Buy Now Pay Later is Growing in Nigeria
Buy Now Pay Later allows customers to buy a product or service and pay for them in installments over time.
Hence, customers can easily buy more expensive products and spread out their payments.
Thus, customers are more likely to buy something that they otherwise might not have money for or might be unsure about paying the entire amount in one go or on the day that they wanted to make the purchase.
Let’s assume a merchant selling on a marketplace where Buy Now Pay Later methods are used.
The customers are given the option to make payments with multiple payment methods to pay for their purchases and one of the methods is the Buy Now Pay Later option.
They are not charged any interest, provided they pay back on time.
But you get paid the full purchase amount immediately by the marketplace at the time of purchase.
In some cases, terms and conditions may apply.
The burden falls on the BNPL provider to recover the money from the customer (buyer).
For every transaction, you have to pay the provider a commission along with a fixed fee and this could be in some cases too.
Buy Now Pay Later methods are great for you if you sell high-value consumer goods.
Or if you are looking to increase your average cart size and reach new customers.
They might not be a good fit for you if you are price-sensitive, as BNPL methods tend to charge higher fees.
How can Buy Now Pay Later benefit e-commerce marketplace wholesalers?
Buy Now Pay Later can have a huge impact on your e-commerce store business.
There are several advantages when you offer them along with other payment methods on your payment gateway.
1. Boost your Sales
Buy Now Pay Later is attractive to those customers who cannot afford a product at the time of purchase or are not comfortable paying the entire amount up-front.
Hence, it increases the likelihood of these customers buying a product because they can pay later in zero-interest installments.
2. Increase customer loyalty
Customers like to buy from companies that offer them more choices. BNPL methods give them flexibility.
And because Buy Now Pay Later service providers offer loyalty programs to their users, customers are more likely to shop with e-commerce wholesalers that allow them to pay through these methods.
They are also more likely to come back for repeat purchases, which further builds loyalty.
3. Improved customer lifetime value
Buy Now Pay Later can influence the frequency or order value of your regular customers.
When they are more engaged with you, they are more likely to buy from you over a longer period of time.
This helps to improve the customer’s lifetime value.
4. Higher average cart value
Because customers can pay in easy installments, they are more likely to increase their average cart value and shop more from you.
This translates to higher sales for merchants.
5. Lower return rates
Buy Now Pay Later makes purchases more feasible for customers because they can pay in installments. Hence, they are more likely to stick with their purchases, which in turn lowers your return rates.
6. Better customer experience
Buy Now Pay Later offers customers the flexibility to shop and pay as they want, which helps to improve loyalty and leads to better sales. This creates positive customer experiences and encourages repeat business.
7. Benefits in reduced cost to serve
The old 80/20 rule in business states that 80% of profits come from 20% of customers.
For many B2B wholesalers and distributors, this is true when considering the cost to serve. Companies are extending credit to many of their smaller customers, allowing them to pay on account.
This results in Accounts Receivable staff issuing countless receipts for low-value orders, chasing outstanding payments for hundreds of customers, and generally spending a disproportionate amount of time reconciling payments.
In contrast, if these same smaller customers were instead given a digital wallet to pay for their orders, there would be no accounts receivable follow-up required. For the B2B merchant, the benefit of the up-front payment goes hand in hand with reduced cost to serve.