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Can BNPL Work for Retailers?
BNPL is a tool that many customers use to make a purchase without paying upfront. Although it’s not new in the market, its recent burst into the Australian mainstream shopping industry may have changed the way we shop.
According to the Power Retail Spotlight Series: BNPL, millennials are the primary users for these payment platforms, and it seems that every week, a new BNPL service shows up on the Aussie doorstep. The report found that 17 per cent of Australian online shoppers use BNPL at least occasionally, with the users of the scheduling plans staying more loyal to the retailers that provide them than those who don’t.
On average, BNPL shoppers report that 40 per cent of their total online spend involves BNPL, and over half of frequent BNPL users come to view it as their preferred means of payment. Platforms like Afterpay, Openpay, Payright, humm and Klarna have popped up to assist customers with their payment plans. With payments starting from $1 to $30,000, online and brick-and-mortar shoppers have the option to make a purchase, no matter what it is.
While it’s great for customers who wish to redistribute the payment options over a series of weeks, do retailers feel the pinch of BNPL? With every new platform that comes into play, the focus tends to stick to the customer, but can BNPL benefit the brand in any way? The report by Power Retail found that the ‘majority of retailers who took on BNPL felt that it had helped conversions and increased profits. Over half felt these effects immediately’. What does this mean? Power Retail suggests that retailers should consider the positive uptake of BNPL as part of their e-commerce strategy.
New Zealand BNPL platform, Laybuy, has recently launched in Australia. The platform is ‘built by retailers for retailers’, and was a pioneer for the BNPL industry throughout ANZ. “Throughout the design process for the platform, we have always kept retailers in front of mind. Not only do we absorb all credit, fraud and chargeback risk on any transaction, which totally safeguards our partners, our unique Laybuy Global feature means we can handle all foreign exchange fees on a retailer’s behalf due to our multinational capabilities. In a nutshell, our service is a win-win for retailers and consumers.,” explained Laybuy Co-Founder, Gary Rohloff.
“I’m from a retailer background, and so we built Laybuy specifically with retailers’ needs in mind and with a team that boasts more than half a century of retail experience behind them. We have a seamless integration, we take on all the risk, we reduce the cost, but most of all for Aussie retailers is that we deliver over 500,000 Kiwi customers,” he said. According to the Spotlight Series from Power Retail, ‘only 17 per cent of retailers with BNPL had not seen any business improvement from it, but 57 per cent had noticed an immediate improvement after implementing BNPL’.
What are Some Customer Perceptions of BNPL?
While there are many platforms popping up for customers to use, is this a case of oversaturation? In the Power Retail research, the most recognised and trusted platform was Afterpay, with 84 per cent use and 93 per cent consider as one of the best. Next in line is Zip Pay, with 63 per cent of customers aware of the platform, and 36 per cent consider it being one of the best. Where does Laybuy sit in this long list of evergrowing platforms? Interestingly, it sits at the third most trusted and used amongst the rest of them, with 21 per cent of shoppers considering it one of the best in the group.
“Laybuy offers our customers another option and complements other payment providers. The integration into our E-Commerce platform was seamless and quick, and then there is the fact that Laybuy chooses to credit-check every user of its platform, so there is less likelihood of fraud,” said Anne-Marie Wade, National Retail Manager at Ally Fashion.
What Can Retailers Learn about BNPL?
While retailers may seem apprehensive about introducing BNPL into its repertoire, it could be a fantastic opportunity to attract further customers, establish loyalty and garner more sales. The Power Retail Spotlight Series report found that ‘consumers who use BNPL tend to spend more, to buy more items, to shop more frequently and to be more loyal to retailers who provide it’.
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