Last year, Buy Now, Pay Later was marching on as an alternate payment method, with take-up by both retailers and consumers accelerating. Fast forward to 2020, and it’s now considered essential by consumers and small businesses, writes Grant Arnott, Managing Director of Power Retail.
Power Retail, the number one resource for Australian Online Retail Industry insights, content and news, has released their second report on Buy Now, Pay Later titled, ‘BNPL 2019: More Shoppers, More Players and More Options’. It synthesises findings from over 9,430 online shoppers and 94 Australian retailers.
Power Retail’s first report on Buy Now, Pay Later asked if it was merely a fad or in fact the future. It’s certainly made its way from an ‘explosive’ disruptor into the norm, with 32 per cent of Australian online retailers offering it in 2018, compared to 41 per cent of retailers being involved with 2-3 BNPL providers currently. It’s also boded well with consumers, as 98 per cent of all online shoppers are now aware of BNPL as an option, and 10% now use BNPL whenever they can.
The actual usage of BNPL has risen between our reports, from 27 per cent to 39 per cent. It’s then no doubt that over 1/3 of Australians will be looking to use these payment options throughout the New Year and beyond.
So, how do small businesses take advantage of this to stimulate sales in 2020?
- It gives consumers more choice
When BNPL hit the scene, shoppers used the platform to pay off large purchases in small increments, similar to layby. In the last few years, this has changed dramatically. The size of BNPL transactions has reduced from an average of $1098 in April 2016 to a median of $155 in September 2019. Therefore, by giving consumers choice and promoting BNPL as a viable payment option for ALL items, whether it’s a $20 T-Shirt or a flat screen TV, you’ll find them coming back each time.
- The customer experience is seamless
It’s no secret that BNPL has embedded itself into the online shopping psyche. When a consumer proceeds to check out, they assume they’ll find a BNPL option alongside credit card or PayPal options. Furthermore, the Power Retail report found that 27 per cent of shoppers use BNPL whenever they can, with 74 per cent having used it on multiple occasions. By offering these options, you will create a flawless customer journey and provide the choice customers demand.
- It increases the average order value
If a customer is scrolling through their favourite fashion retailer’s website, and they see a dress that is a little out of their budget, what do they do? Prior to BNPL, they would probably accept defeat and move on. Now, they’re able to distribute payments over a period of time, so they go for it as it’s now a feasible financial decision. When you make it easier for consumers, they will be more comfortable spending more.
- Increase in customer loyalty
Repeat customers are the goal of all retailers. Using BNPL is correlated with a range of highly desirable shopper loyalty related measures. According to the report, these loyalty measures include:
- Would shop there again (71%);
- Would look for other things to buy there (65%); and
- Would choose that retailer over others (59%).
- Make use of the options
A raft of BNPL platforms have hit the market, which can make it quite overwhelming for any business owner. Perhaps shoppers have a favourite, and prefer to shop exclusively with one platform, or maybe they want to explore different payment options depending on their purchase. Either way, do extensive research and observe their behaviour, so you can find out what works best for them. Once you’ve completed this process, sit back and reap the rewards.