Voice of the Industry

BNPL increasingly important to attract heavy online shoppers

Friday 3 September 2021 09:35 CET | Editor: Andra Constantinovici | Voice of the industry

Johan Rönnerman of AfterPay makes an detailed account of the latest ways in which BNPL has evolved as a trend, as resulting from the company’s AfterPay Insights

The world changes continuously, at a lightning-fast pace. Consumers’ online shopping habits are not any different. And one of today’s key consumer habits is the growing use of flexible payment options and Buy Now, Pay Later (BNPL) services. BNPL’s meteoric rise shows no signs of slowing down: in 2025, 30% of European ecommerce spend is expected to be made through BNPL services. With the continual growth of BNPL – and ecommerce in general – it is essential to know what consumers’ attitudes about online shopping are, what they are buying, and how they plan to shop in the future.

To gain insight into the above and understand drivers, demands, and trends in ecommerce, AfterPay Insights monitors consumer behaviour on a monthly basis. One of the key themes in AfterPay Insights’ analyses is the driver for consumers to choose where to shop. Which aspects are the most important? And is there a difference for specific consumer segments?

A major finding in AfterPay Insights’ analyses is, as expected, that online shopping volumes are driven by the inflow of new consumers from brick-and-mortar shops to online channels – this in combination with existing online shoppers gradually becoming more loyal and shifting even more purchases to online channels. The analyses also identify heavy online shoppers (>10 online purchases per month) to be of crucial importance. These shoppers only make up around 15% of consumers, but they hold major buying power: they make nearly 50% of all online purchases. This segment further stands out not only because they use a slightly different repertoire of methods/brands when paying online – but they also have different demands of merchants.

Attracting new online shoppers is associated with delivering on ‘hygiene needs’ while heavy online shoppers are won on ‘niche needs’

Consumers have three different types of needs when choosing where to shop. ‘Hygiene needs’ are the most important. Once these needs are met, the battle for consumers plays out in the field of ‘webshop choice drivers’ – this is where merchants need to perform better than their competition to win consumers over. If consumers then perceive merchants as performing similarly, ‘niche needs’ become the final, critical factor for choosing where to shop.


Heavy online shoppers choose webshops that can provide flexibility in many dimensions

As consumers shop online more and retention increases, their demands for flexible experiences (flexible returns, delivery, and payments) throughout the purchase journey grow. In Q1 of 2020, 26% of all online shoppers state a need for flexible solutions related to either payments, delivery, and/or returns. And in Q2 of 2021, this need increases to 31% of online shoppers. The need for flexible payment options is a key driver for overall flexibility needs. Only 18 months ago, 11% of consumers stated they wanted flexible payment options – and by Q2 of 2021 this share has already grown to 14%.

Taking the perspective of AfterPay’s shopping frequency segments, we see that 41% of heavy online shoppers in Germany, the Netherlands, and Norway expressed a flexibility need when shopping online during Q2 of 2021. Among light online shoppers, only 26% state that they need flexibility when shopping online. Heavy shoppers’ choice of payment brands also differs from the one of light online shoppers. Light shoppers use significantly more legacy payment methods while the market share for newer payment methods like BNPL and AfterPay is higher among heavy online shoppers.

Comparing consumers’ pre-pandemic shopping behaviour to their shopping behaviour in Q2 2021, we see that the online shopper base increases from 64% to 75% of consumers in the Netherlands, from 72% to 79% in Germany, and from 47% to 67% in Norway. Consumers who shop online less often – including shoppers who are new to ecommerce – place a higher value on ‘hygiene drivers’ like security. For these shoppers, BNPL services can be an attractive way to guarantee a secure and trustworthy experience: there are no financial risks, and returning an item is simple.

Consumer demand drives the growth of BNPL payment methods

The need for flexibility in online shopping in general, and flexible payment options specifically, will grow even further – this is evident, as the need for flexibility is driven by heavy online shoppers, who are overrepresented in the younger demographic.



But it is not just heavy shoppers who are attracted to flexible payments; BNPL services also offer experiential aspects like trust, security, and safety that primarily attract less frequent online shoppers. From that perspective, BNPL services and AfterPay are as much a marketing instrument and loyalty tool as they are a payment method – and an essential trend to join if you want to keep up with the rapid developments in today’s ecommerce world.

This article is part of the Payment Methods Report 2021 – Latest Trends in Payment Preferences, a comprehensive overview of the payment methods in scope for 2021, as well as best practices for checkout optimisation and customer conversion by addressing digital transformation, security, and localisation.

About Johan Rönnerman

Since 2018 Johan spearheads AfterPay’s journey from a local Dutch payment hero to an international challenger. He holds over 20 years of international experience working in the intersection between commercial, tech, and innovation. Starting his career within Virtual Reality and robotics while spending the last two decades within digital and ecommerce for retail, insurance, and banking.

About AfterPay

AfterPay, a business unit within Arvato Financial Solutions, enables merchants to offer their consumers a convenient and safe way of paying – AfterPay enables consumers to pay at the pace of life. Their Pay After Delivery product, available in Central and Northern Europe, comes with five different payment options: the 14-Day Invoice, Campaign Invoice, Consolidated Invoice, Fixed Instalments, and AfterPay FLEX.

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Keywords: Afterpay, online payments, BNPL, instalment payments
Categories: Payments & Commerce
Countries: World
This article is part of category

Payments & Commerce