Is Zip's Big W deal enough to beat Afterpay?

The Zip Co Ltd (ASX: Z1P) share price rebounded from an early slump yesterday after the company announced a new partnership with Aussie retailer Big W.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Zip Co Ltd (ASX: Z1P) share price rebounded from an early slump yesterday to close 0.9% higher at $3.29 on news of a new partnership with Big W.

What did Zip Co announce yesterday?

In its ASX update, Zip Co said the Woolworths Group Ltd (ASX: WOW) retailer would offer Zip interest-free payments to its customers going forward.

The company said "the relationship with Big W continues to deliver on its strategic vision of partnering with Australia's largest retailers, providing consumers with flexibility and convenience in how they choose to pay for their everyday products while expanding the network of acceptance for Zip's growing customer base".

Zip said it anticipates its service to be live with Big W within the first half of FY2020.

Is it enough to catch up with Afterpay?

While yesterday morning's announcement is a solid boost for Zip's ongoing expansion, the company is still struggling to make up ground on incumbent "buy now, pay later" provider, Afterpay Touch Group Ltd (ASX: APT).

The Afterpay share price is up 120% so far this year following a strong start to its United States expansion and decent underlying sales volume growth back here in Australia.

However, several recent events including the recent Senate inquiry and ongoing investigation into its financial crime compliance has meant the Zip share price has outperformed that of Afterpay, climbing 190% so far this year.

If Zip can continue to partner with some of Australia's major retailers and demonstrate organic sales volume growth, it may make up some ground on Afterpay's market share.

Are there any other competitors on the market?

While Zip and Afterpay remain the two biggest listed players here in Australia, Sezzle Ltd (ASX: SZL) made its debut on the ASX on Tuesday and saw its share price double on its first day of trade.

With an initial public offering (IPO) price of $1.22 per share, Sezzle is currently trading at $2.50 per share but slid 8% on the ASX yesterday as investors try to find an appropriate valuation for the latest "buy now, pay later" startup on the market.

Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Growth Shares

These ASX growth shares could rise 18% to 30%

Let's see which shares are being tipped to rocket.

Read more »

Ecstatic woman looking at her phone outside with her fist pumped.
Growth Shares

Goldman Sachs tips this ASX 200 growth stock to rise 35%

Let's see what the broker is saying about this growing company.

Read more »

Two players on a field pump their fists in the air, indicating two of the best
Growth Shares

The ultimate ASX growth shares to buy with $5,000

Brokers are very bullish on these names. But why? Let's find out.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Growth Shares

Where to invest $1,000 into ASX shares in June

These shares could be buys according to analysts.

Read more »

Young female investor smiling and speaking on mobile phone while sitting in front of laptop
Growth Shares

Looking for ASX growth shares? I rate these 2 as top buys for June

I’m very excited about the growth potential of these stocks…

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Growth Shares

3 high-conviction ASX growth shares to buy

Analysts have good things to say about these stocks.

Read more »

happy investor, share price rise, increase, up
Growth Shares

Where to invest $5,000 into ASX growth shares now

These shares could be destined for big things according to analysts.

Read more »

ETF spelt out with a piggybank.
ETFs

Want to buy ASX growth shares? Consider these ETFs instead

Growth ETFs can be easier to invest in than shares.

Read more »