ZIP (ASX) Z1P: StefanF vs the people

Originally posted by murdochVet: ↑

cool Stefan Visa don’t make 1.5 points margin
they make 3 points on total contract value according to their annual and quarterlies
i don’t think I need to explain to you the customer profile of someone using tap and zip is different to discretionary spending. If you can’t work that out to do some research. Aren’t you a risk analyst? I’m not going to do your research for you, but nice try. If you can’t understand that people have necessities they need each week and they also have discretionary spend you might need to again do some research.You could start by reading visas annual and quarterly reports, PayPal’s, stripes, etc to understand that your 1.5 percent marginstatement is wrong and then you will also see what profits they are making off total revenues

again on Visas quarterlies they made 51 percent profit on their annual incomes.

my understanding is you used to be a risk analyst or should I say business analyst for a short time out or uni until you got fired. Having a degree in business doesn’t make you god or know all. I too have multiple degrees one of them in economics and finance. But If you need to revert to your title to try convince people you know what you’re talking about then you don’t know what you’re talking about.

youve told the HC audience that their is a high risk or margin erosion and cannibalisation. What I’ve read it’s clear you don’t understand what cannibalisation is. Two products need to be in competition with another to cannibalise. The incentives offered in store with putting a purchase on Bnpl where Zip obtains the 4-6 percent plus their 15 cent transaction fee doesn’t not compete with tap and zip. Any customer that understands what tap and zip is has a zip account and fair to say they understand how the higher margin Bnpl product differs because they are told they get an interest free period unlike tap and
zip.
your argument has been customers using zip will just start using tap and zip for everything a number of hotcopper people including me have said they are loving tap and zip and that’s what they are doing.
you hijacked those comments from users as an opportunity to again erode confidence in Zip something you’ve consistently tried to do by telling everyone that doing so erodes margin
ive given a real life example of myself. My 24 k annual spend on things I need to survive and my 3 k on discretionary spend and clearly you that Zip, if they can obtain 24 k annual spend on me with tap and zip, getting 1 percentage margin would increase my annual revenue to zip by 140%. This is possible because they are capturing a very small piece of the profits pie on a large large spend, vs a normal Bnpl that gets a 4-6 percent margin on one off discretionary spending that’s a lot less over a year period.

if you want you could construct a mathematical formula on yearly value on a consumer to Zip. And you could actually calculate what the margin erosion that you claim to be by plugging into different variables
youd note that 80 percent of Bnpl is online. And that’s growing so you could put say 85 percent is online within 3 years and 15 percent is in store
you could then look at that 20 percent in store purchases and put a number of what percent of that 20 percent would by mistake change from a Bnpl transaction to a tap and zip transaction
but then you would also need to factor in are tap and zip consumers now using the tap and zip feature to buy things that aren’t Bnpl at all. And the answer to that is absolutely it is happening. I’ve told you I’m doing as have several others you then tried to discredit by saying margin erosion margin erosion ! The sky is falling!

in my scenario zip is able to double my annual revenue to them by 140 percent.
but you could also ask the question how much does a consumer have to spend on tap and zip when you factor in some consumer might accidentally choose tap and zip in store when they meant to do the payment plan option. That accident figure would be very very low, because using zip is very straight forward and easy. what is likely to happen on those accident examples is a customer does the tap and zip and realises later oh, they need to go into the app on a different screen for that purchase.

all those merchants people think can’t generate revenue for Zip now can. Coles, Woolworths, etc. if it’s paid for on Zips tap and zip the company is making smaller margin but it’s on an entirely new revenue stream that they aren’t competing with Afterpay on, they are competing with the banks who offer debit and credit cards. All this is doing is cutting the bank out of the revenue equation and inserting zip.

now go away Stefan. If this was myth busted, your margin erosion and can ibis around theory has been well and truly BUSTED

Expand

I think both of your points are valid depending on what the underlying assumptions are.

Stefan probably assumed that Zip doesn't have a backend system to distinguish customers who used Zip and Tap in a signed up merchant and customers who used actual zip barcode system (instead of going through visa) in the same store. The cannibalisation can arise if they don't have a system but I doubt that's the case. Zip's system collects fees on behalf of the business from the customers before transferring funds to the merchant (Accounts Payable). AP system should be able to identify the merchant and charge an agreed % of commission on top of the transaction value before paying to the merchant.

You are assuming that this zip and tap on the groceries side would not have otherwise been part of the revenue as customers now recycle the zip funding even more. So this is extra cash for Zip. Margin issue wouldn't be there in the long run.

The problem with this own margin conversation is that everyone expressed their opinions without outlining the assumptions and caused serious miscommunication on this forum.

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