
their purchases, a less obvious benefit is that Afterpay is allowing their online consumers to pay for their
purchase after they have received their items and have had a chance to try it. Unlike eCommerce
shopping where purchase needs to make by just identifying pictures and size, which might make a
disappointing online shopping experience, which is quite frustrating if the item just does not match the
expectation. Afterpay understands this frustration and has sought to resolve the issue innovatively with a
'try before you buy' approach. An 'obvious gap inspired the idea behind Afterpay in the market for the
ability for an online customer to try the goods before they have to pay, coupled with being able to spread
their payments over a short period of time' (Bindi, 2015).
3. Barriers to Entry:
The industry is highly attractive is it recently started to pick up growth. The barriers to entry for
instalment payment service is low, which makes it vulnerable to all financial-based organization to invest
in such technology. The 21st century has brought advances in social networking, communication
technology, and digital marketing which eventually have removed the substantial barriers for
entrepreneurs. A new entrant can easily acquire similar bargaining power as Afterpay only when they can
create the distribution channel and forms a network with retailers. Within its competitive market, the only
differentiation is commission charges to merchants will remain the company's core competitive point.
However, it positively will affect the growth of the company and might change the revenue structure of
Afterpay. The Afterpay has one close substitute most notably PayPal, which covers more than 50% of
market share and has an intensive level of connection with offline business owners as its been operating
for many decades.
4. The Evaluation of Business Canvas Model
The critical connections between the nine blocks of the canvas model and the company's value
proportion, the client portion that the organization considers are profoundly identified with cost age and
income floods of the business canvas model. According to Bocks and George (2017), the channels that
are utilized by the organization for making an offer among the clients are additionally legitimately
identified with clients' fragments square and clients' relationship squares. Then again, to produce
legitimate income according to the income streams, the essential exercises that the organization attempts
will likewise meet the client prerequisites and increment client connections (Scarborough, 2016). The key
accomplices of the organization have a direct connection with the essential exercises that the organization
embraces and its cost structure. The connection of all the block describes that the relationship will