"Pay later" is a financial service that allows consumers to defer their payments for purchases, usually online. Offering pay later options in ecommerce can provide several advantages for both businesses and customers. These benefits contribute to a smoother shopping experience and can boost sales.
Pay later options in ecommerce are especially advantageous as we enter peak seasons. These busy periods, often associated with holidays and special occasions, such as Black Friday and Christmas, bring a surge in online shopping activity. By offering pay later your customers can get the flexibility to make purchases without immediate financial strain, making it an attractive choice when budgets may be tight and high spend seasons loom.
It not only reduces cart abandonment rates but also encourages customers to make larger or even multiple purchases that they may not have originally considered. For ecommerce businesses, this translates into increased sales, higher average order values, and an opportunity to capture a broader customer base. By offering pay later during peak seasons, businesses can optimise their revenue and enhance the overall shopping experience for customers, fostering loyalty and satisfaction during these crucial periods.
70% of BNPL users are paying through these means more often as a direct result of the cost of living crisis.
Here are the key advantages for your consumers if you offer pay-later solutions in peak season for ecommerce:
1. Financial flexibility
Pay later options provide consumers with flexibility in managing their finances. Instead of paying for the entire purchase upfront, they can delay payment to a later date, typically within a few weeks or a month.
2. Immediate gratification
Consumers can receive their purchases immediately without having to wait until they have the full purchase amount in their bank account. This is particularly appealing for items they may need or want urgently, or when they need to buy a lot of gifts at once.
3. Interest-free periods*:
Many pay later services offer interest-free periods, meaning that as long as the balance is paid in full within a specific timeframe, consumers won't incur interest charges. This can be an attractive feature, especially for those who want to avoid credit card interest.
4. Risk mitigation:
Pay later can be seen as a risk mitigation tool for consumers. It allows them to assess the quality and condition of a product before committing to full payment. If the item is unsatisfactory, they can return it without making the full payment and stretching their wallets.
5. Budget management:
Pay later services often provide users with a clear overview of their payment schedule, helping them manage their budgets effectively. It can be especially helpful in spreading out large or unexpected expenses.
*It's important to note that while there are numerous benefits to using pay later services, consumers should also be aware of their terms and conditions, such as any interest or fees that may apply if the payment is not made within the agreed-upon timeframe. Responsible use of pay later options is essential to avoid potential financial pitfalls.
But what are the benefits for your brand?
1. Lower abandoned carts:
For ecommerce businesses, offering pay later options can reduce cart abandonment rates. Customers may be more likely to complete a purchase if they have a deferred payment option available, particularly for higher-value items for the home.
2. Increased sales and conversion rates:
Pay later options can increase both sales and conversion rates. Customers who may be hesitant to make a purchase due to budget constraints or uncertainty, can proceed with the purchase when they have the flexibility to pay later. Customers are also more likely to purchase higher-priced items when they can spread payments over time. This leads to an increase in the average order value for your ecommerce business.
3. Improved customer base:
Pay later attracts a broader range of customers, including those who prefer not to use credit cards, have limited access to credit, or want to avoid high-interest charges.
Providing convenient payment options can enhance customer loyalty. When customers have a positive experience with your ecommerce store, they are more likely to return for future purchases where they can use pay later again.
4. Immediate revenue:
Businesses receive payment for the sale upfront, even when customers choose the pay-later option. This provides immediate revenue and improved cash flow for your business.
5. Competitive advantage:
Offering pay-later options can give your ecommerce business a competitive edge. It sets you apart from competitors who may not offer pay later services, and meets the evolving expectations of modern day consumers.
6. Marketing opportunities:
Pay later services may offer your brand marketing opportunities, such as discounts or promotional campaigns, that can be leveraged to attract and retain customers.
7. Easy integrations:
Many pay later providers offer straightforward integration with ecommerce platforms Shopify and Magento, making it relatively simple to add these options to your online store.
8. Data insights:
Pay later services often provide valuable data and analytics. This data can help your ecommerce businesses better understand customer behavior and preferences, enabling more targeted marketing and product offerings.
There are currently around 360 million BNPL users.
The BNPL market is worth over $150 billion.
16% of 18 to 34-year-olds use BNPL.
Exploding Topics, 2023
By offering pay later options thoughtfully, you can enhance customer satisfaction, drive sales, and improve your bottom line in the competitive ecommerce landscape.
As an ecommerce agency, we're committed to enhancing the shopping experience for both businesses and their customers. Our team understands the intricate nuances of integrating these payment solutions seamlessly into your online store. We work with various pay later providers to tailor solutions that match your specific business needs. By incorporating pay later options, we not only enhance the purchasing experience for your customers but also help you stay ahead of the competition in a dynamic and ever-evolving ecommerce market.
We make it easier for businesses to offer flexible payment choices, foster customer loyalty, and increase overall revenue, ultimately leading to a more successful and customer-centric online retail presence. Get in touch to find out more!