The giant retailer is partnering with Affirm-instead of acquiring the company-in order to test the impact that BNPL can have on sales. Other BNPL providers will have to find similar paths in order to keep up with the margin improvements Afterpay will realize. Expect Afterpay’s app to be embedded into and absorbed by the Square app after the acquisition is complete.Īs Afterpay gets absorbed into Square, its payments will increasingly come from within the Square network, not the traditional payment rails. Why does Square need Afterpay’s app to enable merchants to advertise when it has broader reach than Afterpay does? Answer: It doesn’t. Standalone BNPL Providers Won’t Last Long This is already happening with BNPL specialists like LoanStar Technologies in home improvement and Prima Health Credit in elective medical procedures. Few (if any) will be able to do that in more than just a couple of product categories resulting in specialization by product category. BNPL providers will need to be masters of the customer journey. Today’s merchants will demand accurate attribution statistics. Sound familiar? Visa and MasterCard made the same claims about credit cards they were launched. BNPL providers claim that they help merchants make sales that wouldn’t have been made otherwise. Sharpen their sales attribution claims.Brands will be able to choose the products they want to promote via sponsored listing formats, and pay only when a shopper engages with the ad. Afterpay, for example, announced that it will enable its merchant partners to advertise on the BNPL firm's app to boost their promotions, products, and offers. To succeed and differentiate, BNPL providers will: If the answer to these questions is yes (and BNPL providers claim it is), then BNPL (and payments overall) are an element of the marketing mix for marketers to leverage. For example, by varying payment terms-for example, spreading payments for a purchase over a period of time-marketers can influence consumers’ likelihood to buy.Īs merchants experiment with surcharges on card-related payments, do they run the risk of decreasing sales or average transaction sizes? Do they risk losing sales to merchants who don’t surcharge on card transactions? Payments have become an important element of the selling proposition and should be considered the 5th P of marketing. The four variables help a company develop a unique selling point as well as a brand image.” “The marketing mix is the set of controllable variables that the firm can use to influence the buyer’s response. According to the 4 Ps creator Northwestern professor Philip Kotler: Students of marketing learn about the 4 Ps of Marketing: product, place, price, and promotion. Today, BNPL influences consumers’ choices of products and providers (i.e., earlier in the journey). Traditionally, installment payments, POSF, BNPL-whatever you call it-was an option at checkout (i.e, the end of the customer journey). What’s different-and important-about today’s buy now, pay later service is its place in the customer journey. That’s an odd perspective because BNPL-also known as installment payments and point-of-sale financing (POSF)-has been around longer than some of the observers.
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