And now, many stores are offering the option to buy now and pay later – without having to put down a down payment. Is there anything better than walking into a store and finding what you need, right then and there? No waiting for items to arrive, no spending hours online comparing prices. You can get the things you want right away, without having to worry about saving up for them. That's why online stores that offer buy now pay later options are so great! You also probably don't have a lot of money saved up, so you have to be careful about how you spend it. If you're like most people, you hate having to wait to buy the things you want. Please read our disclosure for more info. In this model, store space is at a premium.Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to make a purchase through our links, at no cost to you. Increasingly retailers are using stores as mini-fulfillment centers to service online orders. The programs also have advantages compared with traditional layaway, which requires retailers to store purchased items on site while customers make installment payments over time. The extra revenue is higher than the cost."Īfterpay and Klarna charge merchants a 3% to 5% transaction fee, Affirm declined to disclose its transaction fees. Zandhuis said while the retailer pays an additional 2% higher transaction fee to the BNPL company compared with transaction fees a traditional credit card company charges, "the math speaks for itself. The incremental revenue and increased conversion makes the incremental transaction cost the retailer pays to the fintech companies worth it too. On average, sites with a BNPL option saw a conversion rate of 6% compared with 4% for those that do not.Īfterpay said it increases a retailer's conversion rate and incremental sales 20% to 30% more than other payment options. fashion and retail websites compared 50 merchants that offer a buy now, pay later option at checkout and 50 that do not. "For those using debit cards, the potential for an extended interest-free payment schedule through BNPL is enticing, ultimately enticing enough to drive conversion, which is the primary goal of all digital commerce sites."Īn analysis by Similarweb of the top 100 U.S. "It eliminates the ability-to-pay roadblock" said Ventry. Installment payments allow the retailer to "convert a wish into a sale" according to Chris Ventry, vice president at global consultant group SSA & Co. As of May, Klarna purchases made up more than a quarter of rue21's e-commerce sales. Rue21 shoppers that transact with Klarna turn in the highest sales per customer with a 6% higher purchase frequency. Since Rue21 added Klarna as a payment option in-store and online, its average order volume is 73% greater than other payment methods, according to a case study Klarna published. When the pandemic shuttered stores, Rue21 had to figure out how to sell to its shoppers online without credit. With many low-priced items on its website, and waning mall traffic, increasing average order volume is a key priority. Its key demographic is an 18- to 25-year-old female shopper, who often doesn't use credit cards. Take apparel retailer Rue21, for example. The payments are meant to align with paycheck cycles. With it, that same consumer can spend $175 to $200, with 4 monthly payments of $50. Often the checkout value for the retailer would have been around $100 had the ability to pay later not been available, he said. The average transaction value is about $200 for a buy now, pay later purchase, said Zandhuis. While each plan has differences - from the number of payments to the specific terms - the key similarity is the promise of a handful of equal payments spread over a relatively short period of time, with no hidden fees. He said the option also increases trust between retailers and consumers, leading to "incremental sales, higher average purchase sizes, and higher frequency of purchase."īuy now pay later payment plans, offered by companies like Affirm, Australia-based Afterpay and Sweden's Klarna, are particularly attractive to younger shoppers, like the much-desired Gen Z and millennial consumer. Installment payments give consumers options and convenience when it comes to managing budgets and purchasing, according to Hemal Nagarsheth, associate partner in Kearney's financial services practice. "It's all about incrementality," said Russell Isaacson, director of retail and automotive lending at Ally Lending, "getting that incremental sale or incremental consumer." Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |