In recent times, the ‘buy now, pay later’ (BNPL) concept has evolved from being a specialized payment mode to becoming one of the most popular trends in the payment sector.
The idea of installment payments isn’t novel. For years, businesses such as furniture outlets have facilitated customers to settle significant purchases through installments.
However, ‘buy now, pay later’ modernizes this concept by enabling all retailers to provide installment payment options for any product, irrespective of its size, available both online and in physical stores. Here’s how BNPL is transforming holiday sales.
Simple Repayment Plan
The structure of most Buy Now Pay Later (BNPL) loans is such that they are intended to be fully repaid in four payments over a few weeks. Unlike traditional credit cards, these loans do not provide an ongoing line of credit, and are wiped out once fully paid.
Many BNPL lenders facilitate same-day funding options and automatic payments. They require their customers to maintain a debit or credit card on record, reducing the chances of missed payments.
However, the Consumer Financial Protection Bureau (CFPB) warns that this compulsory autopay setup may result in problems like overdrafts.
Attract New Clients
Offering Buy Now Pay Later options for business services can attract consumers who were previously hesitant to purchase due to high prices.
Now, customers mindful of their budget can acquire top-tier products with little to no stress, and break down their payment into manageable, low or no-interest installments. As a result, businesses can tap into a vast customer base.
Indeed, BNPL for small and medium-sized enterprises is undoubtedly a superior choice compared to using a credit card for purchases. Customers can reduce the acquisition cost by channeling their payment through BNPL for businesses.
Lowering the Rate of Abandoned Shopping Carts
Six percent of online shoppers leave their carts due to insufficient payment methods. The primary cause for this is the addition of unexpected costs, like shipping fees, to their initial purchase price.
It’s crucial to offer comprehensive information to customers from the onset to foster confidence in their buying decision. Instilling belief about the value they are receiving for their money, and being transparent about what they can anticipate at checkout, will enhance customer satisfaction.
Boosting the Lifetime Value of a Customer (CLV)
The total expenditure a customer makes at your store throughout their patronage is referred to as Customer Lifetime Value (CLV). Considering that the expense of acquiring new customers has surged by over 50% in the past five years, it’s increasingly essential to retain existing customers.
By offering Buy Now Pay Later (BNPL) options, your customers can spread their payments over a time frame of their choice and maintain a longer engagement with your business. This ultimately contributes to superior customer retention rates.
Through BNPL facilities, you can foster trust, cultivate brand loyalty, and stimulate repeat purchases, thereby boosting CLV.
Boost your Average Order Value (AOV)
Regarding the value of each individual purchase, a greater order value is always more advantageous. A quick online search reveals that several ‘Buy Now Pay Later’ service providers report an increase in Average Order Value (AOV) ranging from 15-85%—quite a broad spectrum, yet undeniably positive.
When consumers can distribute their total payment over time, they tend to spend more in total as it does not impose a severe short-term financial burden on them.
Your e-commerce business possesses an outstanding content marketing strategy that successfully drives traffic to your site, yet sales do not reflect this success. This is where BNPL steps in.
It enables customers to make purchases with less initial financial commitment, enhancing their overall shopping experience and instilling greater confidence in your business.
Employ BNPL to cultivate a progressive relationship with your customers. As they become familiar with and like your brand, they start to place their trust in you. This trust translates into loyalty and repeat purchases.
A company adopting the Buy Now Pay Later (BNPL) option for business financing enables efficient inventory management. This hassle-free payment solution allows customers to place larger orders, leading to a swift increase in product sales. Retailers can then restock products based on their sales volume and popularity.
As a result, small business owners can sidestep problems of overstocking or understocking by incorporating the B2B Buy Now Pay Later credit service into their operations.
Flexibility and Convenience
Conventional credit cards are often characterized by strict payment schedules, interest rates, and usually necessitate a solid credit history. On the other hand, Buy Now Pay Later (BNPL) offers the flexibility to divide payments over a period, simplifying budget management.
The effortless incorporation of BNPL choices into e-commerce platforms has transformed the shopping experience, enabling consumers to make immediate purchases without needing immediate payment.
Boost in Sales Volume
The marketing tactics of BNPL diverge from the usual credit schemes. Specifically, BNPL has an edge as it imposes no extra charges. It promotes purchasing particular items that customers can comfortably manage, thus enabling them to shop more.
Customers won’t face disappointment as they have the liberty to select installments as per their convenience. By presenting these adaptable options, a rise in sales volume is ensured and it also assures that customers will fulfill their installment payments.
The prospects for Buy Now, Pay Later (BNPL) seem bright. The easy-to-use, adaptable, and readily available nature of BNPL has made it a popular choice among younger demographics. As BNPL becomes more intertwined with online shopping and retail platforms and the power of social media and word-of-mouth endorsements, its usage is witnessing a swift upsurge.