6x more sales by implementing a BNPL solution

PARTNER

NanoMarket is a newly launched Hungarian webshop, currently selling mobile phones, smartwatches, and other trendy tech products. HPH Elektronic started retailing electronics products only online, i.e. through a webshop, and has no plans to open a physical store due to high fixed costs.

Their mission is to become an expert in the latest technical trend products in Central and Eastern Europe. Their aim is to present the everyday value creation and usability of new and modern smart devices in this fast-changing market to customers in a transparent and unbiased way and to ensure their availability through the best digital sales process, without frustration, and at competitive prices.

Their current strategy is to keep their prices within the TOP5 ranking in the top mobile phone market, thereby gaining market share.

THE ISSUE

NanoMarket approached us with the idea that as a start-up webshop, they wanted to differentiate themselves in the market with services such as BNPL, which they were already well known in the Czech market.

They were also facing the following issues:

• As a start-up webshop, their main source of traffic was paid advertising, but they were finding that more than 95% of the visitors they had acquired through a significant marketing budget were churning, i.e. not buying

• One in three customer service inquiries sought an installment facility

• They are not growing dynamically enough, even though their pricing is market-leading

THE SOLUTION

In the summer of 2023, we introduced the NanoMarket branded BNPL payment method in our webshop.

Based on our suggestions, the company management introduced the following version of the service:

A. Construction: customers can pay for products in 4 equal installments, i.e. 25% of the purchase price

B. Pricing: the company management decided not to charge any fee or interest for the service

C. Process: they opted for a four-step process with real-time, instant, and automated judging, which takes only 5-10 minutes for the customer, but gives an immediate result:

• Data submission: only 5 pieces of data required for online contracting are requested from the customer, no other self-reported data requests

• Electronic sharing and review of bank statements: so the customer qualification is based on real bank data - no extra pdf or paper document requests in the process

• Online contracting: for transparency and recoverability, a contract is created and signed electronically by the customer

• First installment payment: the well-known payment of the first installment by credit card 

D. Functionality: the company has decided to introduce full functionality, with the following components as extras to our standard BNPL package:

1. "Find out if you can pay in installments":

• designed to give visitors, while browsing the product, precise information on whether or not they can buy in installments, and if so, how much

• an indicative BNPL pre-qualification process can be launched from the product page,

2. "Add more products to your basket and pay in installments":

• aim to increase cart value through cross-selling

• by making payment by installments only available above a certain amount in some cases, it encourages the customer to buy more to reach a minimum amount above which they can pay in 4 installments

METHODOLOGY OF THE CASE STUDY

For our proposal, we did an A/B test after the launch, i.e. we split the period into 2 parts:

1. Period "A"

2. Period "B"

Both periods were perfectly matched:

• product range

• pricing

• marketing budget

• marketing channels and advertising structure used

• other payment methods

The two periods differ in that BNPL was not switched on in period A and was switched on in period B.

MEASUREMENT POINTS OF THE CASE STUDY

A daily report was created to track the entire sales funnel of our partner on a daily basis:

• Click-through (CT): how many click-throughs from an ad to the webshop

• Visitors: how many unique users the webshop has in a given period

• Add-to-cart rate: the percentage of visitors who add at least 1 product to their shopping cart

• The average number of products in the cart: how many products are in the cart on average

• Sales conversion rate: percentage of total visitors who make a purchase

• The shopping cart abandonment rate

• Average order value (AOV)

THE CASE STUDY RESULT

In period B, when BNPL was available, this was observed compared to period A:

• 10% more people clicked through to the webshop from the Facebook ad

• 2.2x Product carting rate

• 6.5x higher sales conversion

On the other hand, contrary to our preliminary expectations, we failed to make a meaningful impact on these two points:

• Average cart value: no change

• Average number of products per basket: no change

So, overall, in period B, when BNPL was available, twice as many people added products to their shopping cart and significantly more purchases were completed (6.5x), showing that not only did BNPL trigger the purchase process, but more people completed the process, all at the same marketing cost.

There is only one explanation for the 10% higher click-through rate, and that is that when customers are confronted with the unique benefits of the BNPL offer in the ad and see the specific installment offer available for a specific product, they click through to the online shop at a higher rate.

So clearly, BNPL brought new sales and new customers to NanoMarket, but failed to have an impact on cross-selling.

EVALUATION OF OUR PARTNER

We asked Ondrej Hajdu some questions and we quote from his answers.

1. How do you evaluate the introduction of BNPL?

"It has definitely increased my company's sales, plus I have not increased my expenses."

2. What benefits do you see from BNPL?

"It's already a known payment method in the Czech Republic, I expect it to spread to Hungary soon, in the meantime, I want to take advantage of the fact that it's already available in our webshop!"

3. Why did you choose BNPL and not the merchandise credit?

"In the online space, schemes with 20-40% interest rates don't work, and I can't and don't want to shell out the 8-10% that merchandise lenders ask me for in exchange for a 0% scheme. It simply does not fit into my margin. Not to mention that if I say my online shop wants to be an online marketplace for innovative and trendy products, I want to be cutting edge in terms of installment methods."

4. What were the results of the A/B test compared to your expectations?

"I must admit that I was not surprised by the improvement in the effectiveness of our marketing campaigns and therefore sales. But in a positive sense, I was surprised that twice as many visitors added products to their shopping cart and that the cart abandonment improved so much. I can still see points where we can improve and the results will be even better." 

CUSTOMER REVIEW

"I was pleased with the way it went. It was simple, and fair, with no interest, no APR, and no fees. The process was not more than 5-10. I have already recommended it to several friends and colleagues."