The Splitit (ASX: SPT) share price has jumped 13% this morning after it gave an update.
What is Splitit?
Splitit offers consumers the ability to split the purchase price of basic products (e.g. TVs, clothing, etc). Shoppers can split their purchases into up to 36 interest-free monthly payments using their existing Visa or Mastercard.
Big growth update
Splitit announced that in the June 2020 quarter its merchant sales volume grew to US$65.4 million. This was an increase of 260% compared to the June 2019 quarter and an increase of 176% compared to the first quarter of 2020.
Gross revenue for the quarter was US$2.4 million, up 460% on the June 2019 quarter and up 246% from the previous quarter.
Splitit said there are now 1,000 merchants signed up, this is an increase of 104% compared to a year ago. Total unique shoppers grew 85% to 309,000. Interestingly, the average order value grew to US$893, up 44% from a year ago.
Some of the recent new merchants include Purple, Daily Sale, Quiet Kat, Dreamcloud and Bedmart. Splitit has also been working on new partnerships, some of the latest ones are: Mastercard, Finance for Group and Blue Snap.
Splitit CEO Brad Paterson said: “June saw a continuation of the strong business momentum we experienced in April and May. Consumers are making better use of their existing credit to preserve cash, while demand from higher value merchants is ramping up, supported by the accelerated shift towards eCommerce as a result of COVID-19. While we continue to tightly manage our expenses in light of global economic uncertainty, our business model supports more efficient consumer budgeting during these uncertain times, and continues to deliver enormous benefit to merchants by significantly improving consumer conversion on their sites.”
There is so much competition in the space, I don’t know which ones will still be around in five years. Can different countries support several players all operating profitably? It’s hard to answer because it’s sort of a new industry, we don’t know how things will evolve. Will merchants always be happy to pay the higher margins? Or will price competition erode margins? I personally wouldn’t want to put my money on the line in the industry.
Disclosure: At the time of writing, Jaz doesn’t own shares in any of the businesses mentioned.