If you have an online boutique in 2022, then you need to offer a buy now pay later option on your website. Since launching across Australia, Europe, and more recently North America, these services have been a way for shoppers to balance their desire with their spending budget.
And when the pandemic happened, buy now pay later really gained traction. Some even extended past the traditional four-payment structure to more flexible terms to accommodate the influx of customers. Conservative estimates report over $200B in buy now, pay later purchases in 2021 alone. So it’s become one of the fastest growing ways to pay for online shoppers. Some are even using it for groceries and home goods!
With its increasing popularity and massive growth, Buy Now Pay Later is a must-have for retailers selling online, especially during the holiday season. A recent survey even showed that 38% of buy now, pay later shoppers use it once a month or more. That means customers are spending more and shopping more often, all year round. This is a great sign for you to offer it for your online boutique.
So in this blog post, we’ll look at what these services offer, why they’re so important, and how to choose the best buy now pay later option for your online boutique.
What Is Buy Now, Pay Later?
Buy now, pay later or BNPL is a short-term financing option that allows shoppers to pay for their purchase in four or more low to interest-free installments.
Financing a purchase is nothing new. Things like layaway and store credit cards have existed for decades. But companies like Klarna, Affirm, Sezzle and Zip (among others) have adapted the need for flexible payment options for shoppers in this digital era.
How Popular Are BNPL Services With Online Shoppers?
Ecommerce is all about convenience. Online shoppers have come to expect various payment options, from various cards and checkout choices to digital wallets and even cryptocurrency. Your job as a retailer is to make it as easy to shop as possible. And that includes offering BNPL services.
While shoppers of all ages use buy now, pay later services, it’s become particularly popular with millennials and Gen Z. Estimates report that over 40% of millennials have used a BNPL option, with Gen Z not far behind at 36% in 2021. That can make all the difference for your boutique, especially during the holiday season at the end of the year.
Why Are Buy Now Pay Later Services Important For Online Boutiques?
BNPL promises one thing: access. The flexibility is great for the customer. But it also works for the retailer. The fees paid to use the service more than make up for themselves by the volume of customers who either would not have purchased or would have chosen to spend less with their order. That means not only increases in incremental sales but higher average purchase sizes, and higher frequency of purchase because the process becomes easier. And you only have to worry about having the items in stock and fulfilling the order.
BNPL services have been shown to increase online conversion rates by as much as 30% and increase average order values by 50%. Flexibility brings freedom. Which makes customers want to shop even more!
How Do BNPL Services Work?
As an online boutique, you would apply for the service of your choice. Once your account is approved, you would then add the service to your store’s backend. For example, if your online boutique was approved for Sezzle, you would install the Sezzle app for your Shopify website and activate it for your online checkout page.
Once it is integrated into your website, a customer will see it as an option when completing their order. After a quick eligibility check—if the BNPL provider requires it—the shopper is approved. They’ll get to choose the length and terms for payment and process their order through the BNPL service.
You as the retailer will ship the purchase. And the shopper will then be responsible to pay off the purchase they financed. It’s pretty simple.
How Quickly Do Online Boutiques Receive Payment With Buy Now Pay Later?
While shoppers pay for their purchases across four (or more) installments, business owners get paid in full almost immediately. It typically takes up to three business days to process the payout. The BNPL service provider pays the retailer, and then the shopper pays the service provider back the money they were loaned.
As an online boutique owner, you don’t have to worry about managing the payment plan at all.
What Fees Do Online Boutiques Pay To Use A Buy Now, Pay Later Service?
Fees vary between service providers but most start at a similar rate. Sezzle, for example, charges 6% + $0.30 per transaction. But that rate can differ based on industry, retailer risk, and the size of the business.
That fee structure is more expensive than processing a credit card. But it’s important to keep in mind just how popular BNPL is. Offering a BNPL option has been shown to increase conversion rates up to 30%, and grow the average transaction by up to 50%. So the added volume and value of transactions over time will make the fees feel minimal, especially if you’re marketing consistently to create repeat buyers.
What BNPL Options Are Available For Online Boutiques?
There are a bunch of established options (and surely more on the way).
When it comes to e-commerce, we recommend Sezzle. It allows shoppers to split their purchases (up to $1000) into equal payments. The payments are usually collected every two weeks. Shoppers using Sezzle Up can even begin to build good credit by using the service and making timely payments. . This makes it an attractive BNPL option for the buyer. And it also helps retailers increase conversions at the same time.
Your customers are looking for buy now, pay later options. And the buy now, pay later trend isn’t slowing down any time soon. So it’s important that you offer it as an online boutique owner. You want to lower the barrier to purchasing as much as possible. And offering BNPL has been proven to get shoppers to buy, spend more and shop more often. Make sure to put buy now pay later on your list of must-haves for your online boutique website!