Why Should Every Business Adopt The Buy Now, Pay Later Model?
by Ankita Tripathy Business Development Published on: 16 November 2023 Last Updated on: 14 December 2023
As buy now, pay later (BNPL) financing has grown in popularity, retailers have been able to increase their sales volume and the size of their average shopping carts. Businesses that employ BNPL financing report a 20–30% boost in conversion and a 30–50% increase in average ticket size after applying the approach.
We will go through the main benefits that any company may get from implementing the BNPL model, particularly Shopify buy now pay later. With this and many more, let’s get you started with this article that has a lot in store for you.
What Is The BNPL Model?
In the world of finance, BNPL refers to short-term financing. In a usual plan. The overall cost of the product or service someone wants to purchase gets divided into various payments. It all starts with a tiny down payment from the purchaser. Afterward, they need to pay the amount at regular intervals.
In the BNPL model, these internals can be monthly or biweekly until they pay the overall cost of the purchased item. Commonly, retailers might work alongside a third-party industry so that the plan works well. Furthermore, the third-party company has a different role to play, but that’s a story for another day.
BNPL Model And Its Associated Advantages
There might be some reason why you would give up on an existing payment strategy and opt for BNPL. I know, you have been thinking the same. So, below are a few benefits of the buy now purchase later model:
Generating New Revenue Streams
Financial institutions may use BNPL to use their existing knowledge of consumer credit and credit lines to create new financial solutions that are ideally suited for the constantly increasing domain of online commerce.
Banks can now create new revenue streams via partnerships with merchants because of the introduction of BNPL. Retailers bear most of the costs associated with deploying digital finance options, while consumers benefit from interest-free payments.
As a result, businesses may boost the proportion of clients who complete the checkout process while simultaneously offering their customers a good payment option and banks a new source of money.
Exploring Personalized Payment Plans
Would it be advantageous for your business if you could acquire equipment while just making the minimal minimum payment for the first six months? Or would you like a buying option that enables you to delay payment based on price fluctuations throughout the year?
For B2B transactions, BNPL financing offers a diverse range of payment methods. You may find it surprising how flexible sellers and the lenders that deal with them are.
Monitoring Inventory
When a company selects the BNPL as its business financing option, it has a better management facility. They can well-maintain efficient inventory management.
Customers can make larger purchases due to the hassle-free payment option, which accelerates the pace at which product sales are expanding. The number of sales made as well as the product’s popularity, influence a retailer’s capacity to stock up supplies.
Boosting Customer Lifetime Value
When a customer returns often to make purchases from an online platform that accepts BNPL payments, it indicates that the merchant has met the needs of the customer.
Furthermore, returning to the same platform to make a purchase implies that the company has been effective in building customers’ trust by offering a variety of repayment options. Thus, their customer lifetime value may easily be improved.
Providing Affordable, Flexible Payments for High-End Products
“Buy now, pay later” may also have a substantial impact on order conversion for high-value products such as jewelry and tech devices sold by online shops.
Retailers have an easier time selling their products on the market thanks to BNPL options, which allow consumers to pay for items in installments. This eventually paves the way for inexpensive payments that can be customized anytime you want.
Related: Why Do You Need Payment Protection
Keeping Your Company Competitive
If you look to compete in the e-commerce sector, you should include BNPL in your payment plan since it is becoming increasingly widespread among online shops.
The addition of BNPL options to your business, on the other hand, will offer you a competitive advantage over other companies that do not provide this service. Eventually, your company and its prices will remain competitive in the industry for a long time- all thanks to the BNPL model!
Reducing Cart Abonnement
According to a Mastercard study, integrating BNPL may reduce the rate of shoppers leaving their shopping carts by 35%. Many more common concerns may be solved using BNPL.
BNPL is an excellent tool for dealing with the problem of not having a preferred mode of payment. It challenges the notion that the items in their basket are “too expensive” by enabling customers to pay at more reasonable rates over time.
Getting New Customers
Allowing consumers to make partial payments or pay the complete amount later can help you attract customers who want to buy your items but are unable to pay the entire amount right now.
This is especially true if there is no extra expense for them to do so. It is becoming a more popular alternative to credit card usage. Hence, who doesn’t like to benefit more by getting more new consumers?
Conclusion
Customers still look to buy things, and they will if they can find viable payment solutions that don’t make their financial position worse. This is true even if inflation continues to be a big source of worry in the economy.
BNPL models may benefit everyone involved. Moreover, because customers get a clearer view of picking financing options owing to economic circumstances, now may be an excellent time to include BNPL in your strategy. It results in a win-win scenario for both businesses and consumers.
When it comes to putting in place a BNPL solution, simplicity is crucial. The placement of a single BNPL button in the online store streamlines and expedites the purchasing process, which reduces the risk of consumers giving up and leaving their carts.
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