Afterpay Touch Group Ltd (ASX: APT) share price bulls hardly need any encouragement, but news that its UK doppelgänger Clearpay has signed blue-chip UK department store and supermarket player Marks and Spencer will add to their confidence.
The deal will help M&S meet its goal of lifting online sales as competition in the buy-now-pay-later space in the UK heats up with Clearpay actually operating as a challenger to incumbent Klarna.
Clearpay also recently signed Aussie jewellery retailer Lovisa Holdings Ltd (ASX: LOV) as a client.
Of course like the US the UK market is large enough for a couple of successful players with even Australia able to comfortably accomodate both Afterpay and Z1P Co. Ltd (ASX: Z1P) given the ubiquitous takeover of the sector.
For investors the key risks remain valuation (given it’s not profitable valuation remains subjective) and the potential for a ‘race to the bottom’ as competitors offer retailers lower and lower fees in a bid to win market share.
In fact it’s possible we could end up seeing some consolidation in the industry, as we’re now starting to see in the aggregated food delivery platform industry.
This morning the Afterpay share price is down 2.5% to $28.73.
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Tom Richardson owns shares of AFTERPAY T FPO.
You can find Tom on Twitter @tommyr345
The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. 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.