When we think about payments on an e-commerce website we mean the payment options that allow a user to pay for the products. The goal of this article is to present an overview of different ways from the standard single-time payment. These solutions can be useful in many industries and improve the conversion rate of different e-commerce projects.
The e-commerce bike industry
Let’s consider as an example the bike industry (professional road bikes, mountain bikes, and gravel bikes). The product itself is not e-commerce ready and easy to be sold online: as a final user you want to test it, you need technical assistance on the assembly, and you want advice about the best configuration or solution for you. So typically you prefer to buy it at your nearest physical store where someone can help you with the common doubts. More important and more straight to the point: you’re skeptical about spent some thousand euro/pounds/dollars online. And if you are going to do it, maybe you prefer to avoid a single transaction to pay for the product.
If you consider the B2C e-commerce websites and a worldwide overview, the common e-commerce payment methods like Credit Card, Paypal, E-Wallets, cash on delivery, and more. With all these solutions, you are still locked to a single payment action. Every solution can be more or less secure both from the consumer or merchant point of view. But none of them avoids the skepticism about the big amount of the single transaction. How can e-commerce projects help a typical user with the block described above? When it comes to the price topic, some alternatives to the one-shot transaction are possible.
Pay in installments
A way to provide more confidence about the payment of a big amount transaction is to offer a payment in installments solution. This way of paying is more used in other industries and in physical transactions. Consider the car industry or the house/properties industry, when many people are used to asking for a loan from the bank and paying back their new car with a smaller amount each month. This payment option is common and is not new to many people. But when it comes to e-commerce it’s typically not allowed or not considered: mainly because the e-commerce industry started with less expensive products (think about Amazon with books). But with the rising of e-commerce websites also for more expensive products (as the bike industry described before) also online people are interested in payment in installments solutions. These solutions “allow shoppers to purchase their product and pay in a predetermined number of installments, over time. These solutions are often offered to customers with no (or extremely low) interest, meaning no additional cost to the customer.”
These solutions are spreading in the e-commerce scenario. Australian and United States Millennials prefer to buy now, and pay later also because “it enables them to make larger purchases, even if they don’t have that amount of cash on hand.” (find out more in this source article: Big Commerce blog). Pay later is another option and more about the possibility to test the product before paying for it. Some common options are the payment in 30 days.
Solutions: Klarna vs Scalapay vs Afterpay & other alternatives
There are some solutions available on the market and each one is famous or not depending on the worldwide and country-specific adoption. A quick list below:
- Klarna – klarna.com: Klarna is a well-known Swedish solution, that has spread in the United Kingdom. Most of the UK e-commerce websites are adopting this solution. It offers different solutions as “Pay Later in full after 30 days“, “Pay Later Installments into 3 or 4 equal, interest-free installments” and other solution (if you’re a retailer, consider also the option “In-store payment”).
- Afterpay – afterpay.com: Afterpay is an Australian solution spreading quickly and adopted by many US retailers. It offers a “Pay in 4, interest-free (USA solution) with a reminder of every due date for the customer.
- Split it – splitit.com: Split It is an American (United States) solution that offers the flexibility to pay-over-time option. The shoppers will use their existing credit cards without interest charges or fees. This solution’s well integrated with common e-commerce platforms (Magento, Shopify, BigCommerce, and more).
- Scalapay – scalapay.com: Scalapay, an Italy-based solution, offer 3 installment options with the user card (the details are required only on the first purchase). It’s available also for bigger e-commerce solutions such as Salesforce Commerce Cloud or SAP.
- Affirm – affirm.com: Affirm, United States based, have a pay-over-time solution and it’s common the United States as a payment method.
- Zip Money – zip.co: Zip Money it’s another solution, used by Pushys.com, an Australian Marketplace of bikes, accessories, and clothing.
- Other: other solutions are available and for sure there will rise new ones during the next years.
Consider that the solutions described before can be country-specific and have a cost for the e-commerce platform. Usually, a transaction fee is required (as Klarna in the US, the reference here).
E-commerce bike industry examples
let’s return to the initial example: the bike industry and the skepticism about the big amount of a single transaction. The solutions described can help the shoppers to mitigate this aspect. Some big brands have adopted a pay-in-installment solution.
Canyon, canyon.com, the German-based bike manufacturer, has a partnership with Split it, and a dedicated case study is available here: Canyon Success Story. The solution is integrated for the worldwide payments in the e-commerce store (started with 6 countries for a test, visit the GB website to see the solution in action). Some key facts: 21% of shoppers chose to pay with Split it and the e-commerce registered a +13% increase in AOV on bike orders.
Specialized, specialized.com, the US-based bike manufacturer, has a collaboration in place with Klarna (visit the US website).
Giant, giant-bicycles.com, the Taiwanese company allows the GB-specific store, to split the transaction with Creation (creation.co.uk).
Another e-commerce project Decathlon (multi-brand and multi-sport retailer) has recently announced its collaboration with Klarna (I received the following email on November, 11st 2020 from Decathlon UK).
Some big brands in the industry seem already using these options, but others are not yet considering it and others still don’t have e-commerce. That’s a bit of a difference between the peloton and the KOM winners 🙂
Actions after reading
If you enjoyed reading this article there are some actions you can take now:
- Are you working in the e-commerce industry or for an e-commerce project? Consider that the solutions described can increase the conversion rate of your e-commerce (as stated by Canyon).
- Do you want to implement one of the solutions and you need help? Please send me a request on the contact page.
Email: andreafagan93@gmail.com
Side notes, credits, sources
- Image sources: Klarna, Split it, Canyon.
- Article: Bigcommerce.
