Buy Now Pay Later - The X Factor for Retail Success in the new normal
Stalled economic growth. Rising unemployment. Uncontrolled inflation. As India mounts a fiscal and healthcare response like never seen before, earning the tag of the world’s fastest-growing emerging market will take a mammoth effort in the light of the challenges that lie ahead.
To curtail the contraction in the economy, consumer spending in India will have to increase. The worrying factor is that India’s middle class which contributes to 70 percent of the consumer spending is shrinking. According to a Pew Research Centre report, India’s middle-class population shrunk by at least 32 million. [1]
This is the grim reality in the post COVID-19 world.
Nifty measures will now have to be thought of by retail businesses in India who were already reeling under the impact of the prolonged national lockdown and are now facing the brunt of micro-lockdowns prevalent in many states.
Buy Now Pay Later (BNPL) is fast emerging as the X factor for retailers who are looking to woo consumers with the instalment purchase proposition. There is no denying the fact that the prolonged lockdown situation has created a pent-up demand among consumers. Amid the prevailing economic uncertainty, India’s aspirational middle class will most certainly go with the idea of deferring a payment for a product they want immediately.
The detractors will say that you are eventually paying the entire value of the product. Oh absolutely, but what’s missing from that inference is the comfort, the cushion a BNPL gives to a family i.e., helping them meet their needs and yet manage the purchases within their monthly budgets. Not to forget the convenience factor where no paperwork, no-cost pay later instalment purchases happen quickly over a point-of-sale terminal like Plutus Smart.
Pine Labs’ success with BNPL in India where it enjoys a market leading 95% share in offline BNPL services is testament to the success of this proposition that appeals to the consumers of today.
Can the India success of Buy Now Pay Later be replicated in other untapped markets of the world? The answer is an emphatic “Yes”.
In fact, we are already seeing progress in that direction.
The recent launch of BNPL by Fave in Malaysia and Singapore offering instant access of interest-free credit to over 6 million consumers is one good example of the deep in roads happening in new markets.
Newer segments are witnessing BNPL adoption as well and are set to woo an untapped cohort of consumers to the BNPL ecosystem. Our company Qwikcilver recently announced the launch of Buy Now Pay Later for e-gift cards thereby enabling customers to buy Gift Cards of top brands at no-cost Pay Later option.
As I conclude, the following quote from NBA legend, the late Kobe Byant sums up the situation beautifully,
“Everything negative — pressure, challenges — is all an opportunity for me to rise.”
The leaders and laggards in this challenging decade will be determined by how quickly retail businesses can improvise and embrace emerging fintech in a big way. The need to reinvent business models in the light of this unprecedented global health emergency is imminent. Buy Now Pay Later at the point-of-sale is most certainly the X factor that can help retailers sell more, sell often in these trying times.
(The author of this article is Sunil Param, Head of Content and Communications at Pine Labs. Views expressed in this article are that of the author.)
[1] https://www.pewresearch.org/fact-tank/2021/03/18/in-the-pandemic-indias-middle-class-shrinks-and-poverty-spreads-while-china-sees-smaller-changes/
