Good afternoon folks,
Introduction
Over the last couple of years many of you have gone through a lot of effort to do research on APT, draw nice pretty graphs and very selflessly shared them among fellow hotcopperians. To show my appreciation I thought I'd create a way for us to track Afterpay's penetration into our most important market to date, the US. The analysis keeps track of our main competitors there, Affirm and Klarna.
The battlefield
While the US comprises of 52 states they are by no means equal in economic value. In fact, California, Texas, New York and Florida create more than 36% of the US total GDP. This is important to note because when you look at the highest market penetration of Afterpay in the US (based purely on google trend analysis) APT holds 52% in West Virginia, while Affirm and Klarna hold 33% and 15% respectively. Now, West Virginia only contributes to 0.4% of the US GDP so my care factor for this state is little to none.
So what do we care about? I've picked out the top 20 states in the US which covers about 78% of total economic activity in the US, from California in 1st spot to Arizona in 20th.
Below is a list of these states and the pink column show's
Afterpay's "market penetration" on 31 October 2019:
Please note I have the same table for Affirm and Klarna but more to that later.
Weighted-averages
The next bit is for those hotcopparians who aren't familiar with weighted averages and why we would use them. At the risk of stating the obvious, weighted averages means that we put more weight on the numbers that would have more of an impact. California, with its economy contributing over $3 billion via Gross State Product is far more valuable to any company operating in the US when compared to West Virginia that contributes $0.8 billion.
Simple mathematics allows us to weigh the states by dividing their GDP (or GSP) by the total amount. We end up weighing California at over 18% while Arizona is 2.2% and the rest are inbetween.
The Verdict
The GREEN bold number down the bottom right shows what Afterpay's Weighted-average (google-trend) market share is. It sits at 39%. I've used the same methodology to assess the market share of Affirm and Klarna which sit at 50% and 11% respectively.
Going forward I'll continue measuring these and hopefully we will see Afterpay's 39% increase compared to the other two.
My personal opinion is that even in the US Klarna is a bigger threat than Affirm since both Afterpay and Klarna's products are superior. While the graph below isn't conclusive, it does suggest that Affirm has plateaued a while ago and might be on a downturn as Afterpay and Klarna claw at its marketshare:
This analysis can easily be rolled into the "Alternative metrics" thread but I thought I'd give the option to have a US market specific thread and also give people the opportunity to discuss this analysis and provide (positive and negative) feedback. But yes let me know if you'd like to see me post continuous updates on this market share analysis, be it here on on alternative metrics.
Please also note that this analysis isn't technically "market share" or "market penetration" and I do understand the limitations of analysis like this. Regardless it could be useful to track competition this way.
Cheers.
