Buy now, Pay later

Andy Harding, UK Managing Director at Openpay shares his thoughts on how buy now, pay later options can help retailers weather the impact of COVID-19, by offering consumers a cost-neutral budgeting tool that helps retailers to grow ATV.

Since the start of the pandemic, the way we shop has changed dramatically. The closure of non-essential shops on the high street has resulted in a huge number of retailers now solely operating online, with major financial and logistical implications. Even when lockdown begins to ease, businesses will have continued social distancing measures to contend with. In response to this tumultuous economic climate, retailers across the board are adapting to life under lockdown, from adjusting returns and delivery policies to introducing new promotions and discounts. Offering consumers flexibility and reassurance is more important than ever and maintaining or extending this same flexibility to payment options is another important step for retailers to take to ensure they are in a good position to weather the storm.

Before the pandemic hit there was already growing adoption amongst UK consumers of buy now, pay later schemes. At a time when many are having to tighten the purse strings, we can expect to see more consumers turning to buy now, pay later options to spreads costs and keep some semblance of normality to their shopping habits.

Aside from encouraging more responsible spending by consumers, buy now, pay later options also offer benefits to the retailer in a number of ways. Firstly, services such as Openpay, which require an upfront payment, help to drive down returns for retailers. As consumers consider their purchases more thoroughly when having to part with some of their money at the point of sale, they are far less likely to buy more than they intended to keep as a result. Secondly, average transaction value tends to increase when buy now, pay later options are utilised because consumers are able to spread out costs. Finally, retailers can enjoy improved consumer loyalty as shoppers, after experiencing the benefits, revisit merchants who provide flexible payment methods.

With many of us having more time to browse the internet for things we want, the challenge for businesses now is converting this activity into actual sales. While buy now, pay later options can be a differentiator in themselves, investment in sustainability, particularly around returns and deliveries, will help retailers stand out from competitors even further. Especially as growing awareness of this issue is accelerating in the current climate. Also, and most importantly, maintaining the same levels of financial flexibility will be key for retailers in fostering trust and confidence amongst their customers, as will increased and transparent communications. If these things are done successfully, retailers will be in a much stronger position when the economic storm eventually does subside.

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