Buy Now Pay Later is as old as the act of commerce itself. But unlike the merchants of old, you don’t need to bear the risk of default anymore. There are dozens of companies out there offering BNPL plans to e-commerce stores and their customers. A customer who might be short on cash applies for financing, gets approved, and you get paid in full right away. The duty of collecting the money falls on the provider, not you.
BNPL plans are nothing but a net positive for your store. BNPL reduces cart abandonment, increases AOV, and improves customer loyalty. Sure, it’s PayPal or Afterpay lending them the money but it’s you reaping the most benefits from that sweet return business.
Banners, product pages, and dedicated financing pages
When you shop at a typical e-commerce store, you sometimes don’t know BNPL is an option until checkout. This is a missed opportunity. The entire point of having product financing for your customers is to encourage them to spend more.
If you wait until checkout to show the BNPL option, you will miss out on the kind of customer most likely to use these methods. A customer going through checkout already has a payment method lined up.
The kind of customer most likely to use BNPL will probably leave your store before checking out because he has hit his credit card limit for that month or doesn’t have enough money in his PayPal and therefore can’t afford your products at the moment. If financing is an option, this customer is more likely to stay until checkout. For that to happen, he needs to know BNPL is an option from the get-go.
Put your BNPL options in your website banner, put it on the product pages, and have a dedicated financing page.
Other things you can do to maximize revenue from BNPL offerings
- Choose a provider with high approval rates. This is a no-brainer. You want as many of your customers as possible to be approved for financing.
- Choose a provider based on your AOV. BNPL providers offer product financing with two primary methods: split payments and installment loans. Split payments divide a payment over several weekly/monthly installments and are great for small purchases of up to a few hundred dollars. But if a customer is buying something for, say, $5,000, splitting the payments over six weeks isn’t going to help much. This is where longer-term installment loans come in. They spread payments over a longer time frame. Different providers offer different options so you should pick one based on your average order values.
- Email customers with abandoned carts and offer them the BNPL option since cost is one of the largest motivators of cart abandonment.