Buy now pay later scores big on Black Friday
Buy now pay later platforms like Klarna, Affirm, and Afterpay made major gains this year during Cyber Week, indicating they’ll be a fixture this holiday season and for many seasons to come.
- Ebere Anokute
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Spending at physical retail stores increased year-over-year
It’s no secret that this year Black Friday, the cornerstone of “Cyber Week”, reinforced our collective confidence in physical retail, as spending at physical retail stores increased year-over-year while e-commerce spending declined. But physical retail wasn’t the only “winner” from Black Friday this year: Buy Now Pay Later platforms, which have grown in popularity in the past few years, saw that popularity increase considerably on Black Friday this year. These service providers, which include platforms such as Klarna, Affirm, and AfterPay, facilitate interest free installment payments, which allow consumers to make big purchases in a piecemeal fashion.
Image source: Klarna.com
If you haven’t heard of them yet, you’re sure to hear more in the future. According to Adobe Analytics, spending using Buy Now Pay Later (BNPL) platforms increased 422% in the month of November this year, and total order volume was up 438% compared to 2019. With more people choosing to spread out their holiday shopping and begin shopping earlier this year, this figure for November indicates a robust and bountiful holiday shopping season ahead. This trend is corroborated by Salesforce, who reported that BNPL-based spending on Black Friday alone was up 31% from last year. This is especially impressive considering this time last year, there was no vaccine and most people chose to shop online, as uncertainty around the virus made in-store shopping unappealing.
A few of the platforms shared their own numbers, hoping to underscore their increased popularity and utility. Klarna reported a 141% increase in the use of their service year-over-year, while Paypal, who unveiled their own BNPL feature last August, saw its use increase by 400% year-over-year. As the effects of inflation continue to drive up pricing across all retail categories, it’s not hard to imagine these interest-free financing options becoming even more popular in the future.
Parade opens first brick and mortar store in SoHo
Speaking of physical retail, one fact has remained true throughout the COVID era: digitally native retailers are still opening physical stores. With the effects of the pandemic driving down pricing in many prime retail corridors throughout the country, some online brands have been able to lease prime space at a significant premium. The newest brand to join the physical fray is direct-to-consumer intimates brand Parade, which opened its first physical storefront this week in New York City. The company chose SoHo as the location for their first store, which has become a haven for digitally native brands looking to break into the brick-and-mortar space. A 2018 JLL Research study found that New York was the most popular city for clicks-to-bricks retailers to open their first physical location, and almost half (48%) of those retailers chose SoHo as their launching ground. Parade is clearly no different, and hopes to use its 2,000 sf space at 577 Broadway to showcase their new products and add a new dimension to the way their consumers experience Parade, inviting their community to “color outside the lines” with them. Undies for everyone!