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When a buyer purchases a product, in an ideal world, the shop or business receives cash right away. However, with so much competition in the market and economic downturns impacting consumers’ purchasing power, firms needed to come up with innovative solutions to maintain or boost sales. The “buy now pay later” arrangement is one of the most popular.
Pay later options do not have any additional fees or interest, in addition to allowing consumers to spread out the payment of their entire order over a period of time. There are numerous advantages for retailers, such as improving conversion rates, acquiring new consumers, and remaining competitive.
Usability of a Website
Companies must concentrate on various factors in order to lower the risks of a lost sale when it comes to different techniques of reducing cart abandonment. Offering a payment-over-time model is a wonderful method to increase conversion during COVID-19, but before you promote it on your site, make sure all other components of your online business are in good working shape for improved client convenience.
- There are no hidden fees — Transparency and confidence between the consumer and your company will be enhanced by reducing any hidden expenses.
- Checkout is simple – Following that, building a frictionless checkout procedure will assist customers in completing their transaction. Businesses should ensure that their web sites are extremely functional and that everything goes well when customers enter their credit card information.
- Coupon Codes – Promised discount codes that do not work when the customer is checking out will almost certainly result in abandoned shopping carts.
With Buy Now, Pay Later, your sales potential increases.
Allowing customers to make payments over time may encourage them to make a purchase. Customers do not even need to have money in their accounts to purchase your goods. They simply must be certain that they will be able to pay for them within the next few weeks. This is especially useful for capturing customers who are nearing a payday. If your things are more expensive, the rise in conversions can be very dramatic, as customers may be more ready to buy something pricey that they otherwise wouldn’t if they can break the payment into reasonable pieces.
Buying Now and Paying Later Could Increase Trust
Getting a trial period for many consumer products used to be nearly difficult, but buy now, pay later makes it possible in many cases. Customers can try out your product without committing to a purchase by using a buy now pay later option. They can pay as normal if they like it. If they don’t like it, they can return it without worrying about getting a complete refund because they haven’t spent much, if anything. In the near term, a little increase in free returns may cost you more, but the long-term benefits of greater customer loyalty can be significant. Customers may see that you believe in your items enough to risk the chance of returns, and that you trust them to make wise decisions for themselves, free of the interrogation they would face in stores.
Customer lifetime value has increased.
Regardless of the payment options you offer, your loyal clients will undoubtedly buy with you on a regular basis, but the amount they spend with you isn’t assured. These clients will almost certainly continue to shop for their favourite items, but the availability of BNPL may have an impact on the frequency or value of their transactions. Do you believe that regular consumers will shop with you regardless of payment method to avoid cart abandonment? Reconsider your position. Even persons in good financial standing may reach the checkout page and realise they have a costly cart, causing them to abandon their purchase. Customers may be more likely to spend if they have the option to buy now pay later. Customers who utilised BNPL were questioned, and 31% claimed they would not have bought anything if they didn’t have the option to pay later.
Conversions have increased.
You’re not alone if you’ve ever stuffed your cart with things on your favourite ecommerce site only to baulk at the price when you reach to the checkout. Many buyers are thrilled to purchase new things until they see how much they will have to pay, resulting in cart abandonment. Despite the fact that BNPL functions in a similar fashion to credit cards, with no actual savings option, the psychology of paying later for a single item encourages buyers to make the purchase. On average, two-thirds of shopping carts are abandoned, resulting in a significant number of lost sales for most ecommerce businesses.
Stores that introduce BNPL alternatives at the checkout, on the other hand, experience a large decrease in cart abandonment rates, resulting in increased profitability without any significant cost increases. According to one survey, 48% of consumers would allow the availability of BNPL to affect their shopping decisions, implying that nearly half of your potential clients may be swayed one way or the other by your payment option availability.
Payments for high-value products that are both affordable and flexible
“Buy now pay later” can have a big impact on order conversion for online stores selling high-value items like jewellery and electronics. BNPL programmes make it easier for merchants to offer their items to the market by allowing clients to pay in increments.
Increasing the average order value
When a consumer makes a purchase, the Average Order Value (AOV) is the average amount they pay. After implementing the “buy now, pay later” financing mechanism, many online stores saw an increase in AOV of up to 130 percent. Smaller, more evenly spaced payments boost a customer’s purchasing power. Another study of U.S. consumers discovered that the majority of customers utilise BNPL to avoid credit card interest or to buy things that would otherwise suit their budget.
Cart abandonment is being reduced.
Because to a lack of payment choices, 6% of people searching for products abandoned their carts. The most common reason is additional charges above the purchase price, such as delivery fees. It’s critical to give customers all of the information they need up front so they may feel confident about making a purchase. Customer satisfaction can be improved by giving them confidence that they will get their money’s worth and by being transparent about what they can expect when they check out.
Start by learning about your company and what you have to offer customers before deciding which buy now pay later services to cooperate with. Giving clients the opportunity to pay over time, whether you’re a high-end retail store or provide home improvement services, will expand your customer base and help future sales.