The Webretailer News for December 6, 2022
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The holiday season is marching forward, and we hope your business is doing well. Here’s a promising Black Friday 2022 statistic from Adobe Analytics’ 2022 Holiday Shopping Trends & Insights Report: From October 1 to November 28, eCommerce companies generated $210.1B in revenue.
On Friday, we reported credit and ‘buy-now-pay-later’ options are growing in popularity this holiday season as shoppers finish out their gift lists.
On November 15th, the Federal Reserve Bank of New York reported the largest credit card balance increase in over 20 years — a 15% jump. And at the end of the month, Adobe Analytics reported a 13% increase in BNPL usage.
If your online business doesn’t offer buy-now-pay-later options, then it may be time to jump on this trend. After all, analysts estimate the BNPL market to grow by $41.8B by 2026.
To help, here are some tips on how you can incorporate BNPL into your online store for a fresh start in 2023.
BNPL: What merchants should consider
1. Fees — BNPL dollars and sense
Using a BNPL service offers sellers the benefit of receiving the full purchase amount immediately. But if the fees cut deeply into your profit, then why bother? That’s why the first and most important element to investigate before committing to a BNPL service is assessing their processing fees. Here’s a recent list:
*The bulk of BNPL companies do not list merchant fees on their site. You must contact the service or look at a third-party site to see updated rates.
- PayPal – $0.50 + 1.9% to 3.49%
- Klarna – $0.30 + 3.29% to 5.99%
- Afterpay – $0.30 + 4% to 6%
- Affirm – $0.30 + 5.99%
2. Purchase Limits
BNPL companies — for obvious reasons — have a limit on the amount customers can charge to their service. The numbers could shift as the US Consumer Finance Bureau released a BNPL study in September that may indicate new regulations may come soon.
You get the money, and the service handles fraud and chargebacks. But handpicking a company with a higher limit could benefit you — especially if your items have an above average price point.
3. Pricing Minimums
BNPL services favor higher priced items to get more on the commission fees. Before committing to a service, review their pricing minimum on items.
Having BNPL for higher priced items can increase your sales by offering customers a way to break down the payments, But if the bulk of your inventory falls below their minimum, then it’s not worth it to offer the option.
BNPL Benefits
These BNPL elements to consider shouldn’t put merchants off the service. Do the research and reap the benefits — especially if you already offer credit card purchases.
- BNPL services have a softer credit check than credit card companies offering a wider range of users — for sellers, ‘potential customers.
- It gives customers flexibility to make more purchases when they need — like when a large sale like Black Friday is happening.
- On average, your Average Order Value should increase if you offer BNPL. A recent report from Insider Intelligence showed a 160% AOV increase for sellers.
Also in the news
- MCF Amazon orders will now ship with unbranded packaging by default. Amazon Seller Central.
- Wamo payment service now affiliated with Shopify. Yahoo! Finance.
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