MGMT20143 Assignment 1: Afterpay Touch Group Business Model Analysis

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Executive Summary
This assignment is presenting the business model of recently incorporated financial technology
company ‘After Pay Touch Group Limited’. The company was incorporated in Australia in
2015. The company is registered as a public company and it currently has 2.3 million users. The
company ‘After Pay’ specialises in providing its customers with easy payment options. With the
aim of understanding and analysing the key aspects of the business of a company, a business
model canvas is developed in the assignment. Through this canvas, key partners, activities,
resources, customer relationships channels and customer segments of the company are studied
and analysed.
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Contents
Executive Summary.........................................................................................................................2
I. Introduction...........................................................................................................................4
II. Business Model.................................................................................................................5
a) Key Partners..................................................................................................................5
c) Key Resources...............................................................................................................5
d) Value Proposition..........................................................................................................6
e) Customer Relationships.................................................................................................6
f) Channels............................................................................................................................6
g) Customer Segments.......................................................................................................7
h) Cost Structure................................................................................................................7
i) Revenue Streams...............................................................................................................7
III. Interrelationship................................................................................................................7
IV. Success Factors.................................................................................................................7
V. Risk Factors.......................................................................................................................8
VI. Business Model Changes..................................................................................................8
VII. Conclusion........................................................................................................................8
VIII. Recommendations.............................................................................................................9
References......................................................................................................................................10
Appendix........................................................................................................................................11
Appendix 1.................................................................................................................................11
Appendix 2.................................................................................................................................13
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I. Introduction
The company ‘After Pay Touch Group Limited’ is an Australian company incorporated in 2017
as a Public Company. The headquarters of the company is located at Melbourne, Victoria,
Australia and the company is currently providing its services in areas including Australia, New
Zealand and the United States. The company was incorporated as a result of the merger of
Afterpay and Touchcorp in June 2017 (Touchcorp Limited,2017). The founders of the company
are Nicholas Molnar and Anthony Eisen. The business of Afterpay operates in the segment of
pay now and pay later. Through the pay later business, the retailers are enabled to offer their
customers with options such as buy now and pay later without requiring any upfront fees, interest
or traditional credit. This allows the customers to buy the products and pay in four equal
instalments every fortnight without any interest or other extra charges.
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II. Business Model
The company ‘Afterpay Touchcorp’is a leader and yet growing company in the industry of
Australian financial technology. It is a merged company of Afterpay and Touchcorp and is
popular among existing and potential customers for its services of providing ease of payments.
All the business-related aspects of the company can be analysed using a business model and
therefore, a business model of Afterpay Touchcorp is developed in order to analyse key
stakeholders, partners of the company (Trimi & Berbegal-Mirabent, 2012). Through a business
model, its resources, customer relationships have also been analysed.
The business model is developed based on the nine building block canvas model as projected by
Alexander Osterwalder.
a) Key Partners
The partner's network of any business organization is significant for optimization of business
operations, reduction of risks of the business model. The key partners of the newly incorporated
merged company ‘Afterpay Touchcorp’ are leading retailers in Australia including Marcs, Cue,
General Pants, Hype DC and Top Shop. The other partners of the company include Optus,
Transurban, ConnectEast and Commonwealth Bank.
b) Key Activities
There are various key activities performed by Afterpay for executing its value proposition. These
include:
 Providing customers with easy payment solutions.
 Offering the customers with the option of payment in four equal instalments on every
fortnight (Muhtaroğlu, et.al., 2013).
 Ensuring that the services provided are protected from fraud.
 Use of latest technology
c) Key Resources
The key resources used by the company Afterpay includes its IT infrastructure and R&D
investment. The company operates majorly on online platforms and therefore IT infrastructure is
its biggest resource. These resources contribute to creating value for the customers.
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d) Value Proposition
The company ‘Afterpay’ offers a value proposition to both retailers and customers. These are as
follows:
For Retailers
 Connect customers with brand
 Improve conversions and average order values materially
 Reduction in returns
 Promote loyalty of customers (Zolnowski, et.al., 2014).
For consumers
 Opportunity to purchase at no extra cost
 Payment on a later date in equal instalments
 Short-instalment period
e) Customer Relationships
It is important for all the business organizations to identify the type of relationship that they
intend to build with their customers in order to ensure survival and success of the business. The
form of customer relationship in which the company ‘Afterpay’ believes is Automated services
relationship. Under this relationship, a system similar to personalised self-service is provided to
customers. the business has the ability to identify the preferences of individual customers and
provide them with services according to their preferences.
f) Channels
The services of the company‘Afterpay’ are available in both online platforms and offline stores.
The customers can avail the services in store by logging into its mobile application. The
customers can pay using after paying on online platforms (Gierej,2017). The company enables
the retailers to sell their products and services to customers via various channels including in-
store, website, IVR and mobile applications.
