UX Report for Sezzle: Competitive Analysis Team 16: 4U Authors: Alexa YoonSeon Yi, April Shin, Jesi Zhang, Sunny Kim March 12, 2019 Word count: 2975 Table of Contents Table of Contents 1 Executive Summary 2 Introduction 2 Methodology 3 Direct Competitors Partial Competitors Parallel Competitors Indirect Competitors Findings 6 Direct Comparison: Klarna, Afterpay, Quadpay Partial Comparison: Bread, Affirm, Zip-pay Parallel: Samsung Pay, Apple Pay Parallel: Alipay Indirect: Credit/Debit Cards Recommendations 9 ​ Discussion 12 Conclusion 12 ​ Appendices 13 ​ Appendix A - Competitive Matrix ​ Appendix B - Functionality Comparison Chart ​ Appendix C - Account Setup - Afterpay ​ Appendix D - Account Setup - QuadPay ​ Appendix E - Initial Account Setup - Klarna Appendix F - Future Payment Tracking - Klarna, Quadpay, Afterpay Appendix G - Apple Pay Wallet — Walgreen and Salads Up 1 Executive Summary This report focuses on the methods used to evaluate the competitors of Sezzle, as well as our findings and recommendations. In order to properly evaluate the competitors, we grouped them by functional similarities and placed them into four categories: direct competitors, partial competitors, parallel comparisons, and indirect competitors. By having all competitors in each category, we developed 19 criterias by which to evaluate these services based on values found in our user research. We drew a table that clearly compares the functionality of competitors and Sezzle. Based on our findings, we further developed a competitive matrix to better understand the core differences between Sezzle and the competitors, and ultimately found the opportunity areas including key findings and recommendations. We found that each competitor has experienced growth in their businesses by focusing on the target population and strategically partnering with merchants according to core needs of target users. There are five key recommendations we highlighted in this report: 1. We recommend that Sezzle should clearly re-define target population and from there, should actively seek out strategic partnerships with retailers. 2. We recommend that Sezzle should provide tailored benefits, perks, or reward for target users, which can be stood out from other competitors. 3. We recommend Sezzle to simplify the initial account setup process and provide visual overview to help users easily keep track of future payments due. 4. We recommend Sezzle to offer more flexible payment cycle to users for a better user experience. 5. We recommend Sezzle to offer a variety of omni-channel features that users can use both on and offline stores. Introduction Sezzle is a payment platform that offers buy-now and pay-later feature when users make online purchases. After users select using Sezzle to pay on the shopping website, Sezzle allows users to have 4 interest-free installments payment option. The 25% of the purchase is paid at the time of the transaction, and the remaining 75% are scheduled every 2 week until all is paid. 2 An overarching goal of our comparative evaluation is to better understand how Sezzle works as a buy-now pay-later online payment method and what the weaknesses and strengths are compared to other competing payment platforms. The below are our core research questions: ● Compared to Sezzle, how do other online payment methods vary on factors such as partnered merchants, UI elements and payment plans? ● What are the weaknesses and strengths of those competitive online payment methods? ● What features help enhance user experience while using the third platform to make online purchases and potentially apply to Sezzle for future improvements? Methodology After analyzing the data gathered from our user interviews, we began our comparative evaluation by generating a list of buy-now pay-later platform comparable to Sezzle. As Sezzle plans to develop mobile application and provide in-store payment options, we sought out competitors that offered one or both of these capabilities. We finalized our list to focus on 12 competitors to investigate whether there were certain valuable usability features that could cross over effectively to Sezzle. Using Mark Newman’s taxonomy of comparisons, we refined our list into four different categories, as follows: Direct Competitors ● Klarna is an interest-free installment payment platform allowing users to split over four ​ equal biweekly payments or flexible month-to-month payments. ● Afterpay offers four interest-free installment payments, partnering with top retailers ​ including Forever21, Urban Outfitters and Revolve. ● Quadpay allows users to split the purchase amount into four interest-free payments, ​ spread over six weeks. Partial Competitors ● Bread helps retailers offer pay-over-time solutions as a way to build stronger consumer ​ connections, power sales, and improve brand loyalty. ● Affirm allows shoppers to make monthly payments at a rate between 0–30% APR based ​ on users’ credit and available promotions. 