What is Buy Now Pay Later for Ecommerce?
Buy now pay later, also known as "BNPL," has quickly expanded in influence since it burst onto the e-commerce scene a few years ago. Customers who use BNPL services can purchase things in installments or pay the fee later without incurring any additional fees and, in most cases, without paying interest.
Advantages of Ecommerce BNPL
Major retailers decide to accept BNPL in-store or add them to their websites for 3 reasons:
1. Sell to a group of customers who now buy using BNPL by habit.
2. Offer the ability to purchase for customers at times when they don’t have the full amount available (for example ahead of payday).
3. Match the customer experience offered by competitors, or go one better than competitors.
To increase the possibility that users to their sites will make purchases, rather than bringing in more traffic, some Buy Now Pay Later companies offer to assist market the brands they partner with. One such service is the sending of vouchers to potential buyers.
In general, BNPL companies focus most keenly on the following verticals:
If you are selling in one of the following categories and your competitors provide BNPL alternatives as standard, some clients might be reluctant to transfer to you until you provide a comparable service.
BNPL for Retailers: Four Factors to Consider:
Merchants must pay the provider a predetermined charge for each transaction in addition to a commission of (approximately) 2-6% of the transaction value from sales made using the provider to provide BNPL alternatives.
While some of the sales made through this method may be "incremental" (on top of those you would expect without it), some customers may switch to BNPL, which means that in some cases, retailers will essentially be paying BNPL companies fees for sales they would have made without making any investments.
Additionally, offering BNPL options can raise returns because many customers would buy more than they intend to hold to test the market and return the excess. Due to the introduction of BNPL options, businesses may be more vulnerable to returns fraud, thus it is crucial to make sure you have efficient processes in place to identify and eliminate it.
It's important to keep in mind that some of your consumers might not be familiar with BNPL or how it works. As a result, it might be a good idea to explain and educate website visitors on this option's use in case they decide to use it.
Finally, BNPL could not be advantageous to the company when selling goods with slim profit margins. After deducting the fixed costs and sales commissions, BNPL may lower profit to the extent that choosing this choice would be detrimental to the business. When thinking about integrating BNPL into your e-commerce site, it's critical to consider this.
BNPL is having a significant impact on e-commerce despite being a relatively new payment mechanism. The biggest online merchants, like ASOS, Wayfair, JD Sports, and Pretty Little Thing, offer BNPL alternatives at the checkout. Therefore, BNPL cannot be disregarded and ought not to be. It might not be the best option for every e-commerce site to satisfy client expectations and increase sales, but staying up to date with preferred payment options is crucial. Keeping an eye on BNPL could be advantageous for many shops since it is probable that its importance in connection to eCommerce will only grow.
Want to integrate BNPL into your eCommerce? Ask experts to help you choose and integrate the best BNPL service into your business.