2020 saw tremendous growth in online shopping. We saw the shift from physical store to online shop thus introducing the desire to pay in more convenient ways. ‘Buy Now, Pay Later’ allows the shopper to make purchases they may or may not be able to afford at that moment. It eliminates the need to have to turn down a decision to purchase by giving the buyer a set time to make the payment, usually interest-free. 1/5th of the UK’s population used BNPL methods of payment in 2020, accounting for 4% of all online retail sales. – BNPL and the new economic landscape.
Why Should I Use ‘Buy Now, Pay Later’?
There has been a huge increase in online shopping over the last year, with a growth of 32% in online sales. In order to continue to adapt to the fast-paced changes of online retailing, BNPL solutions are a perfect start.
Here are some interesting stats featuring ‘Buy Now, Pay Later’:
- BNPL saved consumers £76 million in interest fees in 2020
- £4.1bn of online spend was through a BNPL scheme
- BNPL schemes such as Klarna encourages consumers to shop on a brands website that they may not have heard of before
- 64% of those who have used a BNPL service thought that the flexibility offered helped them manage their finances.
Stats taken from Klarna.
By introducing alternative payment solutions, you, the merchant, are enhancing user experience and introducing an element of safety and trust to your potential consumers, you are putting yourself in a fantastic position to encourage a rise in sales. Many consumers that use BNPL solutions are managing their accounts appropriately so are more likely to return, increasing your customer retention rates. Passing the control into the hands of the consumer is perfect for creating a seamless, user experience, allowing for more choices.
Traditional Credit Vs BNPL Solutions
According to Chris Woolard, the former interim chief executive at the FCA, credit makes the economy work and has social purposes. Unlike traditional credit, at Klarna, the BNPL solution has no interest applied to any payments, even if missed or late. Therefore, seen as a positive contribution to the economy and user experience. – The Woolard Review, A review of change and innovation in the unsecured credit market.
Consumers are shying away from using traditional forms of credit in order to make their online purchases, being the cheaper alternative with less chance of adverse credit if managed properly. According to Klarna, consumers reduced their outstanding credit card balance by £10bn in the UK last year, which is why the shift continues to move away from traditional credit to a ‘Buy Now, Pay later’ solution.
According to Buy Now, Pay Later (BNPL) and the economic landscape, the trend of online shopping is set to continue to rise and consumer credit from sources other than the traditional forms has grown an average of 9.3% annually over the past decade in comparison to 5.5% for credit card lending.
Using BNPL For Your Online Store
Looking into the Klarna X Gymshark case study, it is identified that customer acquisition and customer retention has increased since bringing Klarna onboard which may suggest that new consumers and returning consumers have bought into the retailer because of the additional and more flexible payment methods. Additionally, Gymshark has seen a 33% rise in basket value with BNPL solutions.
Integrating Klarna with your eCommerce store is seamless. A hybrid integration allows you to use your own web views and enhance your users’ experience when interacting with Klarna’s products. To encourage the best user experience possible, Klarna can enhance your user experience within your current website, without disturbing your current web view, presentation, clients, or any other property.
For more information on adding alternative payment solutions such as Klarna to your e-Commerce store, get in touch with us today!
