Digital finance company Zip Co (ASX: Z1P) has added another retail heavyweight to its “buy now, pay later” platform, unveiling its latest deal with Australia’s largest pharmacy retailer Chemist Warehouse.
Zip today announced its partnership with the chemist chain’s owner CW Retail Services Pty Ltd, which will allow Australian customers to use their Zip account to pay for shopping both online and in-store at Chemist Warehouse, along with My Chemist, My Beauty Spot and ePharmacy.
This latest partnership follows a string of deals made over the past year with retail giants including Bunnings, Officeworks, Target and EB Games, as well as major airlines Virgin Australia (ASX: VAH) and Tigerair.
According to Zip, the deal aligns with its strategic vision of partnering with Australia’s largest retailers, “providing consumers with everyday choice while expanding the network of acceptance for Zip’s growing customer base”.
The payment services are expected to be live throughout the Chemist Warehouse Australian store network within the “next few months”, Zip stated.
The delayed payment trend
Taking advantage of modern society’s desire for instant gratification, Zip rivals fellow ASX companies Afterpay (ASX: APT) and newbie Splitit (ASX: SPT), which has already taken off in the market since listing last month.
The concept works like a take-home lay-by, offering an interest-free payment plan for goods that can be collected immediately.
While the platform kicked off with retail stores, it has extended to cover products and services including food delivery, cosmetic and dental procedures, fertility treatment, travel packages and veterinary care.
Market leader and Zip’s biggest competitor, $4.2 billion Afterpay, has already linked Chemist Warehouse to its own payment platform.
In its December quarterly results released last month, Zip reported a 28% rise in quarterly revenue to $19.2 million and a 60% growth in transaction volume of $304.4 million (up 117% year on year).
According to Zip chief executive officer Larry Diamond, record results were achieved across all key metrics including customer engagement, transactions, in-store volumes, revenue and bad debts.
“We were pleased to report two months with transaction volumes in excess of $100 million and see significant growth ahead as our market penetration remains below 1%,” he said.
Last month, both Zip and Afterpay attended a Senate inquiry evaluating whether the rapidly-growing “buy now, pay later” (BNPL) sector should be more regulated.
At the hearing, Zip advocated for sector-specific regulation to ensure minimum standards are delivered consistently across the industry.
It also said the new regulations should support BNPL services as a viable alternative to credit cards and focus on three key principles of responsibility, transparency and customer support.
“From inception, we have conducted credit and identity checks on every single applicant and use real-time bank statements to verify income and expenditure,” Mr Diamond said.
“Every BNPL provider has a duty of care to ensure their products are suitable and customers can afford the repayments,” he added.