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g) Customer Segments
The company ‘Afterpay’ segments its customers into various groups based on their attributes and
needs in order to ensure effective implementation of corporate strategy and to meet the
characteristics of a selected group of customers. The various segments of the company include
mobility and payments, health and government and Retail e-Services.
h) Cost Structure
Under cost structure, the monetary consequences of the business operations are described. The
cost structure of the company is effective and efficient. The company is good at optimizing its
resources to its full capability and ensures cost reduction(Pedersen, et.al., 2018). The policies
opted by the company are not only helping in minimizing the cost of operations but is also
effective in maximising returns. The company is able to generate maximum profits due to its
effective cost structure.
i) Revenue Streams
The revenue stream explains the income generated by the company. A comparison of revenue
generated by the company in the financial year 2017 and in 2018 is presented in Appendix 2. The
revenue of the company was increased by 286% in 2018 as a result of new and repeat customers,
new retailers and increased share of checkout.
III. Interrelationship
The company Afterpay Touchcorp provides unique services to champion the best interest of
customers and to help the customers in managing their life’s little extra expenses. It protects the
consumers from entering into agreements for traditional loans or high-interest products of credit.
Further, the company utilises its resources to their maximum strength in order to provide its
customers with innovative products with the help of its key partners (Allayannis, et.al., 2018).
The company uses customer segments to develop effective and long-lasting relationships with its
customers. Further, the business model of the company is transparent and simple and it is
uniquely aligned with the needs of customers. Careful consideration and implementation of all
these factors result in revenue generation and cost minimization.
IV. Success Factors
The major factors that influence the success of the organization include the following:
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 Technology: The business of the company relies highly on technology. The company
provides its services through online websites and mobile applications. It is significant for
the company to ensure that the technology used is intact and is in line with the needs and
expectations of consumers.
 User Interface: It is an important factor as the customers cannot be retained for long if
the user interface provided by the company on its website and mobile applications are
not user-friendly. Along with using the latest and cost-effective technology, keeping in
mind the comfort of customers is also significant (Afterpay Touch, 2018).
 Customer Relationship Policy: The customer relationship policy provides the customers
with a sense o belonging. Unless the customer relationship policy is not effective, the
customers cannot be retained for long and the potential customers can also not be
attracted.
V. Risk Factors
There are various risk factors that may influence the performance of the company, including:
 Lack of IT infrastructure
 Unsatisfied customers
 Ineffective Services (Pedersen, et.al., 2018).
VI. Business Model Changes
There are various factors that may be taken into considerations for implementing changes in the
business model. Various policies can be developed by the company to attract more customers
and influence its revenue and cost structures. The company may make strategies to beat the
competition by broadening the area of its key activities and using its resources effectively. The
customer segmentation can also be a factor of consideration. The customers can further be
segregated based on their age groups so as to provide more personalised services.
VII. Conclusion
From the study of the report, it can be concluded that developing a business model canvas can
hold an organization in having a snapshot of its major drivers and the factors that have a
significant influence on its business. The above-discussed business model can be used by the
company to improve its services and deliver more effective services to customers and retailers.
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VIII. Recommendations
Following are the recommendations to ‘Afterpay Touchcorp’:
 Develop strategies to beat the competition
 Use resources more effectively
 Association with more established partners (Gierej, 2017).
IX.
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References
 Afterpay Touch, (2018). FY17 Results Presentation. Available at:
https://www.afterpaytouch.com/images/APT_Results-Presentation-FY17.pdf [Accesed
on 8 April 2019].
 Allayannis, G. Y., Yemen, G., & Lane, D., (2018). Fintech, Payments Innovation, and the
Acquisition of Worldpay.Darden Case No. UVA-F-1829.
 Gierej, S. (2017). The framework of the business model in the context of the Industrial
Internet of Things. Procedia Engineering, 182, 206-212. Muhtaroğlu, F. C. P., Demir, S., Obalı, M., & Girgin, C. (2013). Business model canvas
perspective on big data applications. In 2013 IEEE International Conference on Big
Data (pp. 32-37). IEEE.
 Pedersen, E. R. G., Gwozdz, W., & Hvass, K. K. (2018). Exploring the relationship
between business model innovation, corporate sustainability, and organisational values
within the fashion industry. Journal of Business Ethics, 149(2), 267-284.
 Touchcorp Limited, (2017). ASX and Media Release. Available at:
https://www.afterpaytouch.com/images/TCH_ASX-Announcement_Touchcorp-Scheme-
Booklet_Combined-Final.pdf [Accessed on 8 April 2019].
 Trimi, S., & Berbegal-Mirabent, J. (2012). Business model innovation in
entrepreneurship. International Entrepreneurship and Management Journal, 8(4), 449-
465. Zolnowski, A., Weiß, C., & Böhmann, T. (2014). Representing Service Business Models
with the Service Business Model Canvas--The Case of a Mobile Payment Service in the
Retail Industry. In 2014 47th Hawaii International Conference on System Sciences (pp.
718-727). IEEE.
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Appendix
Appendix 1
Figure: BUSINESS MODEL CANVAS
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Appendix 2
Fig: Afterpay Key Financial Metrics.
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