Data shows what ‘buy now, pay later’ really means for consumers
New data from BigCommerce says that ‘buy now, pay later’ (BNPL) is on the rise and now accounts for 14 percent of all online transactions in a busy, COVID-led ecommerce market.
According to the ‘State of ecommerce 2020 report’, BNPL is most appealing to younger demographics, with 18 percent of 25-34 year olds opting for this payment method, compared to nine percent of 55-64 year olds.
BNPL is over-represented in the traditional ‘impulse’ purchase categories of fashion and beauty products. Nineteen percent of all online beauty product purchases and 18 percent of all online fashion purchases are made via BNPL.
According to an article in The Sydney Morning Herald, leading BNPL service Afterpay reported record sales across the fourth quarter of last financial year, with sales doubling from the previous year.
While BNPL is still growing, the BigCommerce report found that PayPal still leads the way as the most frequently used online shopping payment method, accounting for 40 percent of purchases, followed by credit cards (27 percent) and debit cards (19 percent).
Consumers are changing their buying habits as a result of COVID-19, causing a surge in online purchases and significant changes in the retail space.
With more people shopping online, Jordan Sim, director of product management at BigCommerce, believes it is natural that more shoppers are encountering BNPL methods.
According to Sim, BNPL is more prevalent among young shoppers partly due to marketing: “BNPL is prevalent with the younger age groups because, at least initially, it was largely marketed that way. Lots of the early merchant deals inked by BNPL companies were with brands popular with Millennials and Gen Z. Now though, BNPL is moving closer and closer into everyday spending categories, with the big players pitching themselves as digital, interest-free alternatives to the credit card. If the pitch works – and it certainly looks that way – BNPL will appeal to much broader sections of society.”
As for the upcoming trends in ecommerce, Sim says that customer experience should be front of mind for brands and online merchants.
“We’ve seen some interesting clues as to what this might look like during the current pandemic. For example, 43 percent of Aussie shoppers would now be happy to pay a delivery fee of up to $20, but 62 percent would switch retailers for free returns. And with so many brands trying to compete on cost, being able to offer customers a more personalised experience will help give merchants a competitive edge.”