Why has the average order value for Affirm's Shop Pay installments decreased by 20% this month?

Introduction

The recent 20% decrease in average order value for Affirm's Shop Pay installments is a concerning trend that requires immediate attention. As we delve into this issue, we'll employ a systematic approach to identify, validate, and address the root cause while considering both short-term and long-term implications for the product and business.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a seasonal effect. Has this decrease coincided with any particular shopping season or holiday?

Why it matters: Seasonal trends can significantly impact consumer behavior and spending patterns. Expected answer: No specific seasonal event correlates with the decrease. Impact on approach: If seasonal, we'd focus on adjusting for cyclical patterns; if not, we'd investigate other factors.

• Considering user segments, I'm curious if this decrease is uniform across all customer types. Have you noticed any differences in the impact on new vs. returning customers?

Why it matters: Different user segments may be responding differently to recent changes or market conditions. Expected answer: The decrease is more pronounced among new customers. Impact on approach: We'd focus on onboarding and first-time user experience if new customers are more affected.

• Thinking about recent changes, have there been any updates to the Shop Pay installments feature or marketing strategies in the past month?

Why it matters: Product or marketing changes could directly influence user behavior and order values. Expected answer: A recent update simplified the installment selection process. Impact on approach: We'd examine how this change might have affected user decision-making and order values.

• Regarding market conditions, has there been any significant shift in competitor offerings or macroeconomic factors that could influence consumer spending?

Why it matters: External market forces can have a substantial impact on consumer behavior and willingness to use installment services. Expected answer: No major changes in competitor offerings, but there's been a slight economic downturn. Impact on approach: We'd consider how economic factors might be influencing consumer spending and risk tolerance.