Beauty Moves Toward Buy-Now, Pay-Later Plans
As far as innovation in retail goes, beauty is leading the pack.
According to Greg Lisiewski, vice president of global pay later products at PayPal, the industry’s resilience during the coronavirus pandemic — and heavy emphasis on marketing — makes it the perfect candidate to usher in a new era of retail.
Lisiewski’s insights into how people are shopping today are especially timely, given PayPal’s wide customer base. “On the financial side, customers are cutting back on where they spend and how they spend their dollar. At the same time, technology is playing an ever-increasing critical role in helping retailers adapt,” he said. “This is true from the smallest of mainstream retailers to the largest of Fortune 100 retailers, and includes finding new ways to reach consumers. We feel beauty and wellness are ahead of the curve and are uniquely positioned to adapt,” he said.
“One McKinsey study estimates that in cosmetics and beauty alone, there’s been a 30 percent increase in online sales. If you go back to the early days of the pandemic in March in April, that increase was 90 percent,” he said.
Part of beauty’s resilience, Lisiewski said, was at-home alternatives to professional treatments, such as hair dye and salon services. “Not only has beauty been faster to adapt, you’re more and better prepared for the holidays. Our data suggests that you’re planning on doing even more marketing and promotional offers,” he said.
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Continued consumer interest in self-care, even in a time of economic downturn, resulted in an uptick in adoption of PayPal’s payment plan options, such as buy-now, pay-later. “We’ve seen this across the board, but nowhere more so than in Millennials,” Lisiewski said.
The generation, he said, is poised to usher in greater use of buy-now, pay-later products. “Sixty percent of Millennials have stated that seeing a pay-over-time offer message in their shopping experience actually gives them confidence that they can afford the purchase, and helps them get through to conversion,” he said, adding that at PayPal, merchants who include pay-over-time options in their messaging see a 56 percent increase in their average order size.
The appeal lies not just in getting customers through the door, Lisiewski said, but in building a stronger relationship with customers. “Solutions like this can help you increase customer loyalty, as well as the lifetime value of the customers you have, all while decreasing the cost of customer retention and new customer acquisition,” he said.
During a live Q&A following his presentation, Lisiewski noted that PayPal has seen success internationally across eight markets, although preferred payment plan lengths differ regionally. He also thinks revenue from the products can make up a sizable piece of profits. “Any individual merchant can expect it to be meaningful in that 10 percent to 20 percent range, and I think online will be faster than off-line as solutions go omnichannel,” he said.
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