Nick Molnar

“Millennials are different to any previous generation,” said Nick Molnar, chief executive officer and cofounder of Australian buy-now, pay-later provider Afterpay. “What a lot of people don’t speak about is that two out of three people in the U.S. aged 18 to 30 actually do not own a credit card. They all use debit cards. Why is that important? It’s important because Millennials are spending money differently.”

Mostly, that’s been driven by the 2008 financial crisis, he explained, adding: “By 2025 [Millennials are] going to own half of all disposable income in the workforce — actually in America and largely in the world.”

Trust, according to Molnar, is at the heart of his business. “It’s been fascinating to watch that evolve, and see how Millennials really resonate with trust,” he said. “Once you break down that trust barrier and say ‘through technology or innovation you can trust me, we are aligned,’ that’s when magical things happen.”

In the U.S., there are twice as many debit card transactions than credit card transactions, and at Afterpay, 85 percent of customers use a debit card.

“Millennials are spending money, and they prefer to spend their own money,” Molnar said. “This is really where Afterpay was born. Within four years we have 30,000 retail partners, and in the U.S. within 12 months we have 3,000 retailers and a million-and-a-half customers.”

The executive has found that beauty brands have the deepest connection with and understanding of Millennial consumers. Molnar noted, as well, that rise of new labels over the past handful of years has flipped retailing on its head, with, for instance, the drop strategy.

“A lot of other retail industries are actually looking to beauty to learn,” he said.

Afterpay surveyed 2,000 beauty consumers. Seventy-six percent said they discover new beauty brands and products on social media, while just number four was a friend’s recommendation. Meanwhile, 72 percent buy products directly from social media platforms.

Seventy percent of Millennials are inspired by beauty influencers and 83 percent watch how-to videos, with 68 percent of those making a purchase. “These influencers…have such a passionate following all because of trust,” he said. “They are unapologetically themselves.”

Afterpay found 68 percent of Millennials buy beauty products online once per month. Seventy-two percent shop online to buy new products and replenish their favorite beauty items, while 59 percent are loyal to one beauty brand.

“This frequency of purchase is very unique to the beauty industry,” Molnar said.

Price is its biggest hurdle. “What [Millennials] want is to buy a set, not the individual eyeliner,” the executive said. “They want to transact with multiple units per basket. This is the biggest lost opportunity, and it’s only going to extrapolate.”

Afterpay, which has a shop directory, last month in the U.S. sent out more than 3 million leads to retailers and the conversion rate was 11.4 percent. The platform’s average order value for beauty is $88 and four units per order. “They are buying in multi, they’re spending more. Their average order value is up. They are buying full price — not on sale — and they return less,” Molnar said.

Beauty makes up one quarter of Afterpay’s activity today.

“What we’re working on is how do we better engage our customers, work with them? What do Millennials want? How do we leverage our data collectively to bring these insights or just share them from a survey perspective, actually to trade on them?” Molnar said.

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