As a small business, the Buy Now Pay Later (BNPL) solution may be exactly what you need right now. The question is, are you ready for the BNPL boom?
The global pandemic has left a massive impact on the world. It has changed our lifestyles and financial situations. Consumer spending habits are also changing. However, the emergence of Buy Now Pay Later (BNPL) in eCommerce might be the boost we’re all looking for, especially if you’re a small business!
No one can deny that for many, cash is hard to come by in an economic recession. People are more selective in how they spend their money. Therefore, businesses have experienced a significant drop in sales. However, BNPL services might help reverse this trend!
BNPL is changing consumer purchasing behaviour!
In a nutshell, BNPL is a financing arrangement that allows consumers to make purchases without paying for them all at once. It’s a method that’s used both in-store and online. It involves customers purchasing goods on credit, then repaying that credit over a period of time, usually interest-free.
In simpler terms, instead of paying for items in cash, a customer can simply select the BNPL option instead. This way, the customer makes three or four equally spaced instalments which are taken directly from their payment card. Either way, there are no extra fees or interest to pay, provided that they pay on time.
This is why BNPL services offer the opportunity for small businesses to increase their sales. Customers don’t always have the available funds in their bank accounts. But by allowing payment for goods to be made in instalments with little or minimal interest, consumers feel less ‘pain’ and view purchases as more affordable than if they had to pay the full amount all at once. Therefore, they are more willing to make purchases that they might not otherwise have contemplated.
Is your small business ready for the BNPL boom?
Without BNPL, your small business might be left behind. Here are a few statistics to prove that BNPL is a booming industry:
1.The rise of BNPL during the pandemic
As mentioned earlier, the pandemic has caused an economic recession. Furthermore, with public movement and operation hours restricted, consumers are moving online to purchase items.
According, to the investor report of BNPL service provider Afterpay, they experienced a sales increase of 219% during the pandemic. In June of 2019, the company had 1.9 million active US customers. By June of 2020, the Australian-based firm had boosted its US user base to 5.6 million!
2. Young consumers are onboard
Because BNPL is such a new concept, it’s no surprise that the younger crowd has gravitated towards it. In a report on the BNPL industry by PYMNTS.com, it was revealed that a whopping 87% of consumers between the ages of 22 and 44 have expressed interest in BNPL.
3. Big purchases and BNPL go hand in hand
Most consumers are not able to make big purchases as they can’t afford the item at the time of purchase. However, as BNPL allows them to pay instalments without interest, these big purchases become possible.
In an interview with Al Jazeera, Afterpay co-founder Nick Molnar said that customers use his service for primarily high-money buys. Your small business can do the same by using BNPL to help push the sales of high-priced items.
4. A better option than credit cards
Just like BNPL, credit cards also allow consumers to spend money that they currently don’t have. However, compared to BNPL, credit card issuers also charge exorbitant interest rates on card balances. This makes BNPL a far more attractive option. In fact, one study reports that that the number one reason people use BNPL services is to avoid paying interest on credit cards.
5. Overall popularity
In a recent survey conducted by The Ascent (a financial analysis branch of the investment advice site Motley Fool), it was revealed that over one-in-three respondents have already used a BNPL service to make a purchase. This proves that BNPL’s overall popularity as a payment choice.
6. Repeat customers
When customers like a feature, it’s likely that they will return to use it again. In its latest biannual global fashion and trend report, Afterpay revealed that 65% of its user base made at least two purchases in the past six months. It’s clear that BNPL helps create repeat customers for your small business.
Get BNPL financing via SmartFunding!
SmartFunding is a fintech company that connects Investors and Borrowers. We offer alternative short-term financing options for businesses, with a 100% focus on SMEs and startups.
SmartFunding currently offers two financing options for your business:
- Term Financing
Our BNPL financing allows you to run your business smoothly with our procurement financing solution. This option provides SMEs with the flexibility to finance the purchase of goods and services, with zero upfront payment, and instead make instalment payments over 6-9 months. We also provide a simple and transparent fee structure. Funds will be disbursed straight to vendors.
Our financing options are accessible to companies that fulfil the following criteria:
- Have been operating for more than 1 year
- Annual revenue of at least S$150,000
We may also review companies that do not meet the above criteria on a case by case basis. Please contact us for a free consultation via:
- Email: email@example.com
- Mobile: +65 9782 7165