Is Adding Buy Now Pay Later To Your E-commerce Site A Good Move?
Buy Now Pay Later (BNPL), an innovative credit solution which has been adopted by businesses across the globe, has seen a low acceptance rate in the B2B space in India. The potential of this new way of making payments remains untapped and the question arises, why? If you are a business that is considering integrating a Buy Now Pay Later option for your buyers, read on to find out more about how BNPL emerged as an innovation that can change the way big and small businesses sell their products.
The ‘Buy Now Pay Later’ Market In India
- Market Share – The Buy Now Pay Later market in e-commerce in India stands at 3%.
- Users – There are currently 5 million plus users of BNPL in India
- Products – The most popular product to buy with BNPL is a smart phone or electronic items in general.
- Players – B2C companies providing the BNPL solution are LazyPay, Simpl, PostPe, Zest Money, etc. B2B companies providing the BNPL solution are KredX, Spenda, Rupifi, Yubi, etc.
To instantly get information about how your business can vail instant credit, you can check out KredX’s BNPL solution, KredX Pay Later.
Data source: Statista
Buy Now Pay Later financing has a long history
BNPL is an old financing tradition, which has been given a modern spin with a technological upgrade. It can be traced back to as early as the 19th century where customers could purchase expensive products on instalments. This was done for the purpose of increasing sales, which was also beneficial to the consumers as they could now own goods without paying for it in full upfront. In India, the udhar-khata system adopted by kirana stores played a similar role.
The New Avatar Of ‘Buy Now Pay Later’
Fintech companies saw an opportunity and picked out the crucial elements of this arrangement and created an updated consumer lending approach with integration and instant credit.
Adding different payment methods at the point of sale intrigued customers as they could choose from multiple options as per their convenience and hence, the birth of BNPL in a new avatar took place. While a huge chunk of B2C organisations have adopted BNPL, the B2B organisations are still getting a taste of it. There are several benefits that have been attracting B2B organisations towards BNPL. Some of the benefits are:
- Increased accessibility to a wide range of buyers such as dealers, distributors, retailers, etc.
- Encourages dealers, distributors and retailers to buy expensive products
- Helps a business attract new buyers on the platform
- Buyers such as a retailer get instant credit facility
What is good for your business v/s What is better for your business?
A world without BNPL would mean that the purchasing power of the consumer will not increase exponentially which will stall a fast-paced growth in sales. For an E-commerce business, there are multiple elements that can not just keep a business afloat, but also make it grow tremendously. Here are a few markers of success for an e-commerce business:
- Profitability – It is necessary for a business to be profitable. The profitability of a business is the degree to which a business yields profit or financial gain.
- Buyer – centric approach – The growth of a business depends on its consumers who are their buyers. An e-commerce business must make the life of its buyers easy.
- Conversion rate – It is the number of people that turned into buyers per the number of people that visited your e-commerce site. Higher the conversion rate, higher the growth.
- Sales – One of the most important elements is sales. It decides whether your business has the capability to survive for a longer run or not. Every business must aim to achieve high sales numbers.
Now, what’s better for your business?
- Higher profitability
- Better buyer experience
- Higher conversion rate
- Double sales
The differentiating factor can be a closed-loop channel financing solution, like ‘Buy Now Pay Later’. If an e-commerce business offers BNPL to its consumers at checkout or the point of sale, the cart abandonment rate will reduce which will increase the conversion rate and thereby increase the organisation’s sales and profits.
BNPL For The Future
While the Buy Now Pay Later solution is yet to discover its true potential in the B2B space, it is safe to say that businesses adding BNPL to their e-commerce sites will be having an early mover’s advantage. Providing instant credit to buyers improves their cash flow and increases return purchases. Therefore, adding BNPL as a payment option for your buyers will be a good move.