Buy now, pay later is taking off across online retailers

Date

11/05/2021

Written by

Airnow

The impact of the pandemic has accelerated an already present shift away from shopping on the high street, towards shopping online, and with everyone equipped with a mobile device it is hardly surprising that m-commerce has boomed. In 2021, 72.9% of all retail e-commerce is expected to be generated via m-commerce (mobile commerce), up from 58.9% in 2017.

In line with this, apps in the m-commerce sector have all experienced growth, and one particularly interesting development is the rise of a new sector: buy now, pay later apps (BNPL).

These apps are seen as a “budgeting tool” that avoids high-interest rates that come with traditional credit cards by allowing customers to make a purchase by paying a small amount of the total purchase price, receiving the product, then making additional payments (without interest) to complete the purchase amount over time.

BofA expects the market for these apps to “grow 10-15x by 2025 to eventually process $650bn-$1tn in transactions.”

BNPL Will become even more relevant in a post-COVID world

This prediction for the long-term growth of BNPL apps is based on several factors.

Firstly, as more categories are added to these services beyond apparel, beauty, and electronics and as more countries around the world are introduced to the product, these apps have a lot of potential for growth.

Secondly, BNPL apps don’t make money through interest rates or consumer fees (such as with traditional credit cards). Instead, they charge the merchants for transactions. You might think that merchants would be reluctant to agree to this, but in reality, the opportunity to sell products through staggered payments is attracting so many sales that the trade-off is well worth and demand from merchants is skyrocketing.

Finally, the trend is also part of a generational shift. The average user of BNPL services is in their 30s, BofA found, and the average amount spent was around $200 to $500 (as compared to the $5,000 to $6,000 one would spend on a credit card). These apps are unlocking the next generation of consumers, a bloc with spending power to be reckoned with.

With all these factors combined, BNPL apps such as Klarna, Sezzle, Laybuy, Affirm and Afterpay saw huge download and usage increases in the last year: the Airnow Data platform shows that these apps saw a 234% increase in DAUs from March 24th 2020 to the corresponding date in 2021.

While BNPL apps have been a massive success, there is no doubt that they have been supported by a strong mobile app marketing strategy. This is where Airnow Media can help your app succeed. Whether you’re looking to increase awareness, acquisitions or post-event performances, our CP[𝑥] model means you’ll only pay once we’ve delivered the results over multiple media channels, networks & platforms, ensuring your marketing dollars aren’t wasted on non-performing traffic and media partners.

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For more information about Airnow Media’s CP[𝑥] model, please feel free to drop me a line of visit our website here.