ZIP is well-positioned for the long run, with a steady customer base growth, a profitable and reasonable margin (medium, flexible on customer segments), variety of products and good customer / app experience. And it's more resilient to regulation risks, bad debts and competition environmental changes. ZIP has strong potential to redefine the game by providing more easy-to-access but profitable products and it also set strong protection to its core business as the threshold to compete at the same level is raised higher.
Margin is important and people think higher margin means potentially higher profit, well, double-edged sword. 1), higher-margin means you charge more for your service, more profit potentially (not always, depending on cost as well). 2), higher-margin can make you less competitive, unless you can prove that you always deliver better value than other players, otherwise it's not sustainable for the long run, especially in the BNPL space with more and more players joining in.
In a moving market, the margin, the scale of the customer base and the stickiness to the services are equally important. Without any of them, it's not a sustainable business model and focusing on only one or two, it will soon be a dead end. It's up to the business to find the balance of them. A preference for only one of them when analyzes the potential or the healthiness of a business is very skewed.
It's still early in the game, when the top three or five players are set in the position for a particular market, the business will be very decisive on which company to promote and reject. (Amex vs Visa in regards to charges, I'm talking about in AU market and for the credit card product only.) In BNPL space the players who can help the business the most and deliver a comprehensive and better experience to a large scale of customers will be at the winning side eventually. Higher margin? Clearly not for the first point. Bigger customer base? Well, when businesses reject to pay more than they need to, the growth will become difficult.
ZIP doesn't rely solely on higher margins for profitability and winning the long term game is much more important than being the marginal leader for now. BTW, all players reported loss anyway, the final winner is not declared yet, I don't see why margin should bother the long term investors.
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