Financial wellness platform Zebit leverages consumer data technology in order to provide a transparent, trustworthy alternative to traditional credit card retailing, giving purchasing power to more customers regardless of credit

For banking, the future of retail is morality: 93% of Gen Z'ers believe it is important to bank with an ethical company. Yet in an industry that profits in large from customer failure, decent consciousness is hard to come by. The trickle-down effect is seen at the foundations of the retail industry, where the majority of consumers are limited by their credit scores. Although leaders in ecommerce like Amazon have introduced their own credit cards, their 0% financing offers are limited at six or 12 months.

Enter Zebit, the Amazon for those with limited credit options. Built on strong values, sustainability and transparency, Zebit has a new, ethical vision for consumer-bank relationships. The ecommerce company prides itself on 0% financing, no member fees and no credit score requirements.  Customers can shop millions of their favorite brands and pay directly through the site on a six-month basis. Soon, it will be twelve. PSFK spoke with Founder and CEO Marc Schneider about how Zebit uses closed-market data and machine learning to ensure transparency, build consumer-retailer trust and ultimately transform shopper expectations across the entire retail ecosystem for years to come.

PSFK: Could you describe any trends you’re noticing in the landscape overall and how you’re leveraging them in your work with Zebit?

Marc Schneider: A lot of the mainstream retail stores like J. C. Penney's, Sears, Kmart and Macy's either have hard financial trouble, have gone bankrupt or have closed a lot of stores. This restricts more access to the 80% of U.S. citizens who live paycheck to paycheck and really drive up in the retail shops.

Online, we continue to see the same thing that we've seen in the last five years. Retail represents about five trillion dollars. Ecommerce represents about 450 billion of that. What we don't see in retail, with the mass population, is a game‑changer that would allow customers to buy the things they need, pay over time that correlates with their pay dat, and get it at competitive prices.

Everything either on‑ or offline tends to be for what I call the bank, prime or super prime customer: the people who have the ability to put it on their credit card. Those are the ones who are paying it off in full and not running a tab.

What we see in retail is a big deficit for the mass population to be able to transact and do it regardless of their credit worthiness. I think it's going to become harder and harder given the closures in the retail space.

When we look at this market here, we wanted to fundamentally level the credit playing field for 80% of the base that lives paycheck to paycheck. They tend to only get to shop at Rent‑A‑Center, do a lease to own, or take a payday loan to buy the things they need.

This is not to say that the mass population doesn't go in to Best Buy and buy $14 headphones. What they're not able to do is they're not able to qualify for that point of sale credit because of their FICO scores. We saw this huge gap in the market to be able to fundamentally change the way the mass majority shops and do it in a white hat, transparent and online way. We also want to show that remaining 20% that transacting online might be preferable.

What motivated you to found Zebit?

I grew up in a pretty interesting household: in a mobile home park in Mesa, Arizona. We had to get government assistance. My mother was disabled. I've been on my own since the age of 15, working full‑time through undergrad and grad school, supporting a mother who had four heart attacks until she passed away.

I experienced a lot of those different options for people who didn't have credit and didn't have other alternative means to buy the things they need, like rent‑to‑own, where you get a $500 couch in Arizona that you end up paying $2,000 for, but you can afford the $11 payments a week for it. It's a really limited selection.

That experience gave me an innate passion to support the underdog, to give everybody a second chance to prove themselves and to do it in a way that involves no harm to the consumer.

One of the questions in the FAQ for your service states “What's the catch?” Can you address this?

Our consumers have likely already been burnt multiple times with people promising them and not delivering. If you look at all of the historical deals, everything starts off with the old mattress ad that says, “0% financing for 6, 12 or 18 months.” All of those mechanisms are designed to fail.

They're designed for customers to miss the payment. They're designed to make customers pick up all the accumulated interest over time. Even as Amazon is getting into financial services with its credit cards and they're offering it to its own consumers, it has a six‑month 0%, and a 12‑month.

If consumers miss a payment, they're going to be paying 24.99% APR from the day they actually bought that good. Companies know the only way to make money is to have people fail, but goods have to pay for the bads.

We tried to build a company where everything we were trying to do is transparent. If our customers go off the bandwagon and miss a payment, and if they cure, meaning they pay back what they owe, they get their debit line back instantaneously.

