In the last 12 months, Aussie shoppers have embraced Buy Now, Pay Later as a new payment method. While it’s nothing new, retailers and consumers are making drastic moves to make it a part of the norm. How does BNPL shape up compared to last year and has the fad ended?
Where We Were
Last year, Buy Now, Pay Later (BNPL) was the next big thing. There were a handful of retailers that provided the platform, including Afterpay, Zip and Open Pay. According to the BNPL Spotlight Series by Power Retail in 2018, 32 per cent of Australian online retailers offered a BNPL option. Moreover, 79 per cent of customers relied on BNPL to help their cash flow.
Where We’re Heading
Flash forward to 2019 – it’s now more than an acceptable payment option for retailers, it’s now considered essential. According to the latest Power Retail Spotlight Series: BNPL 2019, 41 per cent of retailers are currently or have been involved with two to three BNPL providers. Moreover, 28 per cent of retailers have also actively engaged with one BNPL service, resulting in more than half of retailers taking advantage of the payment options.
According to the report, ‘nearly half (49 per cent) of online shoppers who have used BNPL obviously have found it a useful option with a total of 74 per cent having used it on multiple times’. Another 21 per cent are open to using BNPL again and only five per cent do not expect to use it again.
Benefits for the Retailers
Buy Now, Pay Later is an extremely effective tool for customers who wish to spread their payments across varying weeks, but what about retailers? According to the report from Power Retail, regarding basket size, the average BNPL online shop ‘contains 2.3 items compared to the average non-BNPL transaction which contains 2.8 items’. While this is not a significant jump, it can showcase quite a change in consumer patterns that retailers should be aware of.
In terms of the most popular categories for BNPL purchases, 52 per cent were for fashion items. However, when BNPL is not used as the payment method, then fashion only makes up 32 per cent of all transactions. Moreover, nine per cent of all BNPL purchases are in the electronics and electrical products. As pointed out in the Spotlight Series, however, this category makes up 15 per cent of all non-BNPL purchases.
The Power Retail Advisory Board notes that online retailers clearly believe that BNPL has had significant positive impacts on some key business metrics including sales conversions (91 per cent say it’s increased with BNPL), total sales (80 per cent cite an increase) and customer acquisition (75 per cent report an increase).
It’s no surprise that BNPL has saturated the market – and it’s just going to get bigger. With more than 12 major players in the game and no signs of slowing down, it’s clear that the retailers who don’t embrace the platforms may just fall behind the pack. While we can’t predict the future, we can safely say that BNPL isn’t going anywhere any time soon.
As one of the hottest topics in the industry at the moment, it’s important to stay ahead of the times and be on top of the latest trends. The latest Spotlight Series on BNPL: 2019 offers exclusive insights and data on Australian consumers and retailers who use BNPL platforms. It’s an essential report for all retailers going into the next decade.
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