How the 2020 acceleration of ecommerce elevates the role of payment options this holiday season.

Dec 18 2020 | PayPal Editorial Staff

Learn how offering buy now, pay later (BNPL) payment options can help drive sales and average order value (AOV).
PayPal’s Greg Lisiewski, VP of Global Pay Later Products at PayPal, recently joined WWD editor Arthur Zaczkiewicz at the WWD Apparel & Retail Summit, to discuss insights and trends around Black Friday and Cyber Monday and what’s in store for luxury and fashion retailers in 2021. As consumers begin to shop for an unprecedented holiday season, Lisiewski shared his insights on the growth of ecommerce — a trend that has accelerated as a result of COVID-19 – and the role of payments technology. In the early months of the pandemic, year-over-year (YoY) ecommerce growth spiked between 30-40%, and experts predict that it will account for 25% of retail sales in 2020.

Retailers feeling the pressure as holidays approach.

Holiday sales are peaking earlier this year, due in part to a holiday shopping season that gets longer each year, but also because of the uncertainty around delivery and shipping logistics and returns. With in-store shopping limited and people opting to shop from the safety of home this year, customers aware of the possibility of delays are aiming to get shopping done earlier to receive their goods in time for the holidays.
This shift has made adaptability and customer-centricity key priorities for retailers as customers continue to blur the lines between online and offline channels. Retailers, especially fashion retailers, are feeling the pressure during this unique holiday shopping season. A recent PayPal survey about how COVID-19 has impacted fashion retailers highlighted that nearly half (47%) reported felt unprepared for the holidays, with about a quarter (22%) saying their future depends on holiday sales.1

These evolving customer behaviors make it important for retailers to be hyper-focused on engaging customers — especially as the customer journey can now start on any channel, including in-store, online, and mobile. And the desire for financial flexibility is an especially compelling factor driving consumer behavior this year.

Buy now, pay later options can ease pressure for retailers and customers.

The best way for brands to engage shoppers is by listening to consumer preferences, monitoring shopping behavior, and creating products that meet shoppers’ needs, Lisiewski shared. This includes providing more flexible ways to pay; 42% of fashion retailers agreed that “buy now, pay later” (BNPL) options can help combat shopping cart abandonment and increase sales.2
Lisiewski and Zaczkiewicz discussed the surge in the BNPL space, which can afford consumers financial flexibility and additional control over their purchase decisions. An appealing payment method during these uncertain times, in a recent survey PayPal conducted amongst millennials and Gen-Z consumers, one in eight respondents indicated that they will consider using buy now, pay later installments as a payment method during this year’s holiday season.3 And of those participants who say they will use buy now, pay later, 41% cited: “I like having the flexibility to pay over time” as a reason.4 Flexible payment choices can help consumers manage their cash flow and align expenditures with income, without interest or additional costs.
Retailers benefit, too. PayPal Checkout converts
82 percent higher on average than a checkout without PayPal.5 With new solutions like Pay in 4*, part of PayPal’s suite of global pay later products, retailers can cross ‘flexible financing options’ off their to-do list, allowing them to focus on running their business. BNPL options also enable retailers to help convert browsers to buyers and drive up average order value (AOV). Businesses that promoted PayPal Credit** on their site saw a 21 percent increase6 in sales versus those who did not, and merchants with pay over time messaging on their site saw a 56 percent increase7 in overall PayPal average order values.
The Pay in 4 value proposition for consumers is clear: interest-free, fee-free options to purchase the items they want. Merchants — especially those that already have PayPal — will also get value from the in-wallet offering as customers can enjoy POS financing on expensive and everyday purchases alike.
During the Q&A session, Lisiewski emphasized how BNPL plays an important role in the luxury vertical, where reducing friction, creating personalized experiences, and prioritizing security is critical. BNPL is a great enabler of privacy, especially in the era of mobile. Where older methods of in-store financing have become antiquated, BNPL solutions like Pay in 4 facilitate a secure, mobile-friendly way for customers to make a purchase before they even come into the store.
As one of the world’s most recognizable brands and serving more than 300 million active accounts around the world, Lisiewski also noted that PayPal is in a unique position to bring familiarity and certainty to BNPL experiences for both consumers and merchants.
With the recent launch of Pay in 4, PayPal is expecting to learn a great deal about how consumers are using BNPL in the U.S., as well as in the U.K. and France where it has also launched pay later solutions. Pay in 4 is available at millions of online merchants where PayPal is offered, and brings the consistency, security, and reliability of the PayPal mark to help give consumers peace of mind.
To get in touch about our Global Pay Later suite,
email us.
*Pay in 4 is available upon approval on purchases from $30 - $600. Late fee amount and eligibility for Pay in 4 vary by state. 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. Learn more about Pay in 4 here.
**PayPal Credit is subject to consumer credit approval
1An online study commissioned by PayPal and conducted by Netfluential in August 2020 involving 1000 U.S. PayPal SMB merchants selling products directly to consumers through a website or e-commerce platform.
2 An online study commissioned by PayPal and conducted by Netfluential in August 2020 involving 1000 U.S. PayPal SMB merchants selling products directly to consumers through a website or e-commerce platform.
3 Online study commissioned by PayPal and conducted by Atomik Research in October 2020 involving 2,011 U.S. consumers between the ages of 18 and 39 years old.
4 Online study commissioned by PayPal and conducted by Atomik Research in October 2020 involving 2,011 U.S. consumers between the ages of 18 and 39 years old.
5 Checkout conversion is measured from the point when a consumer selects a payment type to completion of purchase within the same browsing session.
6 Average annual incremental sales based on PayPal's analysis of internal data among 210 small and middle market merchants with annual online sales up to $37M with messaging and buttons against a broader group of merchants that did not, with 24 months of continuous DCC volume between January 2016 and November 2019.
7 Average lift in overall PayPal AOV for merchants with PayPal Credit messaging versus those without, 2019 PayPal internal data.


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