There are no penalties. We only try to get people back so they can succeed on debit and not fail. That's a hard thing to prove to consumers unless they come and try it out.

We are changing the way people think about what they deserve, and what they can have access to. Our customers are paying us back by referring other people to come to Zebit. We have a little bit of a viral component that's happening here already, which we're proud of.

What are your strategies for reaching your intended market? 

We have three basic strategies. One is we have a huge component in B2B and B2B partnerships. We're connected to the largest benefit platforms in the country. They own the Internet sites of the UPS, Walmart and FedExes of the world. Employees of these can get access to Zebit if they're on one of those platforms that manages their benefits.

We also do partnerships with other companies that are transparent, like Chime, which offers fee‑free banking. Then the other channel is direct to consumer: Facebook, radio, Twitter, Tobula. We also have a good bulk of our acquisition just from referrals. It's pretty robust and it's places in all 50 states with a representative population of customers.

The list of products and brands you have includes Apple, Samsung, Nintendo and more. How do you decide which brands to sell?

We want to give customers a very broad selection. We think of ourselves as Amazon for the underserved. We don't need three, four, five million SKUs. We have about 21 different product verticals, from tires and jewelry to fragrance and kids.

We're electronically connected with the largest wholesalers and distributors in the country. These are the same wholesalers and distributors that service Walmart, Amazon, Target, Best Buy and similar.

We get our demand indication from our customers. We survey our customers every month to see what they want more of.

We're also not bringing items in from China that take three weeks to get here. There are certain companies that do that. There seems to be demand for that, but we do everything domestically here.

We really just want to fill out a product portfolio so that our customers come back again and again. Here's an interesting stat: 70% of our orders are repeat orders every single month. We're the first company since Amazon that's created what I call very sticky subscription revenue, because we are able to offer our customers diverse selections.

In terms of Zebit's long‑term strategy, how do you see it developing over the next five years?

The first priority is add water and grow the current business. We're going to double our customer base this year and get up to about 650,000 customers this year alone. We'll be profitable at the end of this year and into 2020.

At the end of the day, because we underwrite our customers without a credit score, we validate employment and income. We validate their identity. Because we have a closed marketplace, we run all of our machine learning models to understand whether they're willing to pay us back or not.

We have deep data on our customers. We actually have risk scores at a customer level and at an order level, and so we have this power of the data coming in to really be able to determine the risk of our customer base.

Then, on the other side, we have the loyalty of our customer base. If we have loyalty and we have the data, then why can't we go into other services like fee‑free banking, or offering Zebit not just direct to consumer, but also to small and medium‑sized business?

Why should you take out a Kabbage or BlueVine loan, unless you need it for payroll? If customers want to outfit their office with computers and furniture, we can do that. I look at it as an extension into other lines of business. We're also talking to companies like Best Buy to be a point of sale alternative in its checkout flow in its stores.

Last recession, 500,000 credit cards were cut. Interest rates were already rising. Credit was squeezed. As we go into this year, over the next 12 to 24 months, we'll probably see 750,000 to a million credit cards being cut. We're hoping those near-prime people who don't have access to credit anymore will want to experience credit.

Nobody's ever “made money” off of the underserved or underbanked without charging punitive interest fees and penalties. This model is trying to do it differently, though it does come up against a lot of skepticism.

If nobody steps up to try to make invisible people visible and change their financial volatility, or at least try to improve part of their financial volatility through a product, things will never change for the better. That's what we're on a quest to do We're part of this transformational change. We hope that a lot of people get wind of it and we can service customers in an even broader way.

Marc Schneider.

Zebit

Zebit aims to give more consumers purchasing power by offering innovative alternatives to the traditional credit model. For more from similar creative game-changers, see PSFK's reports and newsletters


Lead image: stock photos from A. and I. Kruk/Shutterstock

For banking, the future of retail is morality: 93% of Gen Z'ers believe it is important to bank with an ethical company. Yet in an industry that profits in large from customer failure, decent consciousness is hard to come by. The trickle-down effect is seen at the foundations of the retail industry, where the majority of consumers are limited by their credit scores. Although leaders in ecommerce like Amazon have introduced their own credit cards, their 0% financing offers are limited at six or 12 months.