Orders made via buy now, pay later (BNPL) increased 85% over Cyber Five, according to Adobe Analytics. “It’s a win-win for retailers” as it increases basket size and boosts conversion rates, our analyst Grace Broadbent said on the “Behind the Numbers: Reimagining Retail” podcast.
Buy now, why now? Shoppers, especially younger ones, are cash-strapped this holiday season. But after two years of restrictions, many want to spend, even as the cost of goods goes up.
- “We might be seeing a bit of YOLO spending, like you only live once,” said our analyst, Sky Canaves. People want to “make the most of these holidays,” which is pushing them toward BNPL.
- And people can now use BNPL for pretty much anything. What once was mainly a service for fashion and beauty is now available for travel, dining, and entertainment.
- BNPL adoption is increasing across merchants and age groups.
Expect a “holiday hangover” in the first quarter. “There’s going to be a bit more of a reckoning next year,” Canaves said. BNPL users who spent heavily in December will likely be more reserved with spending in the following few months.
But even with a potential post-holiday slump, BNPL is here to stay. “It’s getting into people’s habits, their routines, to pay with this, and we definitely expect those habits to continue on,” said Broadbent.
Gen Z will use BNPL for life, according to Broadbent. “They will also adopt credit cards, but I think it’s going to be a both situation and not an either/or,” which is something our forecast reflects.
- One-third of US internet users will also be BNPL users next year.
- More than half of US internet users ages 18 to 34 will use BNPLs.
- People ages 35 and under make up more than half of all US BNPL users.
- Broadbent said Gen Z’s aversion to debt is pushing young adults away from credit cards and toward BNPLs.