Looking to market your business with a new business feature? The “buy now pay later” feature is a popular payment option among online shoppers. More and more businesses adopted it after the pandemic hit in 2020, leading businesses to rely on new marketing, sales, and customer awareness measures.
A survey shows that over 60% of respondents used the “buy now pay later” payment method sometime during the Covid-19 pandemic. The report shows how far eCommerce brand and store were willing to go to stay afloat and keep customers engaged in challenging times.
But, what is it worth to your eCommerce brand and store? After all, every new feature comes with its pros and cons. In this post, we will discuss the feature in more depth and understand the pros/cons to determine its suitability for your eCommerce business/brand.
A Comprehensive Overview of Buy Now Pay Later
It became a lucrative eCommerce brand and store for customers, enabling them to purchase products and then pay later! It was a considerable opportunity for customers to save time and money, keeping them engaged amid challenging times. Meanwhile, businesses could continue operating and selling products.
Many companies increased their customer count and sales revenue figures thanks to this single feature alone. Moreover, it’s an ideal option for young shoppers because most don’t have credit cards or access to such payment options.
Since the feature has been around for many years, it has gained a number of terms. Some of the terms include ‘shop now pay later,’ ‘deferred billing,’ ‘pay in 4,’ and ‘installment payments.’ All these refer to the same “Buy Now Pay Later” feature.
The process of buying immediately and paying later is also straightforward. Your customers choose, review, and order a product. They can have the product delivered and start using it. Then, they can pay in small values over a period of time, i.e., installments.
The Pros of Implementing Buy Now Pay Later
You must understand that eCommerce businesses require a healthy cash flow like all other businesses. Although it looks like the “buy now pay later” feature cuts down on businesses’ cash flow, it’s actually a win-win situation for eCommerce brands and customers.
Brands can get their payments instantly thanks to a partnership with a financing company. Meanwhile, customers pay over time. This way, they enjoy the perks of the “”buy now pay later”” feature while the company ensures steady payments. Here are a few other pros of this feature!
1. Gaining a Competitive Edge
Dozens of eCommerce brands, likely your competitors, have already adopted the “buy now pay later” feature as a new payment method. In fact, a report by Business Insider shows that the industry could benefit by hundreds of billions of dollars in the form of consumer spending due to buying now pay later schemes.
Being left behind in today’s highly dynamic business landscape will bring less attention to your eCommerce brand and store. By adopting the “buy now pay later” feature, you can gain a competitive edge.
2. Increasing Sales Potential and Existing Revenues
Many times, even when consumers are ready to purchase a product, they can’t do so because of financial constraints. However, accepting “buy now pay later” features enable them to order and use products while paying in small amounts over time.
3. Becoming an Attraction for New Customers
The business feature could make you the center of attention in your market. Let’s say you’re a leading brand offering the lucrative “buy now pay later” feature. It could encourage new consumers to approach your business! Customers who don’t like to spend in full before testing the product will be at the front of the digital queue!
4. Building Better Trust with Customers
Let’s suppose you worked hard and devised a great marketing strategy to advertise your eCommerce brand/business. However, no one’s buying anything on your eCommerce store. In that case, you may need a change in payment methods to help you build trust and loyalty with customers.
Offering customers a “buy now pay later” feature will give them some relief. It also helps you build trust with customers as they quickly notice that your company offers the product while allowing them to pay in installments!
5. Providing Affordable Payment Solutions
The “buy now pay later” feature is a highly affordable pricing solution that potentially works for all customers. Some customers aren’t as financially stable as others. Needless to say, you’ll be providing them peace of mind through small installment payments while delivering the full product safely.
It would be feasible for many customers and worth your eCommerce brand’s time and money in the long run as it will establish a healthy relationship with your customers.
The Cons of Implementing Buy Now Pay Later
It would be unwise to make a business decision as big as implementing a new product financing solution without learning about the potential setbacks. The “buy now pay later” feature also has a few cons as well. Here’s what you should know!
1. High Unsecured Debts
Buying too much and not being able to pay later could put consumers under a financial strain, which causes them to dislike you. Hence, you should be careful in setting guidelines and developing policies to ensure that it doesn’t happen. That’s because it could also create financial troubles for your brand.
2. Offer-Less Buy Now Pay Later Schemes
Since many “buy now pay later”, consumers don’t get to use their regular credit cards, eliminating the chances of earning great offers. Traditional credit cards bring perks and rewards to the table. Also, consumers can’t improve their credit scores because they won’t be using credit cards at all.
3. Rare “Default” Occurrences
When customers want to return the product and gain a refund, they could be flagged for default! That’s because the eCommerce brand/business might see them asking for the full price with a few remaining installments! In that case, the customers might have to keep paying the due installments to receive the refund. The customers will also have to face lengthy refund processing periods.
Boosting customer experience is a core value, especially for eCommerce brands and businesses. Nothing beats the joy of enjoying a new product and paying for it later in small installments! It encourages customers to trust you even more.
The “buy now pay later” feature could single-handedly skyrocket your sales if implemented correctly after careful consideration and planning. Discuss with other experts in your business to evaluate the feasibility of implementing this new payment feature.