With so many options available for online shopping, offering the right payment options can be exactly what set you apart from the competition. Read on to figure out what Buy Now, Pay Later option is and how it can help bolster your online fashion sales.
In 2021, the fashion sector was reported to have the third-highest cart abandonment rate of 88.57%, with women's apparel being the most commonly abandoned product type. 58.6% of consumers indicated they were not ready to purchase or did not have the available funds at the time. To overcome this, certain merchants choose to implement Buy Now, Pay Later (BNPL) options in their online stores.
What is BNPL?
Simply put, Buy Now, Pay Later (BNPL) options let consumers split and spread the cost of their purchase over an agreed period of time in the form of instalment payments. Some BNPL options ask consumers to pay a small fraction of the item upfront and later, like Openpay. Others, such as Klarna ask for no payment upfront, letting consumers pay the full or remaining purchase price off in equal monthly instalments or in one go.
What makes BNPL so attractive to consumers?
BNPL solutions have been around since 2010 but have been growing in popularity since the pandemic as more consumers seek out payment flexibility, financial control and transparency in their payment options.
According to a report by RFI Global, what consumers value the most about BNPL options at checkout is the lack of interest charges (33%), the convenience (33%), and improved cash flow management so they can pay for other expenses (28%) and how it helps them budget (31%).
BNPL's simple credit model offers a convenient way for consumers to spread the cost of purchases, making them more likely to buy and spend more.
The advantages of BNPL for online fashion retailers
Adding a BNPL option helps consumers find a balance between long-term budgeting goals and the immediacy of acquiring products. It can increase brand loyalty, boost the average order value (AOV) and streamline the checkout experience. BNPL also offers brands financial security, as they are paid upfront in full, with the BNPL handling the consumer payments and returns.
A survey by Cardify found that 48% of consumers said BNPL solutions allow them to spend 10-20% more compared to using a credit card.
Research from Klarna found that retailers benefited from a 60% increase in AOV when consumers use their financing option and a 20% increase in checkout conversions. The flexibility offered by its payment options helps fashion brands bolster their bottom line while offering financial assistance to consumers.
How to implement it on your online store?
Today, most ecommerce platforms let merchants connect to the BNPL providers of their choice, offering a smooth and seamless integration. Depending on which BNPL provider you prefer, some have minimum purchase requirements to enable financing. Be sure to check the terms, conditions and requirements each BNPL provider has before you connect them with your ecommerce platform.
To experience the most success with BNPL, you must educate your consumer on how the payment option works. Do not be afraid to include messaging about the new BNPL option in multiple places on your site, such as your homepage and product page.
A BNPL is a key tool to analyse further and understand your consumers' payment preferences and offer them the options they want when shopping. A leading solution to convert more consumers and increase sales and brand loyalty, brands today need to include a BNPL option.