Scaling 6 & 7-figure baby, fashion, & home decor brands | Over $500m attributed revenue generated | SEO, paid search, paid social, & email marketing
BNPL (Buy now, pay later) - Is it a blessing or a curse for e-commerce brands? BNPL was a beast during Q4, especially during the month of November. The last numbers I saw were somewhere around $8.3 billion processed through BNPL apps. That was an increase of 17% YoY. That's great, right? Kind of... but maybe not?!?!? When you think about it your customers are going to be making payments on what they bought from you in November for the foreseeable future. If they are overleveraged (which they probably are), the chances of them buying from you again in the near future, might not be so great. If you overpaid to acquire them as a customer (you probably did) and dare I say, lost money on your first order, this could be detrimental to your brand. We're halfway through January and for many brands, they are limping along when compared to January of 2023. Is this because of the BNPL effect? It will be interesting to see how it all plays out. What are you seeing and/or thinking?
I think it will bite Greg Shuey Quick personal example - For Christmas, I popped 90% of my purchases on my PayPal credit pay in 3. This was to spread the costs out. I'm now still paying those off and won't be purchasing in Jan/Feb unless it's really needed. The consumer will get to a point where it will back up and they will have to limit purchases. Alongside, there is growing late payment costs. I came across data the other day (need to try find it) showing the size of Klarna customers paying late payment fees. It's huge.
Do you think theres also the possibility that if your product hasnt absolutely wow'd them, or maybe was a gift, that regret hits you every single month until you've paid off the product. Imagine getting a notification on your phone 4 months in a row reminding you that you bought a product that wasn't quite as amazing as you had hoped.
This has always been something that interested. What is the LTV of BNPL cohort compared to the avg customer? Hasn't been something that has been relevant for our brands, so we haven't had the chance to study it. But I'd be interested to see that especially for brands that have 15-20% coming through BNPL.
It's a balancing act with BNPL. Brands need to weigh immediate gains against long-term customer value. What metrics are you using to gauge success?
Not a big driver for our clients, so not sure. Interesting to see the conversations around WalMart enabling this at checkout though.
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9moThere is the risk that if the customer doesn't complete their payments, your valuable e-commerce revenue will get written off as a bad debt as well. It can be one of those occasions where BNPL increases conversion and AOV now, but you pay the price down the line when you are left with less than you thought. I'd advice caution for any business thinking about BNPL and to run the numbers, seeing if they make sense for you.