Delayed payment options will boost online conversion but also return volumes

With an increasing amount of clothing & apparel retailers that offer delayed payment choices in an effort to drive conversion, retailers that offer’try before you buy’ choices and are well positioned to deal with processing returned goods will be most likely to make the service a success, based on GlobalData, a leading data and analytics firm.


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Advertisers such as H&M, Finery and Arcadia brands Topshop and Dorothy Perkins now offer a’pay later’ online payment choice to encourage shoppers to buy when they may not have the funds readily available. ‘Try before you buy’ payment methods often appear simpler as a short term solution in comparison to conventional credit accounts.

Sofie Wilmott, Retail Analyst in GlobalData, remarks:”Delayed payment methods will break down barriers to buy online and boost average purchase value, but retailers will soon be hit with a greater yields. Undoubtedly shoppers will buy more easily, supporting volume expansion, but when the realisation of paying for things sets in, a greater percentage of things will be sent back.

“Offering delayed payment choices to consumers therefore includes risk. More things will sit at the warehouse unavailable to be bought, there’s a greater prospect of inventory being soiled and a higher cost of processing and fulfilling returned goods.”

A current GlobalData survey revealed that 52 percent of online shoppers frequently buy more things than they expect to maintain when buying online, and’pay later’ choices will only promote this shopping mentality. This makes it essential for retailers to check delayed payment choices on their own sites to assess the effect on their clients’ shopping behavior, which will vary considerably based on target market and product type.

Wilmott proceeds:”Returning goods purchased using the delayed payment option will be much simpler process for shoppers, because the need to await refunds is void, but retailers will have a greater volume of things to process and make available for sale once more. This puts extra pressure on an already costly operation, especially those that rely on obsolete systems and fulfilment centres.

“While consumer facing initiatives are in the forefront of merchant investment strategies in 2017 and 2018, players introducing delayed payment methods need to concentrate on improving back-end operations to decrease the time merchandise is spent offline so earnings opportunities aren’t missed.”

See also

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  3. benefits-of-pos-system-for-brick-and-mortar-stores
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  5. pos-transformation-in-physical-store-workflow
  6. pricing-options-for-different-pos-systems

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