Since 2020, and the recent global pandemic, digital commerce has seen “exceptional
growth,” according to an update from Juniper Research.
Although the impact of COVID-19 certainly forced an increase in online shopping and eCommerce usage, it is clear that it is “a continuing trend,” the Juniper Research team noted in their latest report.
According to a study conducted by McKinsey & Co, eCommerce has “grown two to five times faster than before the pandemic.”
With the delivery and return process improving as the eCommerce market develops, ordering online is “becoming increasing; appealing to consumers as they are able to shop from the comfort of their own homes.”
Additionally, an increased use in social media “has also been a significant factor in the
rapid development of the eCommerce market.”
As brands actively utilize the powerful tool that is social media marketing, it has “become common practice that consumers’ purchasing journeys start on a social media platform.” This is especially “prevalent in younger generations.”
Commonly, retailers use BNPL plans “to attract younger buyers who may not be able
to buy from them otherwise.”
The way in which younger generations like to shop and consume “is quite different from previous generations.” Generation Z and millennials are “greatly impacting the way in which retailers present themselves and operate.”
Due to an increasing number of consumers shopping online, it has “become the perfect environment for BNPL providers to thrive in the eCommerce and retail market.”
As a higher overall amount is spent by consumers, “it was in retailers’ best interest to offer BNPL solutions.”
With the ease of account application and approval, “coupled with the ease of use (as many retailers have BNPL payment options integrated into their checkouts), BNPL has become a strong credit alternative; shifting the way in which consumers behave.”
BNPL’s UVP (Unique Value Proposition) within eCommerce “includes an improved customer experience.”
By utilizing embedded finance and alternative underwriting options, digital BNPL “ensures smoother transactions at the checkout; eliminating the risk of cart abandonment.”
Additionally, the integration of BNPL at eCommerce checkouts “creates greater accessibility and widens the merchants’ customer base.”
The number of BNPL (Buy Now Pay Later) users “will surpass 900 million globally by
2027; increasing from 360 million in 2022.”
This substantial growth of 157% “will be driven by the anticipated economic downturn, which will increase the demand for low-cost credit solutions.”
BNPL schemes “enable consumers to spread the cost of their purchases without
interest charges; making them a highly attractive alternative to credit cards.”
Additionally, BNPL services “do not require hard credit checks and an increasing
number of merchants are accepting this payment method; making it easier to
access for consumers than traditional credit.”
India has potential “for rapid growth in BNPL, with users predicted to grow from 25
million in 2022 to 116 million by 2027.”
This is due to rising eCommerce usage and “growing interest in international goods available through online retailers.”
In turn, it recommends that vendors build strategic partnerships “with vendors in developing
markets with established consumer bases, to successfully capitalize on this user growth and associated revenue.”
The adoption of virtual cards, “where digital only cards are used for purchases, will
increase the usage of BNPL solutions, as they only require merchants to accept
card payments – overcoming previous limitations on growth.”
The advancement of virtual cards “allows BNPL schemes to compete with credit cards; particularly instore, where single use BNPL cards can be used within a digital wallet to complete contactless transactions.”
In order to compete in this highly competitive landscape, BNPL vendors must
“differentiate their services: including offering virtual cards, browser extensions that
automatically facilitate BNPL payment services, and digital loyalty schemes.”
For more details, check here.