Buy now, pay later (BNPL) financing gives merchants a powerful boost to their bottom lines. It helps them drive new customer acquisition, higher average order values (AOV), and repeat purchases.
In a time when consumers have a lot of choices and customer-centricity is paramount, installment financing has become a key engagement tool. And there’s a simple explanation for its success: today’s consumers want access to alternative payment methods and better shopping experiences.
The draw for many merchants is that BNPL services can be easily implemented as an off-the-shelf solution. And from consumer electronics to high-end jewelry, there seem to be unlimited possibilities when it comes to retail categories. Knowing and understanding your customers, however, is very important. With a product field that is rapidly evolving, research is vital to get a good sense of how a solution will align with your business needs and affect your brand reputation.
Whether consumers are shopping for a smartphone, home entertainment center, or gaming system, consumer electronics is a consistently strong retail category for installment financing. It directly appeals to customers' desires to upgrade technology that will improve their lives.
In this category, finding a solution that offers customization and flexibility is vital, as is finding a financing partner with experience in consumer electronics. It’s imperative to be able to offer a variety of programs that make upgrades and different feature configurations possible. It’s also necessary to be able to finance higher price points and enable customers to use their pre-qualified credit amounts for future purchases without having to apply again — like a revolving line of credit.
Home Improvement and Furnishings
When making upgrades at home, customers want to invest in quality furnishings and are more likely to make multiple purchases. This is especially true if they have a straightforward financing option to back them up.
This is one of the highest growth areas for BNPL services. It’s important to focus on customers’ needs and recognize that shoppers are often purchasing multiple items or adding new items to their cart. They might also choose to return later to pick up something else that they saved for later. This is where having payment solutions like a merchant-dedicated line of credit option is very beneficial, as it enables customers to simply log in and access their existing account without having to fill out another application.
Fitness and Recreation
When home gyms became a must-have during the COVID-19 pandemic, the affordable and straightforward nature of installment financing helped convert many website visitors into customers. In addition, this type of financing enables customers to easily bundle equipment, accessory, and/or service purchases into a single payment.
Because this category often comprises higher-priced items and larger cart totals, it’s necessary to offer flexible payment terms that make sense over long periods of time.
Travel and Tourism
As travel regains its popularity, bookings are on the rise. At the same time, installment financing is making it easier for customers to plan, reserve, and pay for their dream vacations — or to rebook the trips they’ve postponed.
A BNPL solution with clear and upfront monthly payment plans makes it easier and more affordable for customers to opt for hotel, flight, or package upgrades.
Big Box Retail and Other Retail Industries
Big box retailers have turned to BNPL options to meet growing demand for new ways to pay for large ticket items such as televisions, appliances, home furnishings, and much more. With the ever-revolving range of retail offerings, a customizable solution that can be easily integrated and updated as demand changes is key.
Additional industry verticals are delivering impressive growth for consumer installment financing, including lifestyle and luxury retail, cosmetics, elective healthcare, and educational activities like camps and sports training.
A Strategic Tool for Long-term Growth
For many retailers, building loyalty and delivering long-term growth will emerge as the pivotal factors when choosing a pay over time solution. Getting customers in the door is crucial to any business; however, giving them a reason to come back again — to build on that initial relationship through repeat purchases over time — is crucial for long-term growth.