As the e-commerce sector continues to grow in leaps and bounds, so does the potential for emerging markets online to get a piece of the pie.
And while many factors contribute to this potential, one that stands out is the “buy now, pay later” (BNPL) model.
What is the BNPL Model?
Under the BNPL model, consumers can make online purchases and then pay for them later, either in installments or in one lump sum. In contrast, traditional e-commerce requires consumers to pay beforehand.
There are several BNPL providers out there, each with its unique offerings. However, the two popular best buy now pay later sites in the space are Afterpay and Klarna.
Why is the BNPL Model So Popular?
There are several reasons why the BNPL model has taken off in recent years. Firstly, it provides consumers with more flexibility when paying for their purchases.
Secondly, it helps to ease the financial burden of making an online purchase, as consumers can pay for their purchases over time instead of all at once.
Lastly, the BNPL model is also popular because it allows consumers to access products and services they may not have been able to afford otherwise. This is especially relevant in emerging markets, where incomes are often lower than in developed markets.
How Does the BNPL Model Boost E-Commerce Potential in Emerging Markets?
How to Boost E-Commerce Sales? There are several ways in which the BNPL model can boost e-commerce potential in emerging markets. Firstly, as mentioned earlier, it provides consumers with more flexibility when it comes to paying for their purchases.
This is particularly relevant in markets where incomes are often low and consumers may not have the disposable income to make an upfront payment for online purchases.
Secondly, the BNPL model can help increase an online purchase’s average order value (AOV). Consumers purchase higher-priced items when they know they can spread the cost out over time.
This, in turn, can lead to higher revenues for e-commerce businesses.
Thirdly, the BNPL model can help to attract new customers to an e-commerce platform.
BNPL is typically more consumer-friendly than e-commerce. As such, it can help bring in new customers who may not have considered making an online purchase.
Fourthly, the BNPL model can help to improve customer retention rates. BNPL models are often more satisfied with their purchases, and as such, are more likely to return to the same e-commerce platform to make future purchases.
Finally, the buy now pay later website model can help to increase the number of transactions per customer. Customers who use the BNPL model are more likely to make multiple purchases from the same e-commerce platform due to the increased flexibility and convenience that the BNPL model offers.
Outlook – 2030
With a CAGR of 45.7% between 2021 and 2030, the global buy now-pay-later market is expected to expand from its 2020 valuation of $90.69 billion to a total of $3.98 trillion.
It might be helpful to access short-term financing options in today’s economy. It allows you to make immediate purchases, like those for clothing, electronics, and home repair.
Customers can make purchases and have their payments handled easily. Thanks to the installment loan process conducted at the point of sale (POS).
Many buy now pay later stores now provide this option that lets customers buy necessities like food and clothing without paying the full price.
The expansion of the worldwide buy now pay later with the worldwide shipping stores industry is fueled by business owners. It is due to the increasing use of such platforms for financing expensive items like machinery, raw materials, and workers’ salaries.
Buy now, pay later payment technology is becoming increasingly popular among young people because of its many advantages. It includes buying expensive smartphones and laptops, paying tuition and stationery costs, and covering cafeteria bills.
The BNP market is expanding rapidly because more individuals in developing countries use online payment methods. The expansion of the e-commerce market worldwide. The rising popularity of buy now, pay later platforms is fueling the market’s expansion.
Unfortunately, the expansion of the business or overseas online shopping is hampered by the hefty costs associated with late and returned payments. On the other hand, the buy now pays later is likely to see substantial growth. It is due to rising demand for delayed online purchases and increased adult spending on luxury goods.
In 2020, the retail goods sector or cross border shopping accounted for the highest market share. It is driven by rising consumer spending on necessities at brick-and-mortar establishments using the buy now, pay later model.
Serious medical conditions cost a lot of money to treat. That’s why the healthcare sector is growing faster than any other sector in the economy.
Furthermore, the global adoption of buy now pay later online stores is anticipated to be a lucrative potential in the healthcare business. It is due to the increasing proliferation of COVID-19 patients and the rising need to treat this condition.
Over the projected period, the rising prices of numerous household appliances across Asia and the Pacific account for this predicted expansion. The buy now pay later online shopping market in Asia-Pacific countries is expected to expand rapidly over the next few years. It is mostly due to rising demand from young people in developing nations.
Growth opportunities, limitations, and trends in the global buy now pay later market are the subject of this paper. The study uses Porter’s five forces analysis to explain the effects of suppliers’ bargaining power, rivals’ intensity, and new entrants’ threat. Also, substitutes’ attractiveness and buyers’ bargaining power in the worldwide buy now, pay later market.
In conclusion, the BNPL model is a great way to boost e-commerce potential in emerging markets.
This is because it provides consumers with more flexibility when it comes to paying for their purchases. It can help to increase the average order value of an online purchase. It can also help to attract new customers and improve customer retention rates.