3 ● Partial.ly targets business enterprises to better manage their sales and business flows ​ by providing flexible payment plans with user-specific down payment, duration, and frequency. ● Zip Pay offers interest-free purchases with user-catered budget and flexible payment ​ plans. It sends monthly statement in the beginning of the month allowing users to pay upfront or pay over time with $40 minimum monthly payment. ● Paypal provide easier and faster online checkout experience for shoppers by linking, ​ saving and auto-loading users’ credit/debit card information. Parallel Comparisons ● Apple Pay uses NFC technology to allow mobile and in-store payments for Apple device ​ users. ● SamSung Pay is a mobile payment system utilizing both NFC technology and magnetic ​ stripe readers. USers receives Samsung reward points additional to their credit/debit card benefits. ● Ali Pay is a Chinese one-time payment platform providing easier e-commerce ​ experience in online stores and between users. Users can scan QR codes or use Face ID verification for in-store purchases. Indirect Competitors ● Credit/Debit Card offers a wide range of choices allowing users to build credit scores and ​ offering difference APR, annual fee and benefits. Next, we developed criteria by which we would evaluate and compare the features and characteristics of these products. We used the findings and recommendations developed from our interviews to guide our investigation of common features amongst these platforms. Since many of our interviewees valued services that featured content breadth as well as viewership flexibility, we developed a matrix (Appendix B) on the presence of the following features: ● Can only use after login ● # of information required for signup ● Approval duration for Account setup ● Walk through / manual ● # of partnered merchants ● Partnered merchants categories ● Interest rate ● User Interface ○ Attention grabbing CTA button ○ Consistency on different merchants ○ Quick overview guideline on how to use the platform 4 ● # of required information for check-out ● Auto-saved information ○ Convenience vs. Security ● Payment Cycle Flexibility ● Security measure for each transaction ● Budget limit for each transactions ● Payment confirmation message ● Payment Reminder ● Punishment for late payment ● Mobile Application ● Domestic vs. International ● In-store payment availability This matrix allowed us to not only track and compare the availability of common features, but also to develop a 2x2 space in which we compared the dimensions of payment cycle flexibility and conveniency of initial account setup. (Appendix A). 5 Findings By investigating the key features and characteristics of our competitors, we analyzed the strengths and weaknesses of current Sezzle product including account set-up process, partnered merchants, UI elements and installment payment cycles. Then, we discovered the following findings for different payment platforms and suggestions on potential improvement. 1.Direct Comparison: Klarna, Afterpay, Quadpay Sezzle has three main direct competitors that provide 4 interest-free installment payment method: Klarna, Afterpay, and Quadpay. All three competitors are offered as payment options in the checkout where users can either sign up by selecting the platform as a payment method or creating an account ahead of time. They are partnered with B2C merchants in various categories such as apparel and beauty, travel, technology, and sports. Klarna offers three type of payment options for its users on online purchases: “Pay after ​ delivery,” “Pay now with card,” and “Pay over time.” Klarna account holders can spread their ​ payments overtime with any of partnered merchants who provide the “pay over time” option at checkout. “Pay after delivery” option allows customers to have their order delivered to them before they pay with a 30 day payment deadline. Klarna provides simple initial account-setup ​ process by only requiring email address. In its mobile application, users can access to-do lists that where they can visually track upcoming payments. Afterpay is offered in a large breadth of retailers, with over 14,000+ merchants including Urban ​ Outfitters, Forever21, and Revolve. Users pay for their online purchases over $35 in four equal installments due every two weeks and receive the purchased items immediately. Most first-time customers are typically given a $500 spending limit and users can’t spend more than $1,500 through the service. Using its mobile application, users can keep track of their future payments and view them