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Innovation

OzSale built its own version of Afterpay and Prime – and it’s paying off massively

OzSale last week quietly launched its own version of Amazon Prime. The subscription delivery service, called Ourpay Select, was an immediate hit with customers. Well over 1,000 have already signed up for the service.

The move came just a few months after the flash sales site rolled out its own version of Afterpay, the hugely popular buy now, pay later service. OzSale’s version is called Ourpay and has been used by over 50,000 customers so far this year.

The timing is no accident, according to Carl Jackson, CEO of MySale Group, the UK-based parent company of OzSale. The company made a decision about two to three years ago to double its investment in technology.

“We’ve always developed and owned our own e-commerce platform… It goes back to our original proposition. We’re not a fashion company, technology is at our core and we’ve built our expertise in it,” Jackson told Internet Retailing.

As part of that investment, the company grew its tech teams in Australia, the Philippines, Singapore and Russia to 100 employees, working full-time on mobile, web development, data science and marketing projects.

“The decision to scale the team gave us the opportunity to start to plan other projects and bigger projects,” Jackson said. “We’ve always taken the view that if it’s customer facing, we’d much rather develop it ourselves and have control over the customer experience and retain that knowledge.”

That’s why, when Afterpay approached Jackson about a partnership last year, he didn’t agree to simply integrate the service in OzSale’s checkout, as retailers like Myer, Sheridan and Showpo did. Instead, he tasked the development team with creating their own buy now, pay later tool.

“The key bit was that if you’re a customer on The Iconic website and you use Afterpay, Afterpay manages the whole relationship around debt. If you miss a payment, they’ll impose a late fee, which is their right. If you’re a high value customer, The Iconic doesn’t want you slugged with a late fee, but they have no control,” Jackson said.

He also noted that OzSale’s razor thin margins made the fees charged by third-party providers like Afterpay and zipPay unappealing.

The company started rolling out Ourpay to a small group of customers in January, and has gradually made it available to more and more customers over the year. Over 50,000 customers had used Ourpay as of this week, though Jackson said the annual run rate works out to between 200,000 to 250,000 customers in 2018.

But Ourpay was just the beginning. The platform gave OzSale an opportunity to create its own Amazon Prime-like subscription delivery platform, Ourpay Select, which the company quietly launched last week. Jackson said the idea has been in the works for some time.

“We always planned to launch our own subscription delivery offer. We knew Amazon was coming and saw the importance of Prime, and we knew Australia Post was going to be launching Shipster,” he said.

But like with the buy now, pay later trend though, Jackson never considered the possibility of partnering with an external service, such as Australia Post’s newly launched free shipping club, Shipster. This makes sense, given the aim of Ourpay Select is not really to tap into the free shipping trend, but rather to increase the value of OzSale’s customers.

Shifting the the ones and twos, to threes and fours

Ourpay Select offers customers three different free shipping packages. They can buy a package of four ‘free’ deliveries for $18, seven ‘free’ deliveries for $35, or ten ‘free’ deliveries for. This works out to around half the cost of OzSale’s standard shipping fee, which is a flat rate of around $9.

Jackson said the company designed the packages based on the customer data, which shows that the average customer makes a little more than three orders per year. With an entry-level package of four ‘free’ deliveries, Ourpay Select incentivises customers to make one extra purchase per year. Jackson said there are opportunities to personalise the packages even more over time.

“The reality is that if a customer habitually shops with us twice a year, we’ll target them to move to two to three times a year, then four. We’ll start to be really granular with our offer based on the cohort of customers,” he said.

Despite the fact that OzSale has not promoted Ourpay Select at all, over 1,000 customers have already signed up for the service. The vast majority of them chose the entry-level package, according to Jackson.

“That supported our opinion that you have a very small group of very high repeat customers. As a business, you have a very long tail of ones and twos, that’s the tail we’re trying to shift to fours,” he said.

Ourpay is currently available in Australia, New Zealand, Singapore and the UK. Ourpay Select is currently available in Australia only, but will launch in New Zealand and the UK in the coming weeks.

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