Affordability is a fundamental factor that drives the consumer’s purchase decisions. As e-commerce sees a rise in India and more and more users shop online, it is important for businesses to focus on facilitating affordability at their stores.
This requires deliberate efforts to go beyond pricing and build the user’s perception around the value offered to them. Companies need to also ensure that the consumer is able to acquire and own a product with greater convenience and ease.
There are solutions available today that redefine affordability as a contemporary concept which helps customers own a product more swiftly. This article talks about those key offerings that businesses should adopt to be able to position themselves as enablers of affordability.
What are the Top Three Affordability Offerings?
1. Buy Now Pay Later (BNPL)
BNPL is a payment option that consumers can use to purchase a product without having to make the payment immediately. It can be done within a stipulated period which is usually a month or as defined by the service provider.
Buy Now Pay Later helps the buyer afford a purchase even without the availability of funds at that time. It offers a great deal of flexibility and convenience to the consumer without worrying about detailed documentation or tedious processes.
Here’s why businesses should introduce BNPL for their users
- Consumers can opt for it online with instant approval
- The terms are interest-free
- It is not mandatory for users to have a credit history
Paytm Payment Gateway’s Paytm Postpaid is synonymous with BNPL and offers an instant payment source to consumers. It helps manage payments better especially for millennials and GenZ who may not own credit cards but want to buy products instantly.
Interesting read – Paytm Postpaid – Enabling New to Credit Users to Shop Online
2. Equated Monthly Interest (EMI)
EMI is an extension of Buy Now Pay Later that is ideal for big-ticket purchases since the repayment period can last for a few months. It is usually availed through a credit card and there is an interest rate on the payment.
EMI introduces affordability for those consumers who would otherwise be discouraged to buy a product because of its price but now have a comfortable window to pay the money in instalments.
Here’s how businesses can help buyers by introducing EMI options at their store
- Users can readily buy items off the shelf
- Consumers can avail low-interest rates and in some cases no-cost EMIs
- Buyers pay directly to the lender without the involvement of multiple parties
EMIs help a consumer buy anything right from an electronic gadget to a car and timely payments ensure a good credit score.
3. Credit payments
Credit card is a relatively older payment option which allows buyers to make instant purchases and pay the accrued debt at a later stage. The timeline can vary from 30 to 45 days.
The credit limit depends on the user’s income as well as credit score. However, several credit cards charge a joining and annual fee and the untimely payment of dues can affect the user’s credit score.
A report by the Reserve Bank of India and PwC reveals the credit card industry in India has witnessed a compound annual growth rate (CAGR) of 20% in the last five years with May 2022 clocking the highest-ever overall credit card spend of INR 1.13 lakh crore.
Here’s how credit cards bring affordability to online payments
- Users often avail cashbacks/discounts when paying through credit card
- Most credit cards issue reward points on every transaction
- Timely payments can help build a line of credit
However, credit cards have strict eligibility criteria and the application can take a few weeks to process.
Interesting read – Offers and Cashbacks: The Essential Instruments of Affordability
What are the Other Ways to Ensure Affordability for your Consumers?
Here’s a look at some of the methods that e-commerce stores regularly use for more traction and traffic with a focus on affordability
Annual sale
Annual or end-of-season sales offer heavy discounts and deals on products as well as festival sales that have special prices on offer.
Coupons codes
Coupon codes are extended to different categories of audience such as first-time users, users with a reference or an existing customer who hasn’t shopped on the website for a while (re-engagement).
Cashbacks
Cashbacks are usually applicable on spending a preset value and are offered by credit cards, banks as well as mobile wallets such as Paytm Wallet.
Flash promotions
These sales usually last for a few hours to a day and are held to bring the users’ attention to a specific set of products on the website
Influencer campaigns
Influencers promote the product on social media and share an exclusive discount code with their followers.
Product bundling
Products that belong to the same category or are likely to be needed for a single purpose are sold as a bundle with a combo offer on them.
Abandoned cart incentives
Users who have added products to their cart but have not initiated the transaction are incentivised in order to close the sale.
Feedback bonus
Users are offered discount coupons upon filling out surveys or sharing feedback on the products.
Conclusion
Affordability offers organisations the opportunity to ease the buying experience for their customers. The aforementioned modern means of purchase ensure profitability for businesses even while offering value to the buyers.
Every e-commerce business must strive to accommodate all the potential means of affordability for a competitive edge as well as continuous growth.
FAQ
Which is the most effective affordability offering?
All of them are equally effective and will depend on what the buyer prefers, hence Including multiple affordability techniques allows your users to choose and pick the best fit.
What role does affordability play in ensuring better sales?
Since affordability offers options to make payments more easily, it effectively contributes to a reduction in cart abandonment and therefore better sales.
How can businesses extend affordability to users who do not have a credit history or sufficient credit score?
With the option of Buy Now Pay Later where credit history is not mandatory, businesses can ensure that new users are able to easily make purchases in their store.
