As the COVID-19 pandemic continues to upend daily life and disrupt traditional shopping habits, many food retailers are turning to buy now, pay later (BNPL) options as a way to boost sales and attract new customers.
The pandemic has seen a surge in the use of BMPL for groceries and other essential items. This is due in part to the fact that many people are now shopping online more often, as well as the fact that BNPL can help people stretch their budgets a bit further during these uncertain times.
In 2020, the global food & grocery retail market was worth a whopping $12.29 trillion. Although there has been evident growth in the industry over the past few years, food retailers are pushing for more by exploring the best practices to entice customers and drive sales. One of the most innovative solutions to have emerged in recent times is Buy Now Pay Later (BNPL).
With BNPL e-commerce transactions predicted to reach $680 billion by 2025, the alternative payment method is a gamechanger in the retail world. It provides the opportunity for a digital transformation, and food retailers that fully utilize it will boost their sales. But what is BNPL, and how can it drive sales?
No Money? Business Goes On
BNPL is a payment method that allows consumers to pay for purchases at a later date. Customers can make a down payment by opting for this method at the point of sale, such as 20% of the total purchase amount, and pay the remaining amount in installments.
Since food retailers—on the cutting-edge of digital payments—started offering BNPL as a payment method, it has become part of what informs the decision of some consumers to deal or not with a retailer. As a matter of fact, 62% of BNPL users are convinced that the payment method could replace traditional credit cards.
Not only does offering BNPL attract customers a retailer might have lost by not offering the digital solution, but it expands demographic reach. For example, BNPL may present a lower psychological spending threshold for price-conscious consumers, encouraging them to purchase premium products.
These benefits come with utilizing BNPL, but grocers can also explore more strategies, using BNPL to grow their grocery sales this year.
BNPL for Larger Carts
Since customers don’t have to make 100% of the payment for purchases, food retailers can leverage BNPL to encourage consumers to build larger carts. A good trick here is cross-selling. Food retailers can recommend items that consumers typically purchase together. The recommendation could be AI-driven, by customer service agents, by simply displaying the items close to each other. Customers know what they want to purchase, but BNPL allows retailers to add a few items to their shopping list. About 59% of BNPL users admitted using the payment method to purchase unnecessary items outside their budget.
Grocers can also offer discounts when customers use BNPL at the POS. For example, “$10 off $300 when you check out using Afterpay.”
Also, food retailers can reach out to customers who have abandoned their carts, giving them a new reason to convert. By informing the customers that they can get everything on their cart without paying immediately, they could proceed to the checkout.
BNPL for a Better Marketing Campaign
Once a consumer opts for BNPL at the POS, the information can be used to personalize subsequent messaging and ads. Aspirational buyers who previously purchased high-value items using BNPL can be informed about similar high-value items and the chance to pay using BNPL. The same strategy works for frequent buyers who make low-value purchases.
Due to the effects of the pandemic on finance, many loyal customers do not show the same pre-pandemic shopping behaviors. Food retailers can reach out to such customers with a message of love. A personalized message saying something like “We miss you, so we are offering you the chance to buy everything you want now and pay later” could get them to make purchases again.
Solve Pain Points To Earn Loyalty
One of the biggest strengths of BNPL is it can earn the customer’s loyalty. Consumers may need to make large purchases for different reasons, but they may not have the financial strength. In some cases, consumers want to control their spending so much that they forgo vital items. Giving consumers the feeling that they can have anything they want without breaking the bank will increase their loyalty and willingness to purchase.
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