Dovetail+ Afterpay

This is the story behind Afterpay’s rise from start-up, to $6 billion international juggernaut.

One thing, however, was frustrating him; of 100 people that visited the site only 1 would actually make a purchase. This is not unusual for e-commerce, but it was crushing the margins of his jewellery business.

Out of this frustration the idea for Afterpay was born. Why not allow customers to buy products online on lay-by, and pay them off over time? Better yet, why not make it interest-free and have the merchant pay a small fee in return for increased sales? Intuitively it made sense to Nick that this would work, and early experiments with his own jewellery site proved that this could be an incredibly powerful tool to increase conversion rates and sales.

Together with Anthony Eisen, Nick Molnar set about to create Afterpay, a firm that would revolutionise the online payments industry and within 5 years be valued at over $6 billion, have over 4.3 million customers and be quickly expanding across NZ, UK and the US.

This is the story behind the story of the rise of Afterpay.

From the very early days, Afterpay formed a partnership with payments firm Touchcorp. Touchcorp provided the back-end payment systems that supported the Afterpay product, and would become a key player in Afterpay’s future.

In early 2017, Afterpay partnered with Dovetail to design and develop iOS and Android apps. The result of this early partnership was a beautiful mobile product that would change the face of Australian retail.

At the outset of the project, Afterpay’s CEO Nick Molnar laid down the challenge - 'we need to launch a mobile app in twelve weeks'. This was an almost impossible timeframe; the first version of the app included the launch of in-store shopping, a new channel for Afterpay. 'How does 16 weeks sound?' countered Dovetail’s Nick Frandsen. Both parties left the meeting with a handshake, and an agreement:Dovetail would deliver Afterpay’s first mobile app in twelve weeks

Initially the launch was kept a secret, but the Afterpay fan-club quickly got whiff of it and the app took off. Within 24 hours of launch, Nick Molnar decided to go all-in and kick off an Australian-wide marketing effort. The Afterpay iOS app soared to #1 in the App Store within 48 hours. This gave some of the Dovetail engineers a mild panic attack, but the launch came off without a hitch. Soon Afterpay soared above Facebook, YouTube and Instagram in app ratings withan average of 4.9/5 stars
on Apple’s iTunes Store

As more retailers started accepting Afterpay in-store, the engagement stats for the app went ballistic. Within twelve months of launch mobile traffic exceeded desktop traffic, and it has remained that way to the present day. To date the Afterpay app has been downloaded by over 4.1 million customers, with over 2 million monthly active users across the globe. In addition to this the app is widely loved by customers, with an average review of 4.9/5 stars on Apple’s iTunes Store – a feat accomplished by no other app in the Australian Top 50 app chart.

1,000,000+
App Downloads

Whilst Dovetail were building the mobile apps, the exponential growth of users was starting to put a serious strain on Afterpay’s web infrastructure. During marketing campaigns, Afterpay was becoming one of the most visited sites in Australia. The website began crashing frequently, customers became frustrated — something needed to be done.

In June of 2017, Afterpay’s web platform was frequently on its knees. Harking back to the very first days of Afterpay, the site had not been engineered for load and would crash as soon as traffic spiked. Given Afterpay’s relentless growth, everyone knew the situation needed to be addressed.

At this point in time, Afterpay.com.au was a much simpler product than it is today. Dovetail knew that they could rebuild the web platform in a way that would be beneficial long-term, but they also knew that Afterpay had little interest in pausing for an uncertain period of time. Thus there was a conundrum, Dovetail knew they could fix this problem for Afterpay;

But How
Could They
Prove this?

The idea was on the verge of feasibility - it would require around-the-clock development and there was no room for error. Dovetail thought they had a chance, and over the following three days and nights, the team got to work building a sophisticated high-traffic prototype of Afterpay’s web platform. On Wednesday morning, bleary eyed, they headed into Afterpay’s Sydney office.

Dovetail opened a browser, screencast onto a TV, and explained to Afterpay they were looking at a new and improved version of their web application - built to handle the aggressive international growth strategy that Afterpay would soon pursue.

A brief silence followed and laughter filled the room. Afterpay’s then Director of Product, David Whiteman, looked at the Doves with a smile and simply said ‘Well guys, looks like you’re looking after the web platform now’.

