Hey there! If you run an ecommerce business, listen up. There's one payment method you need to start offering ASAP if you don't already - buy now, pay later installment plans.
Installment financing options like Afterpay and Klarna are exploding. Nearly 100 million consumers have used them to split purchases into 4 interest-free payments over 6 weeks.
And get this - adding installment plans can skyrocket your conversions and average order value overnight. Let's discuss why you're missing out big time if you don't jump on this rapidly growing payment trend.
The Growth of BNPL Financing
First, a quick primer on Buy Now Pay Later. BNPL plans from providers like Affirm, Afterpay, and Klarna let shoppers split their purchase into 3 or 4 installments over a 6 week schedule.
Customers receive the product upfront, then make payments every 2 weeks. There are no credit checks or interest fees - just a flat service fee per order.
BNPL taps into the preference of younger buyers especially to avoid taking on new credit card debt. It offers flexible spending power through transparent, predictable payments.
The option is exploding globally:
Global BNPL market projected to hit $166 billion by 2023
45 million Americans have used BNPL plans
Klarna users grew from 4 million to 15 million from 2018-2020
Afterpay users jumped 10x from 2017-2019
For online retailers, this presents a huge conversion opportunity. Let's look at compelling data on how BNPL options can rapidly boost your sales.
Conversion Rates See Massive Increases
Here's an eye-popping stat - adding Afterpay as a payment method can increase conversion rates by 68% for some merchants!
That's not an anomaly either. Stores consistently see conversions climb 30-50% once they add BNPL.
There are a few reasons it has this powerful effect:
Increases purchasing power for larger orders customers couldn't afford upfront.
Gives buyers more flexible spending control through installments.
Attracts millennials and Gen Z who are wary of credit cards.
Offers a "try before you buy" experience with 0% interest.
Reduces cart abandonment from sticker shock or budget concerns.
The data is clear that offering installment payment plans widens your audience and drives huge conversion lifts.
Let's walk through some real-world examples...
Case Study 1: Fashion Brand Princess Polly
Princess Polly is a trendy women's fashion brand based in Australia. In 2018, they partnered with Afterpay to offer installment payments.
The results exceeded even their optimistic projections:
Site traffic increased 10%
Sales shot up by 25%
Mobile purchases grew 35%
The average order value jumped from $110 to $130
Clearly Afterpay helped Princess Polly tap into new demographics and purchasing power they couldn't reach before. Their CEO says it "fundamentally shifts the value proposition" for shoppers.
Case Study 2: Blue Nile Jewelry
Leading online jeweler Blue Nile started offering BNPL financing with Affirm in 2017. The impact on their conversion metrics was immediate:
Repeat purchases increased 200%
Average order values rose 40%
Millennial sales grew by 130%
Even retailers in the fine jewelry space are seeing BNPL completely redefine their target audience and shopping habits.
Case Study 3: Velocity Made Good
Velocity Made Good is an athletic apparel ecommerce store that integrated Afterpay in 2018. Here's how it changed their business:
Conversions increased by 30%
Abandoned carts declined by 25%
Average order value grew 15%
They note BNPL appeals most to millennial shoppers between 25-35 years old. But all demographics demonstrated higher intent to purchase when offered installments.
The Verdict Is In...
The data doesn't lie - BNPL options deliver amazing conversion lifts, larger order sizes, and expanded audience reach.
Shoppers view installment plans like Afterpay as more flexible and convenient than traditional credit cards. So they spend more freely through BNPL when given the option at checkout.
Retailers note BNPL attracts millennials and Gen Z demographics in particular. But all age groups demonstrate higher conversion confidence when offered installments.
With BNPL, customers face no confusing credit checks or hidden interest fees. The payment schedule is clear and predictable. This builds trust in the buying experience.
How BNPL Increases Average Order Value
Now you might be wondering - why exactly does enabling BNPL increase average purchase sizes so significantly?
There are a few key reasons shoppers spend 15-40% more when offered installments:
Zero interest installments encourage larger purchases customers can pay over time.
The predictable payment schedule gives shoppers confidence to spend more freely.
BNPL makes higher price points feel more affordable split into 4 chunks.
Customers can purchase multiple items or bundles knowing costs are spread out.
BNPL lowers barriers around budget limitations or credit concerns.
Retailers find customers add more items to their cart, select higher-end product tiers, or upgrade shipping when offered BNPL.
Knowing they can pay over 6 weeks in interest-free installments makes the larger commitment feel comfortable.
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BNPL Gives Retailers a Competitive Edge
Here's great news - adding BNPL sets you apart from competitors and raises conversion confidence.
When customers see BNPL options at checkout, it builds trust and preference for your brand over others. Providing flexible payments shows you care about enabling buying power.
Research shows BNPL availability makes 2 out of 3 shoppers more likely to complete a purchase compared to credit alone.
And over 50% of consumers say they would switch to a retailer that offers installments over one that doesn't.
BNPL gives your ecommerce store a clear competitive advantage both for customer experience and conversion performance.
Top Tips for Offering BNPL
Hopefully you're convinced that enabling BNPL plans is a must for any ecommerce merchant. Here are a few tips to maximize success:
Promote it across your site - homepage banners, product pages, cart page, etc. Make sure customers know you offer flexible installment payments.
Allow BNPL on all products or order amounts - don't limit to high-ticket items only. Even smaller purchases see a lift.
Make the BNPL option prominent at checkout - list it above or alongside credit card icons so users don't overlook it.
Train associates to recommend BNPL proactively to customers who are unsure or need encouragement.
Always abide by BNPL provider rules around customer eligibility, order limits, etc. Don't misuse their service.
Monitor performance metrics - conversion rates, average order value, revenue. Identify areas to optimize further.
The easier and more visible you make BNPL, the more customers will embrace it. Promote prominently and watch your sales take off!
Affirm, Afterpay, Klarna - How to Choose
The three biggest BNPL providers are Affirm, Afterpay, and Klarna. They each offer unique advantages:
0% APR installment loans from 3-12 months
Customizable loan amounts from $50-$17,500
Moderate approval requirements based on purchase amount
Ideal for higher priced items like furniture or electronics
Completely interest and fee-free installments
Fixed 4 payment plan over 6 weeks
Limited order maximums around $1,500
Easy approval for most customers
Huge millennial audience
Very flexible 3 or 4 installment options
Interest only charged if unpaid after 6 weeks
Partners with many major retailers for wide reach
Strong brand familiarity with younger demographics
You can't go wrong with any of the major providers honestly. Choose the option best fitting your typical order value and target audience.
Join the BNPL Revolution
The verdict is clear - retailers who aren't offering buy now pay later installment plans are missing out big time in today's market.
BNPL taps into clear preferences of millennial and Gen Z shoppers for flexible, interest-free payments over 6 weeks.
And the options pay off handsomely in the form of 30-50% conversion lifts, 15-40% larger order sizes, and expanded purchasing power.
BNPL also attracts high-intent customers away from competitors without this emerging payment method.
If you're not providing installments yet, the time is now. Team up with Affirm, Afterpay, Klarna, or another trusted provider.
Then watch your revenue and conversions skyrocket almost overnight! Feel free to reach out with any questions on making BNPL work for your business.
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