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Buy now, pay later good news for small businesses
Many consumers and business are finding that it is easier to buy more expensive goods if you can buy now and pay later.
Image: iStock
The buy now, pay later (BNPL) phenomenon sweeping the retail industry is not just good news for big retailers, but also drives a boom in business for smaller vendors, with four local online sellers reporting a combined 77% spike in business for the first six months of 2022 compared to the same period last year.
BNPL allows shoppers to spread the cost of their purchases across three months interest and fee free, while they receive the goods immediately and South African consumers are embracing this payment method with open arms.
Local BNPL provider, PayJustNow, noted a 260% increase in the number of transactions, as well as 129 000 new customers in the first six months of the year alone, says Craig Newborn, CEO of PayJustNow.
“This has been a boon for smaller local retailers. Durban-based shoe retailer Blu Betty saw business surge since offering BNPL on its ecommerce site, with turnover for the first six months of the year up by 86% compared to 2021. Handbag and tote retailer Lauprene had even better numbers, with turnover growing by 134.6% in the first half of 2022 since joining PayJustNow.”
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More consumers complete purchase with BNPL
He says consumers are between 20%-30% more likely to complete a purchase when a retailer offers BNPL as a payment method, either online or instore. With rates of digital shopping cart abandonment running as high as 70%, retailers are embracing any tool that makes shoppers go from browsing to buying.
“The rising popularity and uptake of BNPL is allowing more retail businesses than ever to compete in the ecommerce market. For small vendors, the boost that this gives their sales figures and cash flow is critical in a really tough retail environment,” Newborn says.
“We all know the importance of small business in our economy, but they had a hard time of it in the past couple of years. By providing a payment method that works for consumers as well, we support small business and help them to be flexible in changing market conditions.”
PayJustNow’s merchants had a 22% increase in conversion rates and a 40% higher average spend per customer for the first six months of 2022. Newborn says the company’s data shows customers are shopping twice as frequently and now spend almost double as much as they did a year ago.
“This is partly due to BNPL evolving from being a purely online shopping phenomenon to becoming an in-store shopping choice as well. The company’s 120% growth in participating merchants in the past year has included a 257% growth in in-store locations.”
