With a combination of discounts across categories and retailers, and the holiday gifting season just over the horizon, Black Friday and Cyber Monday are the annual Olympics for brands, retailers, and shoppers. Consumers are expecting to stretch their wallets to check off gift lists and wish lists this Black Friday and Cyber Monday. For those shoppers who need a little help, a variety of credit and loan options are available. Rising to the top of that list of options is Buy Now, Pay Later (BNPL).
Last year, 3.7 percent of Black Friday shoppers used BNPL to pay for their purchases, and this number is projected to increase again this year. Afterpay, for example, saw a year over year increase of 2x alone for November transactions serviced by BNPL loans in 2020.
So based on what we saw for last year’s Black Friday and Cyber Monday, what have we learned that we can expect from shoppers this year?
1. It’s not only about the big ticket items, but the large checkout.
It’s easy to think that single high-priced items like furniture and electronics are the primary drivers for shoppers who have never used BNPL before to consider it as a payment solution. Indeed, both electronic and home goods are popular categories for BNPL use, and sticker shock is real even for those whose shopping decisions are driven by discounts. However, it’s the apparel purchases that BNPL plans were used to finance 71 percent of the time. What does this tell loan providers?
It isn’t the size of the basket that matters. It’s the final check out price.
That makes this Black Friday and Cyber Monday an exciting time for BNPL financers. Consumer electronics and apparel are the two product categories that shoppers are looking to buy for this year, and these two also happen to be some of the most popular categories BNPL is used for. Providers should see this as multiple opportunities to capture new and returning users, segmented by the type of purchase they use BNPL to finance.
2. It’s not just the youngest generations that are using BNPL on Black Friday.
Some think BNPL is a young consumer’s game. And indeed, Gen Z and Millennials are two of the biggest demographic adopters of BNPL. The typical consumer, for example, is between 18-24. However, during Black Friday and Cyber Monday, the most likely BNPL Black Friday shopper is 40-50 years old. So if you are looking to enhance membership experience and increase loyalty during a time in which your solution is needed most, it’s the older Millennials and Gen X that are looking to you for BNPL financing support.
Are you answering them?
3. Consumers with higher income actually use BNPL more.
There’s tremendous growth potential between retail activity and BNPL financing, which is likely why Walmart retired its layaway program and partnered with Affirm, a BNPL fintech.
Did you know that in a recent study, 51 percent of shoppers who used BNPL reported an income bracket above $100,000? This also happens to be the largest segment of BNPL users. This may be the case due to the propensity of BNPL to be used during last-minute purchase decisions. Shoppers may also be making an impulse purchase, or they are trying to make the most of a discount event or a shopping trip.
This type of need-it-now shopping behavior will be heightened this year as consumers shop earlier in fear of supply chain disruptions and inventory availability.
4. Banks and credit unions have little to offer members during this time.
It’s often mistakenly believed that banks and credit unions must sit out shopper occasions like Black Friday and Cyber Monday (with the exception of credit cards). With fintechs providing BNPL solutions and with increasing consumer awareness of credit risks, what financial institutions offer to their members during this time?
It’s time for banks and credit unions to not only leave the bench, but take advantage of this opportunity to deepen membership engagement and stay connected. Shopping is an emotional engagement, particularly when it is for gifting and the holidays. For banks and credit unions, an ideal time to provide their own BNPL solutions, and connect with members who are trying to stretch their purchasing power.
Learn about which of your members are most likely looking for a BNPL solution this Black Friday, and enhance your membership experience. Chat with us today!