The retail world watches in amazement — and relief — as “buy now, pay later” (BNPL) becomes all the rage with consumers living under COVID, with legs that appear to extend well beyond.
PYMNTS’ September Buy Now, Pay Later Tracker®, done in collaboration with Afterpay, observes that “online spending with U.S. retailers climbed 44.4 percent year over year in Q2. Another study revealed that the health crisis has fast-forwarded eCommerce’s adoption by five years, and the sector is expected to expand 20 percent by the end of the year.”
That’s all gravy for merchants, online or off, that have integrated BNPL into their checkouts.
“More consumers are seeking payment options to stretch their dollars during the health crisis. Retailers are discovering that BNPL offerings can give consumers the financial flexibility they seek, as well as enable merchants to fend off cart abandonment and improve brand awareness. One in three eCommerce retailers is expected to offer BNPL solutions by the end of next year, for example, as the $1.9 trillion industry continues to gain customers.”
Placing Items Within Financial Reach
Larger merchants and eCommerce sites were the first to jump into the reanimated installment payments market when BNPL debuted in its digital form about four years ago. Now, SMBs are figuring out that BNPL can be an equally powerful option to offer their customers.
With so much buying having shifted online, BNPL isn’t so much an option as a necessity now.
U.S. consumers spent roughly $347 billion with eCommerce retailers in the first half of 2020, compared to $267 billion in the same 2019 period. That clear digital shift can’t be ignored.
“SMBs are feeling the weight of increased competition and have fewer resources than their much larger competitors to draw upon,” the new Buy Now, Pay Later Tracker® states. “Small eCommerce retailers are discovering how leveraging BNPL can help boost not only customer engagement and loyalty, but also their own bottom lines. Installment payments can allow customers feeling the pinch of the economic downturn to pay off their purchases over time while providing steady revenue streams for small businesses that keep them afloat.”
Not only does BNPL help consumers and merchants achieve their respective sales goals, but it also tends to increase cart sizes. “BNPL offerings have also proven to increase the average order value by placing items within financial reach for customers who would probably have called it quits on the spot,” per the new Tracker.
BNPL Can Boost Cart Conversion by 30 Pct
For any doubters that remain, consider this: “The European Payments Council has … stated that BNPL methods are boosting customer loyalty and cart conversions by 30 percent, and that approximately 9.5 million Brits said they would avoid shopping at retailers that did not provide BNPL options at checkout. The report also found that Australian BNPL provider Afterpay’s app was installed on U.K. smartphones 298,000 times between Jan. 1 and July 31 of this year.”
The September 2020 Buy Now, Pay Later Tracker® also confirms viewpoints that have been forming for months as businesses made fast changes to keep the lights on. It’s working – and for it to keep working, merchants must cater to COVID-era consumer sentiments.
“Retail’s digital shift means SMBs must do more than offer standard eCommerce experiences; they must also provide unique benefits to consumers who are redefining where, as well as how, they buy their items,” per the Tracker. “Supporting innovative payment methods can keep customers engaged, but today’s consumers are asking for more than just speed and digital capabilities. Many also seek payment options that are tailored to their specific financial needs, which is where methods such as BNPL come into greater play.”