Overstock.com Inc. customers are increasingly turning to buy-now-pay-later (BNPL) services to fund small purchases, according to CEO Jonathan Johnson. Johnson told Digital Commerce 360 that BNPL purchases account for a small number of total sales, just 2% to 3%. Overstock uses Swedish payment service Klarna to facilitate those sales.
Overstock.com Inc. customers are increasingly turning to buy-now-pay-later (BNPL) services to fund small purchases, according to CEO Jonathan Johnson. Johnson told Digital Commerce 360 that BNPL purchases account for a small number of total sales, just 2% to 3%. Overstock uses Swedish payment service Klarna to facilitate those sales.
The average products purchased with Klarna range between $10 and $400, Johnson said. This is a wide range that encompasses Overstock’s average order value of $215 in the fourth quarter of 2022, and notably includes items priced far lower than that AOV. For example, a small throw pillow priced at $25.19 can be purchased through four payments of $6.30 over six weeks.
Johnson told Digital Commerce 360 that the main reason to offer BNPL as a payment option is to maximize flexibility for consumers. Overstock’s BNPL users tend to be younger than its average customers, and may not have well-established credit yet. He noted that using the service still takes “a few more clicks” than paying by credit card, because Klarna performs a “soft” credit check. That means the check doesn’t hurt a customer’s credit score, and Klarna uses the check to decide how much credit to offer.
Overstock first offered Klarna as a payment option in 2015, relatively early compared to other U.S. ecommerce retailers. In 2020, Overstock was among the 28.2% of Digital Commerce 360’s Top 1000 online retailers offering BNPL. In 2021, that was up to 45.7%. As of April 2023, 54% of Digital Commerce 360’s Top 1000 retailers offer some version of the service.
Adobe’s data shows that more consumers turned to BNPL services in 2022 than in previous years. Online purchases made with BNPL were up 14% in 2022 over 2021, and revenue from BNPL purchases grew 27% year over year. However, in January and February 2023, BNPL use increased 10% year over year, while revenue decreased 19% over the same period.
Sources: https://www.digitalcommerce360.com/2023/04/11/overstock-ceo-says-customers-are-using-bnpl-for-purchases-as-low-as-10/
