From laptops, computers, and tech essentials for the work-from-home office to cellphones, gaming consoles, and TVs for at-home entertainment – we don’t need us to tell you that electronics have become an essential part of the way we work, relax, and communicate in the modern world. You may, however, need a buy now, pay later payment solution to support the way modern shoppers purchase their electronics online.
Buy now, pay later platforms have added a whole new layer of opportunity (and competition) to the rapidly growing ecommerce landscape. They give shoppers the option to break down their online cart into smaller payments that can be made over a longer period of time. [ody-nbc count=”3″ excerpt=”off” per-row=”1″ thumbnail=”off” mode=”list”]
Not only does this provide customers with added flexibility and control over the way they shop for electronics, but it can transform the way you grow your electronics business.
Here, we’ll explore how buy now, pay later works in the online electronics retailer space and why it can bring added value for you and your customers.
How buy now, pay later works in electronics
The concept of “buy now, pay later” in the electronics business has actually been around for a long time.
Brick and mortar electronics retailers have offered financing solutions for decades (just ask your parents or grandparents what the payment options were around back when they bought their first family TV).
Even today, most Americans are enrolled in a cellphone plan where they’re paying off the cost of the physical device over a series of months as part of their contract.
From an ecommerce perspective, buy now, pay later platforms bring this option into the online checkout. Customers can choose to pay for their items in installments, rather than charging their credit card or e-wallet upfront all at once.
There are a few different ways to integrate buy now, pay later solutions into an ecommerce electronics space. From a customer point of view, the basic flow is:
- A customer shops on your website and adds their electronics to their cart, as usual.
- When they’re ready to check out, they’ll see your existing payment options as well as the opportunity to choose a buy now, pay later platform
- If they decide to select the buy now, pay later option, they’ll be presented with a payment plan that allows them to pay for their electronics purchase in a series of installments (usually bi-weekly or monthly)
What happens next is a little different, depending on the type of buy now, pay later platforms you’re using.
Credit-based buy now, pay later platforms
Some buy now, pay later providers and financing solutions (like Klarna and Affirm) operate on a credit-based model in which customers must complete a credit application in order to complete their purchase.
This process typically requires them to leave the retailer’s checkout page and enter their personal information (including their Social Security Number) in a separate portal. In many instances, this data is collected and used to retarget these customers for other marketing purposes.
If approved, they’ll essentially be taking out a new line of credit to fund their purchase, which may be subject to high interest or fees for missed payments.
Card-based buy now, pay later platforms
Splitit is the only buy now, pay later platform that operates on a card-based model. Customers will enter into a payment plan using their existing credit card, which means there’s no credit check required or applications to fill out.
They must have the full balance available on their credit card at the time of purchase, but they won’t be charged upfront for the full amount. Instead, this will be held in reserve as they make monthly payments until the entire balance has been paid in full.
The experience is integrated with the retailer’s existing payment platform, so there’s no need for the customer to exit the electronics website. They won’t pay any late fees or additional interest (apart from any fees that are already associated with their credit card).
Benefits of buy now, pay later for electrical retailers
By offering buy now, pay later as an option to your customers, you can empower people to shop for electronics in a way that suits their individual needs.
This creates endless opportunities to attract new customers while encouraging loyalty and retention. It also provides people with flexibility to purchase the electronics they need in a more affordable way, which can grow AOV.
Eliminate credit risk for customers
A card-based buy now, pay later platform provides a simple and accessible payment plan solution for people who don’t want to take out a new line of credit to purchase electronics.
By enabling them to use their existing credit, they can avoid adding to their credit file.
Card-based plans can also improve conversion, as shoppers don’t need to go through a lengthy application process to benefit from a buy now, pay later solution.
Customers are more likely to make a purchase (and spend more when they do)
If you’re an ecommerce retailer, you’ve probably already noticed the rise of popularity in buy now, pay later payment plans. Customers aren’t just getting used to seeing them at the checkout – they’re beginning to expect to have the option.
Awareness and trust for buy now, pay later is growing. Our research found that 35% of shoppers are more likely to make a purchase if they’re offered the ability to pay in interest-free installment payments.
This flexibility also makes it easier for customers to afford large purchases, provided that the buy now, pay later platform allows for larger transaction limits or that credit-based applications are approved.
From a card-based perspective, Splitit’s average order value is over $1,000, which is four times higher than other leading credit-based buy now, pay later providers.
Drives new customers to your store
Allowing people to choose a flexible payment plan provides an entrance point for customers who prefer to rely on buy now, pay later options.
Whether it’s a start-up that needs a more adaptable solution or a family that’s sticking to a strict monthly budget, there are endless reasons why customers would rather pay in installments.
Builds customer loyalty
As well as supporting your business, buy now, pay later can support your brand. You can encourage loyalty – and retention – by having an option that suits diverse situations, lifestyles, and ways of shopping for electronics.
Providing multiple payment solutions is a signal of trust and shows that you want to empower your customers to shop in a way that makes sense to them.
Easily integrated in your online store
It’s easy to incorporate a buy now, pay later payment solution into your existing ecommerce flow.
For example, Splitit is designed to integrate with most electronics ecommerce merchant platforms, including Shopify and BigCommerce, with everything from custom integration options to an all-in-one installment and payment gateway solution.
You can also include multiple buy now, pay later options and present your customers with card- and credit-based solutions.
What to consider when choosing your buy now, pay later service provider
When you’re ready to offer a buy now, pay later solution for your customers, it’s important to consider a few key things before choosing which platform (or platforms) to start with.
Compatibility
This comes down to your backend compatibility as well as your general business operations.
From an ecommerce perspective, it makes sense to choose a provider that can quickly and easily be onboarded to your existing platform. It’s also worth asking about the support and service that’s available to you as a client, to ensure you’re partnering with a company that’s able to accommodate your needs and potential future questions or concerns.
If you operate within an omnichannel model, consider if you want a buy now, pay later option like Splitit in-store, which provides the same service for your brick and mortar experience.
Cost and commission
The cost of running a buy now, pay later solution will vary, depending on the provider and the plan you choose.
Most platforms have a commission and fee-based payment model – you’ll pay a percentage of each transaction (typically between 2% – 8%), plus a flat fee.
There are also different ways to align the payment structure with your business, depending on the solution provider – you may prefer to receive all payment upfront (typically with a higher fee), or receive payments in installments alongside the customer payments.
Customers
Customer trust and alignment is the most important thing to consider when choosing a buy now, pay later provider. Put yourself in your target audience’s position and think about what’s important for them when shopping for electronics online.
Is it a simple user experience? Is there support available if they need help? Is it a payment solution that presents itself with authority and trust?
Brands like Fenton and Virgin Pure have chosen Splitit due to this customer-first mindset, which prioritizes security, ease of use, reliability, and quick support.
Once I’ve set up a buy now pay later payment service for my customers, what’s next?
As with any new business venture or campaign, it’s all about monitoring and optimizing the way your tools can support your customers’ experience!
With Splitit, we can work with you to identify opportunities for growth and make sure your business – and your customers – get the best possible experience.
This includes finding ways to incorporate your buy now, pay later offering into the customer journey prior to the checkout, so people are aware they can access this option and factor it into their decision-making process.
Most providers offer resources, so you can take advantage of branding kits and other educational content that supports your ecommerce channels.
How can I get started with Splitit?
Whether you’re looking for ways to grow your electronics business or you need a buy now, pay later solution to get an edge on the competition, there are many ways Splitit can support your goals.
It’s easy to set it up yourself, and our team is ready to help along every step of the way. Learn how to get started.