Recession-Resistant Retail: How to Help Increase Conversions in These Challenging Times

Mar 09 2021 | PayPal Editorial Staff

During these difficult financial times, many consumers are looking for ways to make their money go further. Learn how leveraging online consumer financing tools can help give your customers exactly the flexibility they need right now.
It may be true that change is inevitable, but 2020 is proof that too much change can easily get overwhelming. The coronavirus is still impacting daily life for most Americans, and many are out of work. Enterprise retailers have had to quickly adapt to a new way of doing business, while also working to maintain sales during a sudden economic downturn.

Consumers have quickly adjusted to more online shopping than ever before. 40% report shopping online more and shopping in stores less, up from just 12% who reported doing so in early March.1 

Meanwhile, shoppers also feel challenged to make every dollar go further. More than 13 million Americans are unemployed,2 and the average consumer believes the coronavirus pandemic will last at least another 11 months.1 They are understandably wary about spending money and eager to find ways to gain more control over their monthly budget.1

For enterprise retailers, this presents an opportunity to look for new ways to lessen the stress of shopping, build trust with your customers, and increase conversions. Let’s take a closer look at how you can help meet your shoppers’ needs.
 

What are consumers looking for now?

Many consumers are facing financial difficulty, and yet online shopping continues to grow.1 But as the coronavirus pandemic continues, shoppers are looking for ways to make every hard-earned dollar go further, including:

Flexible payment options. This year, financial uncertainty is rampant, and Americans have less savings.1 Consumers are having to get creative to pay for essentials, so they may appreciate retailers that offer flexible payment options, like deferred interest financing options and installment plans. In fact, 57% of consumers say that the availability of digital payment options would impact the choices of where to shop.1

Interest-free payments. Consumers may want the option to pay for a product over time, but they don’t want the added expense or stress of interest charges. Interest-free payment options may help improve the odds that shoppers don’t get scared off before completing a purchase. 

Maximum buying power. With so many people out of work, consumers are looking for any help they can get in buying necessities. Buy now, pay later financing can help them feel more confident about checking out. Retailers that offer these types of options are seeing real results: As an example, 31% of fashion retailers say that offering buy now, pay later solutions helps increase sales.3

Trusted brands. In times of uncertainty, consumers are drawn to shopping experiences that create some sense of certainty.3 Many are showing preferences for brands that they already know and trust, so they can feel confident that their financial information will be secure and that their order will arrive as expected.
 

Giving your customers flexibility

These consumer trends point to an exciting opportunity for enterprise retailers: Adding buy now, pay later options to your ecommerce site can give your shoppers the flexibility and confidence they crave right now.

For many consumers who are really feeling the economic downturn, the ability to shop and pay later could be the difference between affording essentials, such as groceries and home goods, and going without. Flexible financing options also encourage consumers to spend money in areas where they might normally feel the need to reduce spending, like fashion, beauty, and home and garden.
 

Buy now, pay later 

Pay Later options from PayPal are automatically included with a PayPal Checkout integration, at no additional cost to you. On your site, your customers may be presented with two options to shop now and pay later:

Pay in 4: A short-term, interest-free installment offering. Pay in 4 enables customers to pay for purchases in 4 payments, while businesses get paid up front.8 

PayPal Credit: Special financing offers available for larger purchases. Customers can pay over time while businesses get paid up front.9

You can incorporate PayPal’s buy now, pay later payment options to your ecommerce site with a single integration. And, when you add dynamic offer messaging that presents the most relevant financing offer to each shopper, you can help grow sales and average order values.
 

Benefits of PayPal Pay Later Offerings

Pay in 4 and PayPal Credit can benefit enterprise retailers – even in a down economy – by meeting the current needs of consumers: namely, greater flexibility and the ability to pay for purchases later.
 

Potential benefits to your business include:

More conversions. Offering the option to buy now and pay later can help convert even more browsing customers into buying customers. 42% of fashion retailers agree that giving customer the choice to pay later could help combat shopping cart abandonment.3 

Frictionless approvals. PayPal has more than 346 million active accounts worldwide. Since these shoppers already have an account with PayPal, the approval process is frictionless. Applying is quick and easy, which keeps the checkout flowing smoothly. New customers may require a soft credit check for Pay in 4 and a regular credit check for PayPal Credit, a process that usually takes only a few seconds.

Increased sales. Offering flexible payment options through PayPal can help increase overall sales, since shoppers feel like they have more buying power. One survey found that 33% of PayPal Credit users wouldn’t have made their most recent purchase if PayPal Credit wasn’t offered.4 Simply adding PayPal Credit to your product and cart pages could result in 21% more incremental sales.5

Increased average order value. In addition to helping boost sales overall, messaging buy now, pay later options on your website can also help increase the average value of each order. In fact, businesses with pay-over-time messaging on their site saw a 56% increase in overall PayPal average order value.6

Increased customer loyalty and lifetime value. Consumers want to feel confident when they spend money online, and promoting PayPal Pay Later options on your site is an effective way to provide flexible financing through a well-known company. When customers see that your site accepts PayPal, most appreciate having payment options they can trust, even if your brand is lesser known. 59% of surveyed customers said they are more likely to trust an unfamiliar retailer when PayPal is present.7 

In an unprecedented year, enterprise retailers are looking for new and creative ways to meet the needs of consumers. Today’s shoppers are demanding greater flexibility in their payment options, and PayPal can help increase conversion rates and revenues, improve customer loyalty and lifetime value, and decrease the cost of customer retention and acquisition. 

Take the first step toward meeting your customers’ changing expectations with PayPal Pay Later. Get started today. Visit our site, talk to your account manager or call 855-477-5687 today.
 
Sources:
1 How We Shop: Measuring the Rapid Digital Shift, PYMNTS.com, August 2020.
2 Employment Situation News Release. The Bureau of Labor Statistics. 2020. Accessed September 2020.
3 Online study commissioned by PayPal and conducted by Netfluential in August 2020 involving 1,000 U.S. PayPal merchants selling products directly to consumers through a website or e-commerce platform. The sample is made up of merchants in different verticals, 200 in fashion, 200 in cosmetics and 600 across home-goods, furniture, garden electronics and sport.. 
4 Online study commissioned by PayPal and conducted by Logica Research in May 2020 involving 2,000 U.S. consumers, half were PayPal Credit users and half were non-PayPal Credit users.
5 Average annual incremental sales based on PayPal’s analysis of internal data among 210 small and middle market merchants with annual sales up to $37MM against a broader group of merchants with 24 months of continuous Direct Credit Card volume between January 2016 and November 2019.
6 Average lift in overall PayPal AOV for merchants with PayPal Credit messaging vs. those without, 2019 PayPal internal data.
7 Ipsos MORI Conjoint Research (US respondents). Methodology: Online survey conducted across seven markets (UK, Germany, Italy, Spain, US, Australia, Brazil) with 1,500 respondents per market/10,500 total respondents (boost in Brazil to ensure 500 PayPal users), including 6,930 PayPal users. Respondents were online shoppers who have made a purchase in the last month, 2018.
8About Pay in 4: Consumer late fee may apply for missed payments and varies by consumer’s state of residency. Loans to California residents are made or arranged pursuant to a California Finance Lenders Law License. PayPal, Inc. is a Georgia Installment Lender Licensee, NMLS # 910457.
9 PayPal Credit is subject to consumer credit approval.

The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.

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