Online shopping has redefined the landscape of commerce and continues to grow year upon year. According to a 2021 study, 2.14 billion people around the world purchase goods online – and this number is forecast to reach 2.77 billion by 2025.
There are many reasons that online shopping is so popular – price is at the top of the list, but people also choose online shopping because of convenience, easy returns, and free shipping.
Of course, with this rise of popularity also comes competition and customer volatility – now more than ever before, businesses need to optimise their ecommerce experience to suit shoppers’ needs and expectations.
Pay after delivery is a solution that can solve many of the anxieties surrounding online shopping and break down barriers that prevent customers from converting. Here, we’ll explore the rising trend of pay after delivery and take a closer look at how it can improve the customer experience and benefit retailers.
The challenges of online shopping
The popularity of online shopping clearly demonstrates consumer demand – but that doesn’t mean it’s an easy landscape to navigate. Abandoned cart rates can be as high as 88%, which means investing in the customer journey is crucial to ecommerce success.
Some of the most common reasons shoppers walk away from a purchase include:
- Extra costs that appear at the checkout
- The need to create an account in order to make a purchase
- Slow site speed
- A long or confusing checkout process
- Coupon code errors
- Lack of trust surrounding security and privacy
In order to remain competitive and deliver a great experience, retailers need to troubleshoot, optimise, and implement customer-centric solutions at every stage of the customer journey. This includes offering innovative and diverse payment solutions.
The payment options that customers see in the checkout can be the difference between conversion and cart abandonment. Pay after delivery can satisfy the needs of customers who may be sceptical or hesitant about a product, which can build trust – and, ultimately, increase purchases.
An introduction to pay after delivery
Pay after delivery (also known as PAD) is a form of BNPL in which customers are able to order something online, have it shipped to them, and in some cases, even test it out before committing to pay for it:
- Customers shop online as usual
- At the checkout, they select ‘Pay after delivery’
- Their item is sent to them
- Once they receive it, they can decide whether they want to keep it
- If they choose to keep it, they will pay for it via their chosen payment method
- If they choose to return it, they’ll send it back free of cost by following the retailer’s instructions
Pay after delivery is already a common payment solution in Europe and accounts for 40% of payments in Austria, Germany, Sweden, and Switzerland. We are seeing growing popularity for PAD in the US market, as customers begin to look for diverse BNPL options.
Pay after delivery enhances customer trust and confidence
Pay after delivery promotes customer trust on a variety of levels. As part of the purchase decision process, it allows customers to see and interact with a product before committing their money.
This removes anxiety about payment and returns, giving customers more control over their experience. As a result, they’re able to reap the benefits of online shopping while also making a more informed choice.
From a brand point of view, PAD shows that you trust your customers (and your products) enough to send merchandise out without receiving payment. This sentiment builds loyalty and encourages positive feelings surrounding product quality and brand confidence, which can not only help with conversion but also drive repeat purchases.
PAD offers convenience and flexibility for customers
For customers, the main benefit behind pay after delivery is that they are given the opportunity to explore a product before committing their money towards it. This allows them to ensure their purchase meets their expectations of quality while also managing their funds.
In order to keep this enticing, retailers need to make it as easy as possible for customers to take advantage of PAD. This means:
- Quick shipping: The turnaround time between selecting a product and being able to see it in person should be as short as possible.
- Clear terms: Customers should be able to quickly and easily understand the expectations surrounding the trial period, purchasing process, and returns process.
- Easy returns: PAD isn’t about trapping customers into making a purchase and keeping it because it’s such a hassle to send it back – retailers must offer a transparent and straightforward returns process that makes it worth the customer’s while.
- Flexible payment options: If they choose to keep the item, continue to offer flexible payment options, such as ecommerce installments, so customers can continue to find a solution for their budget.
How PAD boosts conversion rates and sales
When implemented in a customer-centric way, PAD can boost business and drive conversion.
It all comes back to mitigating reasons behind cart abandonment – 12% of shoppers abandon because of a store’s return policy, and 9% abandon because payment methods aren’t satisfactory.
By offering pay after delivery, you can ease customers’ concerns and remove barriers that may have prevented them from moving through the checkout.
Building relationships and customer loyalty with pay after delivery
As well as impacting purchases as the lower end of the funnel, PAD can encourage brand affinity by driving loyalty and retention.
Allowing customers to interact with products before paying for them shows that you trust them with your products, and you trust the quality of your products. In turn, your customers will develop trust in you.
In terms of a wider business strategy, customer loyalty is key to creating a strong revenue base:
- More reliable foundation for conversion: On average, repeat customers account for 60%-70% of sales.
- More affordable strategy: Retention is 5%-25% cheaper than acquisition.
- More profitable: Loyal customers are more likely to convert and spend more – growing a loyal, repeat customer base by just 5% can boost profits by 25% to 95%.
- More referrals: Loyal customers are more likely to recommend a brand to their family and friends.
Addressing payment security and fraud prevention
As well as growing trust at a brand level, PAD can help ease concerns surrounding online security and fraud – 18% of users don’t trust online stores with their credit card information.
PAD can be a good way to combat this, as you can meet customers halfway and show them that you trust them with your products before asking them to share their payment information.
In order to maintain this trust, it’s vital to ensure you have a secure payment portal that includes information about privacy, data protection, and financial security. Once customers reach the payment stage, your site infrastructure should be professional and smooth to avoid causing friction in the checkout.
Pay after delivery is a growing BNPL solution that allows you to offer personalized options for your customer base. It’s growing in popularity in the US market, and for good reason:
- Provides customers with a flexible payment solution
- Allows sceptical customers to inspect a purchase in detail, prior to paying
- Encourages trust and loyalty
- Solves common reasons for cart abandonment
Ultimately, these benefits will drive conversion and retention, which can help retailers to increase revenue while remaining competitive.
Learn more about how Splitit will diversify your checkout while maintaining a seamless customer experience through a white-label payment solution.
Get in touch to find out how we can help you bring PAD to your checkout.