Zip Co Ltd (ASX: Z1P) has announced a partnership with Harvey Norman Holdings Limited (ASX: HVN) today. Will Zip shares rise in reaction to this?
Zip is one of the largest buy now, pay later businesses on the ASX. It has operations across Australia, New Zealand, South Africa, the UK and the USA. It also owns and operates Pocketbook, which is a personal finance management tool.
What was announced?
The buy now, pay later company announced today it has entered into a partnership with Harvey Norman, Domayne and Joyce Mayne franchisees to offer their customers the ability to pay with Zip’s buy now, pay later payment solutions.
Peter Gray, co-founder and chief operations officer of Zip, said: “We are thrilled to partner with such iconic brands. We look forward to providing customers with additional choice and better ways to pay as they shop with confidence at Harvey Norman, Domayne and Joyce Mayne.”
Zip said the partnership with Harvey Norman continues to deliver on Zip’s strategic vision of providing customers with convenience and choice in how they choose to pay, while also driving towards Zip’s mission to be the first payment choice everywhere and every day.
What does this mean?
Harvey Norman is responsible for a large amount of sales. In FY20 Australian Harvey Norman franchisees’ aggregated sales amounted to billions of dollars. But it’ll take time for Zip to gain a meaningful share of Harvey Norman’s sales. Zip is doing very well at growing the business globally.
It’s already involved with some of the biggest retailers in Australia including the Wesfarmers Ltd (ASX: WES) businesses Bunnings, Target, Kmart and Officeworks, Woolworths Group Ltd‘s (ASX: WOW) Big W, and Amazon. It also recently announced a partnership with Facebook.
Zip is building its reach and its underlying sales continue to grow. In a recent update it said that its FY21 year to date revenue was $96.7 million, up 91%, for the first four months of the year. October’s monthly revenue was $27.6 million. In terms of the transaction volume in October, that grew by 104% year on year to $401.1 million.
Is Zip worth buying? I don’t know – the Zip share price has been drifting lower in recent months, so it could be an opportunistic time to buy seeing as Afterpay Ltd (ASX: APT) is rising – there may be a bit of value dispersion there. But there are other ASX growth shares in the payment sector I’d rather buy like Pushpay Holdings Ltd (ASX: PPH) and EML Payments Ltd (ASX: EML).
