Why ESG is at the heart of ASX-listed e-commerce and the BNPL Zebit platform
Zebit is working to restructure the financial system of millions of Americans with bad credit to make sure they don’t go into more debt and can improve their lives.
With a powerful history, one of the fastest growing hybrid e-commerce and BNPL platforms on the ASX, Zebit (ASX: ZBT), has a bold mission to solve a major structural problem in the United States and reduce the cycle of poverty for millions of people.
When it comes to environmental, social and governance (ESG) criteria as a set of standards to be taken into account by investors, Zebit ticks all the boxes.
Zebit is the only e-commerce company that allows customers to make a 25% deposit on purchases of 170,000 products and fund the remaining amount over six months.
But the point of difference in Zebit’s business model is that it is designed to serve consumers with poor or lower credit scores, unable to access more traditional payment financing methods.
Talk to Storer From his base in San Diego, Calif., CEO Marc Schneider said Zebit’s target market of over 120 million is poorly understood and strongly stigmatized.
“What I’m telling investors now is that we don’t need to plant any trees or get a seal that says we’re B Corp and socially good, because the fundamental principle of this business is not to harm, to uplift the customer, to give them a second chance and make a difference in their life, ”he said.
Give customers a chance to improve their credit rating
Schneider said the United States has a long-term structural problem that has hurt many struggling consumers and their ability to access credit.
“We have over 47% of our adult population with an impaired or no credit credit score and 74% of our population who live off paychecks and need the ability to fund items over time,” did he declare.
“In the United States, if you don’t have a good credit rating, you are relegated to high-cost predatory alternatives such as rent with purchase option, leasing with purchase option and payday loans. . “
Schneider said customers pay more than 380% of the retail price for rent or hire-purchase, with missed payments resulting in repossession of the item.
The annual percentage rate for payday loans can reach 660% with products designed to trap customers in a cycle of debt.
“Health care costs go up, rents go up with the cost of living and so many people can’t make a difference in their lives,” he said.
“We are a mission-driven e-commerce company that offers credit-distressed consumers the opportunity to shop 25 different verticals and pay us back over six months with no interest, hidden charges or penalties of any kind. that is. “
Zebit’s secret sauce for managing risk
Since its inception in 2015, Zebit has processed over 1.2 million orders on its platform of tens of thousands of people that other finance companies were unwilling to take a risk on.
“Our customers are incredibly loyal and if you’ve been with Zebit for over a year, your bad debt expectations are in the range of 9%, but drop to 2.3% in four years,” Schneider said. .
“Zebit has proven that you can take a risky customer and give them a fair value proposition and they’ll reward you by paying on time and turn into a reliable buyer and repayment.”
He said Zebit has invested heavily in developing its own credit and risk models by processing more than four million requests since its inception and pulling data from third parties.
“These advanced machine learning models are at the point where we register a customer and effectively assess whether their identity is good and their price is affordable, and then what we do differently is have a closed market,” he said. declared.
“Everything the customer does on our site is modeled in a set of models that are at our own checkout because we are the merchant and determine what the risk of that order is and which ones we can and cannot ship.
“I think we’re the only company in the world to do real-time point-of-sale underwriting for a consumer with credit distress using intent to pay and how it works.”
Zebit based on Schneider’s own life difficulties
With a career in business and finance spanning over 30 years, Schneider has never forgotten his roots and is determined to make a difference in the lives of disadvantaged people.
“I grew up in Arizona in a home that was heavily divided with parents who didn’t get along and ended up divorcing,” he said.
“My father took it all and left my disabled mother who couldn’t work, my sister and I homeless.
Eventually living in temporary housing with limited government and charitable support, Schneider has worked full-time since the age of 15 to support his mother, while finishing high school and earning a college education.
“My mom never had a credit score because my dad took care of everything so she couldn’t get loans, couldn’t work and life was very difficult,” he said.
“I supported my mother until she passed away 13 years ago and after graduating from my undergraduate degree I joined the World Bank and since I was a child I thought about how I can make a difference so that other children and families do not face the same uncertainty. I grew up.
Schneider said his childhood and work experience all came together with Zebit to both build a successful business for investors, but also make a difference in people’s lives.
“My experience in gaining expertise on how to run businesses, get businesses out of bankruptcy and turn them around, with e-commerce fintech led me to what I would call my last business. at the age of 52, “he said.
“Zebit makes sense and gives someone a second chance by trying to stabilize their life so that they can buy what they need without going into heavy debt.
“The payoff for this is that you capture tremendous lifetime value from a customer because no one in the US has ever offered them a fair deal, so we’re building incredible brand loyalty.”
Zebit chooses “the NASDAQ of the 90s” for its public listing
Zebit hit the Australian stock exchange in October 2020, after the US venture capital space hesitated to invest in credit companies.
“We’ve had 10 years of economic growth and everyone here was worried about a recession, so the last thing you want to do is put money into a business that grants credit,” Schneider said.
Schneider started looking for different capital opportunities and after some research the ASX represented “the NASDAQ of the 90s”.
“You could have less than $ 100 million in revenue, high growth and access to capital without preferences, focus on executing your business plan and have access to public markets,” he said. declared.
“It’s clearly a growing exchange that is absolutely believable and has been very successful.”
Unicorn investor Ulu Ventures, a major shareholder of Zebit
While many large VCs may not have been keen on investing in loan companies, Zebit caught the attention of Ulu Ventures, an impressive American company.
The VC made a name for itself as the top pick of potential tech unicorns and was an early investor in SoFi and Palantir.
Ulu Ventures increased its stake in Zebit to 8% and is now a major shareholder, CEO Miriam Rivers recently said Storer she thinks the stock has huge potential.
“Zebit serves an underserved customer base where we believe credit risk has been misjudged,” she said.
“The Zebit platform creates a vehicle for these people to buy the things they need and achieve a good credit score at the same time.”
Schneider said he expects Zebit to continue its strong growth path in the years to come with further expansion planned.
“In five years the core business is expected to be between $ 750 billion and $ 1 billion in revenue and we have extended Zebit to adjacent natural revenue lines like small and medium businesses and also offered it to people with good credit, “he said.
“I have worked a lot internationally and this model works in Europe, UK, Latin America and countries like India so hopefully we have a global footprint as well as merger activity. and acquisition to join us with other companies where there are potential synergies. “
This article was developed in collaboration with Zebit, an advertiser for Stockhead at the time of publication.
This article is not advice on financial products. You should consider getting independent advice before making any financial decisions.