Online shopping has no doubt become a major trend as far as the retail industry is concerned. In a bid to obtain more customers, increase sales volumes and provide a better shopping experience, e-tailers or online portals have begun embracing a host of solutions and concepts. The “shop now, pay later’’ (buy now, pay later) is the latest amongst such concepts or trends being embraced by e-tailers as they look to gather traction on volumes and customer loyalty.

“This unique and interesting concept helps complete the purchase process in a much easier and time efficient manner allowing for a higher number of successful transactions and greater purchase volumes.”

 

 

Take for example the case of e-commerce company Flipkart – at the checkout stage buyers get to choose the ‘’pay later’’ option and can instantly complete the order. This ‘’single tap’’ option, provisioned by fin-tech service providers such as ePaylater , is fast becoming a rage as more number of buyers opt to use the same.

In fact, the concept of ‘’buy now, pay later’’ is making enough noise that the other e-commerce giant operating in India – Amazon, has adopted a similar concept with a slight difference. For ‘The Great India Sale’ held on 21st of September (20th for Prime Members), Amazon paired up with HDFC Bank to offer a three month credit to all the credit card holders. HDFC Bank Credit card holders could actually purchase and opt for ‘’pay later’’ that allows them to begin their EMI payments from the month of January, 2018. A bit different in approach but of course, has the similar objective of – Credit extension.

The above two instances point out to the growing popularity and relevance of ‘’shop online but pay later’’ when digital or e-commerce companies are making a headway as far as retail industry is concerned.

As per a report by CIO, more than 50 e-commerce portals in India, some of which include – FreshMenu (Cloud Kitchen), Zomato (Restaurant Finder), Nykaa  (Beauty Shop), Voonik (Fashion retailer) and PVR (Cinemas), have embraced the concept in a hope to ride on this new and exciting (mode-of-payment) wave.  These portals hope to gain two important things amongst a host of others – a) Lessen the number of transaction failures during checkout phase and b) Create a much more refined and hassle free user experience during the transaction phase.

 

Does it entail risks?

One might ask – what is the guarantee of a buyer paying back the borrowed credit to the e-tailer or the fin-tech service provider? Does it not entail a certain risk?

The answer is – Yes.

It does come with the baggage of a certain risk and e-tailers and providers alike, stand a certain chance of loss. But the innovation it brings to the payment process coupled with the faith that – buyers will definitely pay but only need that extra time period to do so, has encouraged players to move forward and execute the concept.

Another way to avoid risk is by careful assessment and selection of beneficiaries of the credit. As Akshat Saxena of ePaylater, puts it –

 

‘’People paying us back is a credit risk that is there in the business, which any lending unit has, be it a loan product or a credit product. The best way to tackle that is at the source itself: we let in only trustworthy transactions and customers.’’ 

 

 

Millennials – The more likely users?

It is not surprising, that people, who are utilizing this concept and will continue to do so, are the millennials. This tech-savvy demographic spends a lot of time browsing the internet and looking out for various options before making a purchase. Their first instinct is to move online and check through aspects such as – product variants, prices, delivery time, etc.

Since these users carry out most of their purchases over the internet, they are often burdened with the hassle of following multiple steps to complete a purchase. This results in time consumption and adds to the stress levels. ‘’Buy now, pay later’’ shrinks the time spent on purchase process to a single tap and also alleviates the stress of going through multiple steps.

 

To conclude, ‘’buy now, pay later’’ as an extension form of credit is not new as the same has been in existence in the Indian market system for ages. Every entity from a pan shop to a local Kirana and departmental store has been extending credit to the Indian customers for a very long time. This concept of buying first and paying later or at the beginning of the next month (when salaries are usually credited) is what has been the business model for small operators in the market.

As the digital revolution took place, shopping moved online and few fin-tech start-ups have tweaked the same to bring out an innovative method of – buying now and paying later, online. As far as the experience of both the shoppers and portals go, the concept is here to stay as it primarily reduces the shopping time and ensures higher transaction success leaving the shopper much more satisfied and the portals, relieved.

 

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Online shopping has no doubt become a major trend as far as the retail industry is concerned. In a bid to obtain more customers, increase sales volumes and provide a better shopping experience, e-tailers or online portals have begun embracing a host of solutions and concepts. The “shop now,...