This marked the beginning of a deep, successful and ongoing partnership between Afterpay and Dovetail. From 2017 to the present day, Dovetail has looked after the design and development of Afterpay’s web and mobile properties as they have grown to service over 4.3 million monthly active customers, generating $4.7 billion in underlying sales

The new platform arrived just in time, as Afterpay was about to undergo a period of hyper growth unlike any technology company in Australia's history. Between March 2017 and May 2019, every imaginable metric in the company simply took off. As monthly active users soared from 580,000 to 4.3 million, web and mobile traffic went through the roof.

Customer Growth
Monthly Active Users
During this period of hyper-growth, Dovetail maintained 99.999% uptime as the Afterpay consumer platform grew to service over 500 million server requests per week.
00.000%
Uptime Rate
500,000,000
server requests per week

Meteoric growth – by the numbers

Between March 2017 and May 2019, Afterpay’s customer-base quintupled in size and the rest of the platform saw absurd growth across every metric measured. In-store transactions grew from $0 to $780 million. Merchant referrals — clicks out of the Afterpay platform — grew from 72,000 per month, to 8,400,000 million per month. The iOS and Android apps were downloaded a total of 4,100,000 times. As a whole, the Afterpay platform crossed the theshold of processing over 10% of all Australian e-commerce transactions — and $4.7 billion of global underlying sales — serviced by 500 million requests to the consumer servers per week. As these staggering numbers continued to increase, Afterpay hit a milestone;

#2
In AUS
In 2019 Afterpay has become the second largest source of referral traffic in Australia after Google

Not content with being the fastest growing technology company in Australia, in 2017 Afterpay launched a grand international expansion plan that continues through to the present day.

In September 2017, Afterpay jumped the ditch and launched into the New Zealand market by partnering with Trade Me. This move allowed Afterpay and Dovetail to internationalise the product, and marked the first step in Afterpay’s global ambitions.

May 2018
USA

Nine months later, Afterpay launched in the US, the land of retail. With more retail spending in the state of California than the whole of Australasia, success in the US has the potential to transform Afterpay into a global payments giant.

April 2019
UK

In April 2019, Afterpay launched in the UK following the acquisition of local company ClearPay. With a $720b market, the UK is over twice the size of the Australian market.

The pace of international growth has required a substantial investment into the architecture of the Afterpay platform. This behind-the-scenes work on both the web and mobile platform includes automating build pipelines, managing conditional functionality by market, supporting region-specific operating teams and extending cloud infrastructure services.

Despite this torrent of complexity, the Afterpay platform has successfully launched in three markets across the world in the space of 16 months. And growth in these new markets is exploding.

Early traction in the US market

While still early days in the US market, the results so far have been astonishing. Afterpay has already acquired over 1.5 million new customers transacting over $1.7 billion anually with over 3,300 retailers. By comparison, it took the Australian business approximately three years to deliver the $780 million of underlying sales that the US business has achieved to date.

4400+
US Retailers
1,500,000
New Customers
$780 Million
Underlying Sales

In a partnership spanning two and a half years, Afterpay and Dovetail have built the fastest growing consumer technology platform in Australian history. With over 4 million monthly users transacting $4.7 billion across four international markets, Afterpay shows no signs of slowing down.

With all of this success to date, Dovetail and Afterpay remain in a close strategic partnership.

Customer Growth
Monthly Active Users
Global Monthly
Users by Platform
Mobile
2 Million
Web
1.9 Million
Global Monthly
Merchant Referrals
0
May 2019
0
Mar 2019
Monthly In-Store
Purchasing Codes
1.3M
Mar 2019
100-200
Feb 2017
Online & In-Store
Afterpay Merchants
Weeklyrequests toAfterpayservers
500M

Weekly requests served
 by the global Afterpay consumer platform

MobileDownloads
4.1M

iOS and Android app downloads globally

AverageUptime
99.999%

Availability of the Afterpay consumer platform

GreaterThan
>10%

Of all e-commerce transactions in Australia are processed by Afterpay

HighestRated App inAustralia
4.9

#1 rated mobile app out of top 50 apps in Australia

AustralianMillenials
27%

Of all Australian millenials are Afterpay customers

“Dovetail have done an excellent job of supporting Afterpay with creativity, agility and technical proficiency. I would enthusiastically recommend Dovetail to any business looking for a genuine partner to work with.”

Nick Molnar, CEO of Afterpay (Oct 2017)
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*All data and figures sourced from Afterpay Touch public filings.