In the ideal world, you should make the full payment immediately when you purchase a product from an online retailer. But, so much market competition and a global economic downfall since the COVID-19 pandemic have negatively affected the purchasing power of consumers. Therefore, it was high time for businesses to come up with something new, something innovative, to ensure the sales do not get badly affected. That is precisely where “buy now pay later” fits in.
Buy Now, Pay Later or BNPL is referred to as point-of-sale installment loans. So, it is a short-term financing solution provided by third parties, where customers can purchase without needing to pay the total amount. After making a small down payment, customers can make the rest of the payment in EMIs. Often that attracts little to no interest rates.
BNPL payments have become extremely popular among shoppers, thanks to their convenience. But that’s not all. Even merchants, businesses, or retailers benefit from the trend of this new payment method. So, if you have a small retail business, you should embrace this to get the following benefits –
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Better Conversion Rates
It is frustrating for small shop owners to see visitors on their site, browsing different products, adding a lot to the cart, but leaving them in the end. While there can be plenty of reasons why conversion rates fall, one of the most common reasons people abandon their shopping carts is financial issues.
This is precisely where BNPL services serve as a savior for your company and buyers. It allows customers to make their purchases even during a tight financial situation because they can make the payment in EMIs.
On the other hand, it also allows them to fully use discounts and sales days. Therefore, in the end, it is your company that actually gets better conversion rates.
Increased Average Order Value (AOV)
You must have heard about Average Order Value (AOV). It is the average amount spent by customers while making a purchase. Different retail stores have different AOV units.
But, it was only after the BNPL program became a trend that many online shops evidenced a 130% jump in the AOV. The credit goes to the spread-out payment mode offered by BNPL. It makes a customer feel like they have increased purchasing power.
Some studies suggest that people prefer this credit payment option more than credit cards. It is because, sans the interest rates, the purchases fit their budget limits.
Enhanced Customer Experience
A positive customer experience always leads to more sales. Usually, customers are happier when given more control over their purchases and payment decisions. A flexible payment option like the shop-now-pay-later scheme is one of the best ways to empower your customers.
By splitting up purchases over weeks, bi-weekly or monthly, online shops can apparently make big purchases look attainable. By doing so, your shop can also reach a broader audience base, especially among young buyers.
Final Words
It might seem that the buy now pay later payment mode is a boon only for customers but is more beneficial to the merchants. This advantageous payment facility gives businesses a firm grasp over their market share.
