Consumer preferences toward payments are changing. Today’s shopper wants access to more options and craves greater flexibility. It’s a sentiment that has been mounting for some time, but is also one that has been exacerbated by impacts of the COVID-19 global pandemic. Combined with the sharp shift in consumer behaviour toward online purchases, it’s a sentiment that presents businesses everywhere with the opportunity to grow their share of the market by catering to evolving preferences within an omnichannel world. It’s an opportunity recognized and supported by Afterpay – the innovative provider of ‘buy now, pay later’ services. And, according to Zahir Khoja, General Manager of Afterpay North America, it’s one that the savviest retailers within the industry are increasingly taking advantage of.
“Prior to the pandemic, there was already a generational shift happening in regard to spending preferences,” he says. “This was further fueled by the onset of COVID-19. Generation Z and Millennials are increasingly credit averse and wary of high-interest and revolving debt cycles, favouring the use of debit cards. They want to use their own money instead of turning to expensive loans or credit cards, but still want and need the flexibility of being able to pay over time afforded by traditional credit. Amid the past year, which saw immense economic uncertainty and a shift in consumer preferences toward online purchases as we faced the pandemic, the demand for Afterpay’s ‘buy now, pay later’ value proposition has risen steeply.”
Simple and effective payment option
Since its founding in 2014, Afterpay has quickly become one of the leading solutions available for retailers looking to offer a more flexible and responsible payment option for their consumers. And, what’s more, the model is a simple one. By leveraging Afterpay’s services, consumers can receive products immediately and pay over time using their own money, always interest free, with purchases paid in four instalments due every two weeks. It’s a model that provides the consumer with the flexibility that traditional credit affords, without all of the downside. And, when it comes to merchant benefits, Khoja says that the heightened performance of brands offering Afterpay as an option at checkout speaks for itself.
“With Afterpay, merchants gain access to a large and growing segment of shoppers – nearly 15 million globally – who prefer not to incur credit card debt, interest or fees,” he asserts. “For this reason, Afterpay delivers increased conversion rates for merchants approximately 20 to 30 percent higher as compared to other payment methods. In addition, the availability of Afterpay also results in higher average order values, fewer returns and increased customer engagement. It’s also important to note that our merchants see us as much more than a payment option, but also a marketing vehicle as many of our customers will start their shopping journey on the Afterpay platform. An average of 35 million merchant referrals are generated globally per month from our Shop Directory, providing a source of new traffic to our retail partners.”
Supporting ecommerce growth
Considering Afterpay’s increasing global reach, combined with the spike in ecommerce activity caused by the pandemic, its services have been critical in helping many retailers and brands sustain the pressures of the past 16 months. Moreover, it’s also been instrumental in the development and growth of ecommerce business for retailers across the country, helping them unlock benefits and opportunities to meaningfully engage with today’s digitally-connected consumer. Due to its power and simplicity, Afterpay has become a strategic tool leveraged by many retailers, and one that Meghan Roach, President and CEO of Roots, considers a valuable component of her company’s innovative solutions.
“At Roots, we continue to stay at the forefront of ecommerce innovation, by offering a wider selection of payment options, including our recent addition of leading ‘buy now, pay later’ platform, Afterpay,” she says. “It’s allowed us to add to the variety of payment options that we provide at checkout, while enabling us to offer our customers an entirely new form of payment flexibility. As we continue to evolve our digital offering in order to keep up with mobile and payment trends, Afterpay allows us to appeal to consumers who are looking for alternatives to traditional payment methods. Younger consumers, specifically Gen Z and Millennials, want flexibility when it comes to their spending. With Afterpay, we can now offer our customers the option to get the product now but pay over a period of time.”
Enhancing the online experience
In addition to adding breadth to the payment options that the company provides, Roach says that Afterpay also helps to support the online shopping experience that Roots offers. By allowing the company to offer its existing customers new methods to engage and transact with the brand, it’s helping to remove barriers and friction common within the digital experience, while also helping attract and acquire new customers.
“We have continued to evolve our payment options beyond the more standard online experience of ‘enter your credit card information’,” she says. “Afterpay helps to create another channel through which customers can discover our brand, and because it enables our customers to purchase products now while paying over time, it makes some of our higher-priced products more accessible, driving a higher average order value. It’s also been a great tool in driving customer loyalty and repeat shopping and has reduced our product return rates as well.”
Agility and adaptability
Given the business complexities that have been created by the pandemic, and the strains and pressures faced by retailers throughout the industry over the course of the past year-and-a-half, many are actively looking for ways to further enhance the offering and experience they provide for customers. And, as we approach ever closer toward a post-pandemic environment and a potential subsequent boom in consumer purchasing, it seems that ensuring a wider breadth of options and greater flexibility when it comes to payments is a great way to elicit business and engagement. Furthermore, adds Afterpay’s Khoja, it also enables increased adaptability for brands going forward concerning their response to future consumer trends and evolutions.
“The rise in ‘buy now, pay later’ has proven that consumers want flexibility when it comes to their spending. And this is not something that’s going to go away. Generation Z and Millennials are the new powerful force in the economy. And as this generation’s spending power grows, so will the use of ‘buy now, pay later’ as a primary form of payment. Retailers should keep this top-of-mind as they’re evaluating their current payment options and looking at ways to ensure greater agility that will allow them to adapt quickly to changing consumer demands, including the ways by which they want to pay for their purchases.”
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