With more and more people shopping online, online businesses are starting to grow quickly. First, it has led to more people using the dropshipping business model, which is a way to make money without doing much work. Second, we have payment options that work, like the Buy Now, Pay Later (BNPL) model.
The “Buy Now, Pay Later” model is a new way of doing things that is becoming more popular. You can even use a service to offer BNPL without waiting for the money or putting your cash flow at risk.
In this article, we looked at whether or not a BNPL model could work for dropshipping businesses. Start looking around.
Buy Now, Pay Later Mean?
As the name suggests, BNPL is a model that lets the customer buy something without making a down payment or getting credit. This is done by making a promise to pay the money back later. You might be wondering how this can be.
Many businesses use “Buy Now, Pay Later” based on how loyal a customer is or how they have paid in the past. Based on a close look, the company offers many options under BNPL, such as EMI, no-cost installments, or full payment after a certain period.
How It Does It
Here’s how the “Buy Now, Pay Later” model works:
You offer a BNPL wallet to a customer after looking at what they’ve bought from your brand in the past. This can be done based on how good the customers’ credit is (if you have relevant collaborations).
Once you know you can give a customer a BNPL wallet, you need to decide how much money they can put in it. It doesn’t make sense to give any customer as much credit as they want, because that could double or even triple the risk for the business.
Once the limit is set, the customer can use a BNPL wallet to buy products. Every time a purchase is made, the amount of that purchase is subtracted from the total limit and added to the amount that is “pending.” The way this works is a lot like how credit cards do.
Now, you give the customer the choice between easy installments (but only if they have a certain amount of credit) or a fixed time to pay you back.
If the customer can’t pay on time, interest is added daily or every month. After this, the customer can’t use credit or do any other kind of transaction until the last bill is paid.
Is it OK?
Buy Now, Pay Later is a safe credit or payment plan, but only under one circumstance. It has to do with good sense. Would you give someone you didn’t know in the market credit? We won’t. This is why we don’t let just any customer have credit or BNPL. For the same, you need to make a model.
How dangerous is BNPL? You decide this based on how well you know how to reduce your risks. With this payment model, there will always be some risk. But you need to know the basics of how to get your money back on time. Reminding the customer, holding a portion of their credit card limit, setting up an autopay card in case of problems, and many other similar things.
What are the ways I can pay?
When you give a customer the option to “Buy Now, Pay Later,” what payment options can you give them?
- Pay in full in 30 days or longer, depending on how much trust you have in the person.
- Pay in installments, usually between 3 and 6 payments with no interest.
- Divide the money and add some interest.
- Pay half now and the rest over time.
Can You Use a Buy Now, Pay Later Seller?
A supplier is one of the best ways to offer Buy Now, Pay Later. On the market, there are many vendors who can help you set up BNPL on their accounts. Suppliers will be the ones in the middle. They are responsible for getting the money back or giving the customers the right amount of credit.
The customer is given the chance to pay later.
The payment goes to the dropshipping business as soon as the order is made.
The BNPL service takes care of both sides of the business by giving both the customer and the dropshipping business a solution that works. When you don’t have the right systems in place to handle BNPL in a risk-free or low-risk way, it’s best to work with a reliable supplier.
What’s good about BNPL
You might be wondering why BNPL is a good idea. With Buy Now, Pay Later, dropshipping businesses can improve their sales and get better results.
Better Sales
BNPL payment model helps you improve your sales and convert more. For instance, if you sell a product for USD 30 with a one-time payment, customers may not want to pay that much all at once. Even if the customer thinks your product is worth the price, they may not like paying so much all at once.
On the other hand, if you offer a 70%:30% payment plan, like USD 20 up front and USD 10 later, more people may buy from you. In an ideal world, this would be true not only for the dropshipping industry but also for many others, such as the smartphone industry, retail, etc.
If you sell smartphones, letting people pay for them in installments helps a lot more people buy from you. People are willing to pay a little more for this option because it gives them more flexible ways to pay. So, you can raise the payment a little and offer BNPL to get more sales and make a good amount of money.
Better Service for Customers
Millennials enjoy shopping a lot. Isn’t it? But for a simple experience, you need to offer something extra, like loyalty benefits, reward programs, discounts, etc.
For example, you could offer a 5% discount on BNPL to get your user interested in the option. This will make them happier, and once the user sees that a method works, they will want to use it again and again. That sure makes things better for your customers.
Doing Business Again
The BNPL model works for customers because it gives them the freedom to pay whenever they want after a reasonable amount of time. This gets you more customers who come back. If your competitor sells a similar product without BNPL, your dropshipping business may be better because customers can pay in 30 days or in other ways.
For instance, the user can pay in installments or buy 30 days to pay the full amount. This makes it easier for customers to come back. It is a great way to keep customers coming back and make them more loyal.
Paying is easier
The BNPL method of payment is easier. The customer only has to fill in their information once, and then they can pay with one click. So, once the product is chosen, there’s no need to add card information, an OTP, or anything else. If you click on the BNPL account, payments are made right away. This saves your users time because they don’t have to deal with complicated payment processes.
Conclusion
Businesses that drop ship can benefit from the “Buy Now, Pay Later” payment option. There is a level of risk, but there is risk in everything. Even if you get an order from a customer and deliver it directly through a supplier, you risk the quality and type of packaging you send.
So, the risk of BNPL is worth taking when you think about what it can do for your business. Before you use BNPL, just try making a model that builds customer loyalty. This will make problems easier to deal with and make the model more useful.