Buy now pay later service offerings are taking the eCommerce landscape by storm and can no longer be ignored by growing online retailers.
When a visitor browses your online store they’re looking for something that’s caught their attention. And when they find it, they want to get it sooner rather than later. But before committing to buying it they may ask themselves a few questions… Can I get a better deal? Will it go on sale soon? Can I afford it right now?
These are the sort of financially fuelled questions leading to shopping cart abandonment rates of almost 70%, and could become big obstacles to your sales.
Let’s take a moment to think about the experience.
Say there’s a new jumper online you’ve been eyeing off. It’s perfect for an event you have on the weekend, however you can’t quite budget for it in one pay. So you miss out on the item, soon forgetting about it because when you have the money there’s something else that’s caught your eye.
For a consumer, it’s not that big of a deal. But for an eCommerce retailer, it potentially means wasted advertising budget and lost sales.
One Australian trend is changing the game however and it’s called buy now, pay later.
Today, buy now pay later (BNPL) services like Afterpay and Zippay currently make up 7.7% of total online spend on physical goods according to the recent Australia Post 2018 Online Shopping Report and this percentage is expected to rise in the coming years.
Specifically, the fashion industry represents 57% of all BNPL transactions, a seven-fold increase in 2017 from 2016.
It’s kind of like the heydays of lay-by, remember them? You’d see something you liked, pay a deposit, and then come back to the store every few weeks paying a small amount off at a time until finally you could pick up the item. This is all well and good back in the days before eCommerce, but in modern times we want instant gratification. With the BNPL offering, consumers can pay a portion of the items cost to get the product sooner, and retailers can capture these time-conscious sales.
That being said, these services do come at a cost… And not for the consumer. Retailers are charged a fee between 4% and 6% from each and every sale.
Start-up mogul Naomi Simpson said “if credit card transaction fees were that high, I’d be having big red kittens. But given the benefits we’ve seen in offering these payment options to customers, we consider the fees an investment in delivering audiences to our brands.”
And what are those benefits? Well, how about:
- Enticing more shopping on your site
- Offering risk free finance – BNPL providers wear all of the fraud and credit risk
- You get paid in full that day
- And you might get featured on their website or app which is another channel to access new customers
So, are you of thinking of using BNPL to capture more sales?