Boost Ecom Conversions with “Buy Now, Pay Later”

A lot of people associate a “Buy Now, Pay Later” option with higher-end products only, and it’s definitely helpful when it comes to making those sales. But it can also be very effective for selling lower-end products, such as print-on-demand items. No matter the price point of your products, the “Buy Now, Pay Later” (BNPL) option is very worth adding to your ecommerce store.

Pros and Cons

If your options are down to customers bouncing off your ecommerce site or making a purchase but paying in monthly installments, we bet you’d choose the installments! Take a closer look at ways BNPL is a win-win option for buyers and sellers:

• Win first-time and repeat customers: BNPL is persuasive regardless of the demographic of visitors to your store. People always prefer to pay over time if they can. And if they know that you have a product they love and that they can pay for it over time, they’ll be happier and you’ll be more likely to get the sale. Happy customers are also more likely to keep coming back to order from you.
• Liability is clear cut: The company offering the service or app that allows customers to buy now and pay later takes on the liability if the purchaser doesn’t make all the payments. It’s that company’s responsibility to go after the buyer for the money owed. Note: Of course, if you fail to ship the product or it’s never received, that’s on you. But if you’re trying to build a viable business, you’re no doubt taking steps to make sure that deliveries are timely and successful!
• Bonus: You get full price for your product.

There is a potential downside to BNPL:

• The app is free, but fees can be high: It doesn’t cost you anything to use a BNPL app. However, there are fees associated with each purchase on an installment plan, and they can be quite high. Fees vary from one company to the next but are typically based on purchase price (for example, one company charges 8% of the purchase price). Some may also charge an additional small fee (e.g., $0.30) per product sold. These fees can definitely cut into your margins.

Note: It comes back to the financial risk the installment company is taking on: the higher fees are an attempt to cushion their liability. However, for some installment companies, larger sales volume can open the door to some fee negotiation.

Analyzing the Results

Be sure to investigate the results that offering this option brings your ecommerce store to confirm that the increase in revenue is worth the higher fees.

Google Analytics (GA) can be extremely helpful in pinpointing the results of offering an installment plan. GA behavior tags help you determine how visitor behavior on your site impacts your revenue.

For example, for one of our stores, GA indicated that the installment plan widget on each product page (which calculates and displays the payment per installment) was seeing the most activity of the locations where BNPL was mentioned. We also used GA to determine how many times someone clicked through to find out more about the installment plan and how many of those sessions then converted.

In our experience, the results have been great. In one of our stores, people that clicked to see more information about BNPL on the product pages were five times more likely to convert into a customer.

Wrap-Up

Offering a BNPL option in your ecommerce store allows your customers to get the product they want, helps you make the sale, and earns the BNPL company a commission. It’s a win-win-win for everybody and a great option to add to your ecommerce business.

If you enjoyed this article and would like to learn how to build, grow, and scale your ecommerce business, check us out on social media or head over to workwithbgs.com to find out more!