Affordability and E-commerce: An Overview

affordability and e-commerce

It is a well-established fact by now that online transactions are convenient, quick and secure. The rising number of e-commerce stores and the corresponding purchases only validate it further.

However there is yet another reason which makes online transactions favourable for a vast number of people – they are also affordable. Affordability in e-commerce is a fairly new yet prevalent concept that is changing the way people shop.

If your e-commerce store wants to build a well-rounded sales strategy, affordability needs to be an intrinsic part of it. This article offers an overview of the concept and explains how businesses can adopt it in multiple ways.

What is affordability in e-commerce?

Affordability in e-commerce is how buyers perceive value in the purchases they make. It is essentially a mix of accessibility, quality, benefits and gains which help the consumer decide if the deal is a worthy one.

Affordability does not necessarily translate to goods becoming cheaper but in turn makes them easier to own.

The shift in consumer behaviour driven by rising purchasing power will result in a thriving e-commerce market in the coming years. 

According to the World Economic Forum, there shall be 140 million middle income households added to India’s economy and 14 million high net worth individual households by 2030. 

However, it is going to be a highly competitive market and therefore organisations must deploy innovative solutions to simplify shopping for their consumers.

Affordability is a crucial consideration for buyers and can well become the priority and a determining factor in their buying decisions. 

It’s time that businesses reevaluate their value propositions and influence consumers through the lens of affordability.

How does affordability in e-commerce help a business?

Companies usually work on each aspect of their business to achieve a single objective. For instance, a better UX aims at enhancing the shopping experience or a seamless checkout ensures reduced cart abandonment. 

Affordability however offers multiple advantages for the customer as well as the business. Here’s a look at its benefits.

  1. Affordability eases as well as simplifies the purchase of high-value goods helping buyers acquire products more easily and hence boost sales for businesses.
  2. Businesses which focus on affordability ensure that the consumers are able to access multiple payment options and choose the one that works best for them leading to a reduction in checkout abandonment.
  3. Affordability options such as EMI or Buy Now Pay Later can be availed with minimum or no upfront costs during the purchase. This helps buyers invest in an expensive purchase resulting in an increase in average order value.
  4. Many people do not have a credit card or are ineligible to own one. A business that covers maximum affordability options makes payments inclusive ensuring a successful purchase for every buyer and better conversions for itself.

affordability in e-commerce

Which affordability options can businesses extend to their customers?

Let’s look at the four main pillars of affordability in e-commerce and how they are facilitating purchases.

1. Equated Monthly Instalment (EMI)

EMI refers to the deferred payment by the buyer towards buying a product. Instead of paying the entire amount at the time of purchase, it is done at regular intervals in instalments and may take months to years to complete depending upon the principal amount. 

This mode of payment offers affordability to the buyer by dispersing the amount over a period thereby helping the consumer invest in high-value products irrespective of the availability of cash at the time of transaction. Additionally, it gives them clarity well in advance on the amount they have to pay each month.

Similarly, for businesses it is predictable as well as consistent income and an opportunity to increase their sales within the high-value product segments.

More than 50 per cent of the borrowers in India have preferred EMI cards during shopping or for any credit purpose, a survey by Home Credit India stated. 

Customers that were earlier shying away from spending on expensive items are now confident about buying them, consequently impacting sales and stressing on the need for affordability solutions.

2. Buy Now Pay Later (BNPL)

Like EMI, Buy Now, Pay Later (BNPL) is also a medium of financing where buyers can purchase a product and complete the payment at a later date. However, one key difference is that EMI is not always interest-free, unlike BNPL which most often does not charge additional fees.

It is therefore ideal for short-term loans that can be paid within a few months. Amongst the newest affordability options, BNPL is rapidly gaining prominence and is highly convenient for consumers because of its ease of approval.

For merchants, it is an opportunity to appeal to young buyers, particularly GenZ for whom this payment method is hassle-free and easy to use.

However, according to a survey conducted last year, Buy Now, Pay Later (BNPL) payment services in India are mostly used for fashion and electronics purchases, with nearly eight in ten consumers aged between 45 and 54 years using BNPL payment services for electronic products or smartphones.

affordability in e-commerce

3. Bank offers and cashback

No e-commerce checkout and transaction is complete without glancing at the available offers that can be availed by using a certain card or a particular wallet. These are effectively rewards that consumers earn back and are a certain percentage of the final amount.

A recent study by M&C Saatchi Performance states that 51 per cent of Indians spend more time looking for the best deals and offers online before they make a purchase. 

Credit card issuers usually tie up with merchants for issuing cashback and discounts to buyers upon paying through their credit/debit card. These offers extend affordability on smaller purchases and motivate users to repeatedly transact on their sites and avail of these deals.

By offering discounts on their websites, merchants are also able to appeal to and attract new users to their stores. These incentives prove beneficial in creating long-term relationships.

4. Loyalty and rewards

One of the best ways to retain customers is through the introduction of rewards and loyalty programs. In fact, their design is apt for ensuring repeat business because the longer the customer’s association with the business and the more the spends, the better are their rewards.

Additionally, loyalty programs also include special incentives for their subscribers such as early access, member-only discounts, free merchandise, etc. 

Reward points on the other hand can be converted to cash and motivate the buyer to use them on their subsequent purchase. These modes of affordability are highly advantageous when the products need to be restocked or at frequent intervals.

The India loyalty program market is estimated to top nearly US$ 2,922.9 Mn in 2022 and is projected to reach US$ 10,852.6 Mn by 2031 at a CAGR of 15% from 2022 to 2031. The Indian market holds approximately 4-8% of the global loyalty program market.

How does Paytm ensure affordability in e-commerce?

Paytm offers its merchants an opportunity to provide affordability options to their customers and boost sales as well as user retention.

Paytm Postpaid (synonymous with BNPL) offers up to INR 60,000 instant spend credit with zero interest to the consumers. Businesses can activate it instantly and reach out to new users who may not have a credit card or prefer quick and convenient payment methods.

Also read: What is Paytm Postpaid? Learn Everything About it

Your consumers can also avail instant cashbacks when initiating a transaction through Paytm on your website. The offers include promo codes, coupons and deals that make the user’s checkout experience affordable as well as engaging.


Affordability in e-commerce is imperative considering the potential it offers for businesses to expand their audience base and boost sales. Moreover, the Indian buyer is rapidly shifting to online commerce and prefers to shop at stores which makes the process easier and seamless for them. 

Merchants should take note of this and build a targeted approach to introduce multiple affordability solutions on their website for continued growth. These aforementioned modes of affordability are indeed the future of short term financing.

If you wish to learn more about such topics, you can read our knowledge base blogs and apply your learning to your business.


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