In recent decades, the retail industry has been through a series of transformations. First, brick-and-mortar stores had to contend with an increase in demand for online purchasing choices. Then came a new trend of subscription models, which further altered customers’ purchasing experiences and forced shops to adapt to survive.
These transformations might be difficult for retailers to adapt, but it is also spurring the development of inventive new solutions that can benefit their businesses. We are talking about Buy Now Pay Later (BNPL) flexible payment solutions, where purchases can be made in instalments using a debit card, which has the potential to impact the future of the retail industry.
Here’s how buy now pay later is reshaping the future of retail.
1. BNPL Serves as an Edge for Retailers
BNPL service is designed to help retailers in converting more customers without incurring additional expenditures at a risky moment.
Having the ability to be granted instant credit with a debit card is simply life-changing for Malaysian customers. It provides them with increased purchasing power and the flexibility to purchase while deferring their payments in interest-free instalments and providing higher sales revenue for businesses.
2. Social E-commerce Will Drive Further Adoption
The growth of social e-commerce is another ‘change factor’ linked to the Buy Now Pay Later boom. Social e-commerce combines social media and e-commerce, allowing users to purchase straight from social media apps like Instagram and TikTok without ever leaving the site.
Whether or not they participate in the social e-commerce environment, all retailers with an online shop must optimise their checkout experience to be competitive, which emphasises the importance of the Buy Now Pay Later model in the e-commerce landscape.
Traditional payment methods may become increasingly difficult for both consumers and retailers in the future, as the ability to purchase straight from one platform becomes a key component in driving conversions.
More financial institutions may go into the lifestyle and social media landscapes, further blurring the borders between entertainment and finances, as the digital-native generations (Millennials and Gen Z) become a larger proportion of the consumer landscape.
3. Connected Consumers Driving the Evolution of BNPL
One out of every three shoppers across the world would cease doing business with a favourite brand after only one negative encounter. Businesses must provide good customer service, understand who your customers are and what they want to enable you to meet or exceed customer expectations on their terms.
Consumers today want businesses to provide them with a frictionless shopping experience, one that is simple and smooth from product discovery to purchase. In the Asia Pacific, 55% of those polled are unwilling to wait more than 5 seconds for a web page to load before exiting the site.
4. Leverage on extended shopping season
Changes in consumer buying habits have always been the driving factor behind retail’s most significant advancements. The desire for quick checkouts and secure transactions has modelled the e-commerce era, and now it’s time to move on to the next level.
With digitally-engaged consumers flocking the internet in droves while simultaneously restricting their finances, buy now pay later options are well-suited to help them stretch their ringgit and additionally offer them a built-in way to budget their spending by using technology.
BNPL service has the potential to change the future of retail by providing flexibility and convenience to Malaysian consumers and ultimately encourages the adoption of digital payment in the nation.
Based on an Impact Study done in 2020, Malaysia leads South East Asia in e-wallet use at 40% up-take. We predict BNPL will become a strong driver in growing the nation’s digital economy.
While some may argue the BNPL service can encourage unwise spending, it all depends on the consumers to make their decision based on their essential needs and financial preferences.
It is important for BNPL service providers to provide the consumers awareness and education around using technology to simplify personal finance and financial literacy in the fintech and e-commerce era.