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Buy-Now-Pay-Later Model Evolves to Boost eCommerce Amidst the Pandemic

buy now pay later

The coronavirus pandemic inflicted a swift massive shock to the global economy with many experiencing job losses, salary cuts, unsteady incomes, and slow business with the compulsive stay at home order.
Many Consumers have transitioned to online shopping for the buying of essential goods in order to avoid the risky trip to brick and mortar stores. However, with more cost-consciousness, changed in priorities and behavior, mindful buying, less disposable income as they are being influenced by personal circumstances.

This has geared up eCommerce big players to come up with a solution, the concept of ‘buy now, pay later’ (BNPL) to promote online shopping and transform the eCommerce landscape induced by the crisis.

Well, this payment model is not new and has been existence since ages, the sudden reintroduction didn’t come as a surprise considering the economic distress the world is facing.

What’s the rave about this Buy now pay later(BNPL) that seems to be the hottest in the eCommerce world? It is a payment service that allows consumers to pay later or make payments through installments. It can be used to order anything from food to essential goods where one can pay for it later. A brilliant way to financially empower consumers to make a purchase during this period of crisis.

It all started when Amazon stated lending to retailers in India. It partners with financial institutions to provide SMB loans to retailers in order to keep serving consumers. Only recently, the eCommerce giants pause the loan repayments as a way of COVID SMB loan help amid crisis.

This new shift of lending to consumers will bolster sales and drive e-commerce especially during this pandemic and after. Consumers are loving the deferment of payment method, retailers who are looking for ways to bolster sales and be ahead of the economic crisis are loving this and the BNPL are reaping the benefits. This attractive interest-free payment will likely continue post-COVID 19 and even attract more consumers to ditch the retail stores for online shopping.

A transformation to the eCommerce retail

Several BNPL players have started attracting customers who otherwise would have held a tighter grip on their finances as a result of the pandemic. The likes of Afterpay, Splitit, and also the recently announced ‘Amazon Pay Later’ is experiencing a massive increase as consumers become warier of the old credit cards method.

Retailers alike who are looking to increase sales are bolstering spending among cash restrained consumers. They have been able to win the heart of new consumers who are cash strapped and are presented with the opportunity of paying in installment while avoiding lump sum. In fact, consumers who seem to be financially stable are also taking advantage of this payment option. This has also promoted impulse buying, especially in the fashion world among young consumers. Leveraging the BNPL method by the retailer to assist consumers has no doubt help them to leg up in the highly competitive market space and drive sales.

Experiencing massive growth as a retailer with this payment option didn’t come as a surprise. Cart abandonment has been estimated to be the highest when consumers see their high total costs staring at them at the checkout point. Thanks to the Buy-Now-Pay-Later, consumers can easily jump on the opportunity to make purchase without thinking much about the financial constraint as they could pay with ease. It’s simple, pay on installments later things you cannot afford now. What looks like a simple marketing strategy is certainly a powerful way to not only retain new customers but to also acquire new ones and increase the customer base.

As you provide a seamless, easy experience to your consumers, your business is poise to grow. Plus, retailers that have been hard hit with the pandemic as consumers adopt a conscious approach to spending can brace up and induce consumers with this interest-free financial payments to get them to buy now and not later. Think of it as COVID SMB loan to help businesses make sales during as the world moves towards economic depression.

BNPL gains tractions with consumers

As consumers are evaluating their purchase and seek to balance between managing budget and buying essentials, many are gravitating towards businesses that offer ease, affordability, and flexibility. They are looking to avoid incurring heavy debts from credit card options, personal loans, and high interest. More reasons why BNPL services seem to be more appealing with its low to no interest rates to consumers. Now consumers can make a purchase online, control their debts, and pay at later date with Buy Now Pay Later services.

Advancements in technology have made this approach possible to reduce the risks of fraud or default. Companies have an in-depth understanding of the customer profile as they make use of algorithms to check the eligibility of the potential customers to make payment. Various parameters are put in place such as customer payment history, what is being purchased together with other third-party sources. More businesses including car retailers, fashion, tech giants are adopting this payment method in order to provide their customers with an exceptional buying experience.