Let’s say you spend $10 to capture the interest of an online shopper. Now they are browsing your website and have found something they like. The typical action will be for them to place an order. Unfortunately, times are tough, and the global economic crisis has reached many pockets.
So you can be doing everything right and still lose a sale. But don’t worry; modern problems require modern solutions. Introducing the buy now, pay later for eCommerce businesses model.
To be honest, that’s not a new concept (credit cards have been doing it for decades). However, it is certainly getting more popular nowadays.
In this blog, we will present you with everything you need to know about the concept and if it is the right choice for your eCommerce business.
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For example, if you offer BNPL and a customer makes an order totaling $50, then they can pay for it in five interest-free installments. Of course, that differs according to the payment plans you offer, but more on that later.
This method is constantly on the rise, especially with younger generations. Originally, BNPL was introduced as a solution to address the financial pain points of customers.
However, as it got more popular, everyone has been opting for that solution.
There are many providers that offer the BNPL service to eCommerce businesses, such as Affirm, Sunbit, Hoolah, Zip, and Klarna.
So this is how it works from your end, but how does it work for customers?
Buy now, pay later is presented as a payment method next to cash, credit cards, or any other method you offer.
Each eCommerce business has its own system, but most companies offer weekly or monthly installments. Bear in mind that most eCommerce businesses offer BNPL without any interest.
All this depends on what products you sell, which market you are operating in, and most importantly, who is your target audience and what their purchasing power.
We know what you might be thinking right now; why should I do all this? You might think that if you are targeting the right segment, pricing will never be an issue.
But if that's what you think, then you are wrong. This is not our opinion; this is based on facts and numbers!
Ready to learn some numbers affecting buy now, pay later for eCommerce?
The buy now, pay later concept is revolutionizing the world of eCommerce and online shopping.
Think we are exaggerating? Well, let’s take a look at some numbers so you can see for yourself!
Now do you see why it is important to consider offering buy now, pay later for eCommerce? And yes, the right word to use is considered not implemented, as there are still plenty of things you need to know about it!
Whether we are talking about the customer or your business, there are tons of pros and (some) cons of buy now, pay later for eCommerce.
Don’t worry; we did all the leg work for you, and here are some of the most important information you need.
Your target audience is carefully chosen through concrete data and research. But no matter how precisely you try to figure out who can comfortably afford your products, there will still be some gaps.
BNPL can fill out those gaps and help you reach a larger customer base, as it makes you more flexible and affordable.
2- Higher AOVBNPL encourages existing customers to order more.
Why? Simply, those are people who are already interested in your products and frequently place orders. So when you start offering easier and more manageable payment methods, many of them will start to order more.
As a result, the average order value (AOV) will increase.
3- Enhanced customer experienceOne of the most important pros of buy now, pay later for eCommerce is making customers happy. Just by offering this payment method, you show that you care about consumers’ comfort and convenience.
And it's widely known that nowadays, customers tend to buy from those who care.
4- Increase sales and revenues>image3>
This one is a no-brainer if you are reaching more customers, existing customers are ordering more, and generally, consumers are content; your eCommerce business will see a notable increase in sales and revenues.
5- FlexibilityEven if a customer can pay the full amount upfront, it will be a lot more convenient to split that over installments.
This level of flexibility allows consumers to place more orders without affecting their financial situation whatsoever.
6- 0% InterestMost, if not all, online stores offer the buy now, pay later method with 0 interest. So if the customers meet their payment deadline, they will get the product at its original price but with the flexibility of BNPL.
Was an order shipped with a defect? The wrong order was sent? All that and more regularly happens no matter how tight a ship you run.
This is usually an easy problem to solve; you exchange/return the product and send the customer their money back. However, when you are dealing with a third-party provider, it will get a bit more complicated.
2- Provider feesLike any external entity you work with, the BNPL providers will require fees from your end. In the long run, this won’t be a problem as the increase in sales will cover that.
However, if you are on a tight budget or just starting out, you should put the provider fees into consideration.
3- Location barriersDoes your eCommerce business operate in several markets? If not, then you can skip this one.
If you operate in different markets, then most probably, you will have to offer BNPL through a number of providers because each provider covers a certain part of the world.
So you are either super lucky and find a provider that operates in the same markets or you will be forced to deal with several providers.
4- Missing out on credit cards rewardsCredit cards constantly offer valuable rewards based on your purchases. Accordingly, if you replace credit cards with BNPL, you will miss out on all those rewards.
5- Missed paymentsLike a sword, BNPL is double-edged! Ok, we will stop with the theatrics.
Just like it's a pro that BNPL offers 0% interest, it can easily turn into a con if you miss a payment. In that case, you will start paying interest, which can sometimes be even higher than credit card interest.
But don’t worry; you will always find the rules and regulations to get back to before choosing to buy now and pay later!