Wear now, pay later

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This article was published 14/12/2021 (1737 days ago), so information in it may no longer be current.

Mondetta, the 35-year-old Winnipeg leisure wear company, has outlived all but three brands it was competing against in the 90s.

Among other things, its co-founder and CEO Ash Modha said that unlike many of its competitors along the way who concentrated solely on building new product and marketing, Mondetta has put in extra time on making its supply chain transparent when it comes to compliance on all sorts of levels.

You don’t get to be a supplier to the likes of Costco and Walmart for decades if you are not on top of compliance issues in your supply chain.

Early this year, the company became B Corp certified and recently Mondetta became one of the early users of Afterpay, one of the leaders in the growing “buy now, pay later” service market.

Modha said partnering with Afterpay is on-brand for Mondetta that strives to be a for-profit company that can actually be a force for good in the community.

“The fact that Afterpay does not engage in external credit checks or allow customers to fall into debt is perfectly in line with our values as a B Corp Certified business,” he said.

The service allows consumers to make four interest-free installments over six weeks with no credit checks required. The merchant gets paid right away and Afterpay will send consumers who are late with their payment several reminders and try to work with them to collect repayments, but they are not reported to credit agencies.

Afterpay, an Australian company, has only been available in Canada for about a year and the approximately 200 Canadian retailers on board include only a few recognizable names including Lululemon, Roots and Running Room.

But that is likely to change soon. Square, the payments company used by many small businesses, just acquired Afterpay for US$29 billion and a competitor in the space, Affirm, just partnered with Amazon to allow flexible payments on a number of items.

“We think it’s fantastic,” Modha said of the gentle way it allows customers access to credit.

While about 90 per cent of Mondetta’s business is wholesale — the company’s stylish activewear and “everyday functionality” apparel is available in about 7,500 stores across North America — it is looking to grow its direct-to-consumer business which is where Afterpay comes in.

“We found out that more than 60 per cent of millennials don’t have credit cards,” he said.

“There are no fees or interest charged to the customer and it is an easy way of scaling credit without actually going to the bank.”

So in addition to capturing a huge chunk of the marketplace that does not have credit cards Modha said they have quickly seen a dramatic increase in average order values.

Afterpay charges between four and six per cent to the vendors, a little more than credit cards charge, but it’s also giving Mondetta access to a large market that it previously was shut out of.

Ryann Carruthers, Afterpay’s general manager for Canada, said, “We created Afterpay because we fundamentally understand that many consumers including millennials and Gen Z prefer to use their own money to budget and pay over time without the need to take out a traditional loan. Consumers love it because it’s completely free, and unlike traditional credit products, they can never revolve a payment or fall into extended debt.”

Afterpay has only been in business for about five years but it already has about 100,000 retail partners and more than 20 million users in Australia, Canada, New Zealand, the United States, United Kingdom, France, Italy and Spain. (It does business as Clearpay in Europe.)

martin.cash@freepress.mb.ca