The last year has seen tremendous changes in shopping, payments and marketing. Many new trends have emerged in this course of time. Buy now pay later option is one such trend, that has taken the retail industry by a storm.
What is Buy now pay later?
Buy now pay later is the new payment option for the customers. It is very much like a credit card. The customer can purchase a product and pay for it later. What makes it different from the credit card system? Buy now pay later is like a small ticket loan that customers get while purchasing their goods. They can purchase the goods on credit basis, just like a credit card and pay for them within the decided period in interest-free installments. They also need not go through the prolonged paperwork to avail themselves to this payment option, unlike the credit card.
How does it benefit the customer?
The outbreak of covid saw many changes in purchasing capacity of people, switching to new payment methods, etc. People saw Buy Now Pay Later as a reliable option to buy something without worrying about paying the interest rate. This made many credit card users switch to Buy Now Pay Later. Buy Now Pay Later option offers the customer more time in paying back the payments. In general, people face a lot of issues due to shortage of funds during the end of the month as they are yet to receive their paycheck for the month. With the advent of the Buy Now Pay Later option, customers have more options to spend before the payday. Rather than preferring the products fitting their budget, customers can now buy whatever they wish to.They will be able to repay their due payments in smaller chunks within the decided time period.On top of these, most of the Buy Now Pay Later options are interest free. This thereby gives greater spending power to the customers. It has also made the process of shopping efficient and user friendly.
How does it Benefit the Retailer?
Buy Now Pay Later has shown to increase the sales numbers. This ensures steady flow of money, and less hassle in marketing for the sale of the products. Now the retailer need not use the old tactics of providing discounts for promoting the sales of new or existing products in the store. This option is much appealing to customers as they are able to get what they want much easily. Hence, a shop or a business can be more successful in attracting new customers. Now since the payment is made much simpler with Buy Now Pay Later the customers are bound to make repeat payments with the same store or business. This thereby increases the loyalty of customers towards the business and provides a large, steady customer base. The high prices no longer discourage the customers as they needn’t pay the whole amount upfront. This will attract young customers, who don’t have a credit card to pay for their products. Overall the store owners or businesses needn’t worry about the repayments as these would be borne by the payment providers. When any business offers installments, the customers tend to spend about 50% more. It prevents the retailers from giving unsustainable discounts.
Why is Retaining Customers Important to Retailers?
Making customers coming back to you is crucial to any business. Because, it is these existing customers who advertise your products and purchase them on a regular basis. Research shows that getting a new customer needs more spending than retaining the existing ones. This is because, to rope in any new customer, businesses should offer them huge discounts and promotional offers. This would cause more loss than profit in the given covid scenario.
How does Buy Now Pay Later Option Helps in Retaining Customers?
The outbreak of covid made customers do priority shopping. They are focusing to keep the purchases short and affordable. They are just trying to get hold of the product without looking for any particular brand.
This situation is pressing more need for customer retention. Shoppers are looking for more convenient and affordable purchases. So, businesses should focus on this to retain existing customers. With every business almost offering the same benefits to the customer, it doesn’t make any difference to them. While the loyalty programs have their own added benefits, its effectiveness is dropping due to the prevailing competition. So, loyalty programs should not be the only arrow in your quiver in aiming for customer retention.
Customers face more resistance because of the limited availability of payment options or due to the process of payment itself. The delay in payment or failed payments are customer’s worst nightmares. This will prevent them from availing any existing offer even though they ordered in time. For the customers to have hassle free and effective payments, buy now pay later option comes as a better alternative.
The Buy Now Pay Later trend doesn’t seem to fade away anytime soon, with its target audience being the Millennials and Gen Z. The benefits of buy now pay later can be attractive to the customers but they should be cautious enough to not get tangled in debt. This can be avoided by paying the installments regularly and keeping track of one’s purchases. They also should not forget to go through the terms and conditions before signing themselves up for this better and hassle free alternative.