Strategies for outsmarting millennials and Generation Z during purchase processes
A new study by Netfluential, involving 1,000 U.S. PayPal SMB merchants, has revealed a significant shift in consumer behaviour towards flexible payment options. The research, titled "Generation Influence: Gen Z Study Reveals a New Digital Paradigm," shows that merchants across various verticals, including fashion, cosmetics, home goods, furniture, garden, electronics, and sports, are benefiting from offering buy now, pay later options.
The study highlights the increasing preference for customization among Gen Zers, with 75% of them more likely to buy a product if they can customize it, according to an international study of Gen Z conducted by The Center for Generational Kinetics. This trend is mirrored among millennials, who prioritize a seamless shopping experience, as reported by Accenture.
The popularity of buy now, pay later services is evident among consumers aged 18-24 (37.71%) and 25-34 (46.77%), as reported in The Ascent, a Motley Fool publication. This demographic, with a combined spending power of nearly $3 trillion, according to a financial survey by YPulse, is a prime audience for flexible, digital payment options like 'buy now, pay later.'
Millennials, who are now between 24 and 40, are digital natives and likely at an age where they are now "adulting." Offering buy now, pay later options can provide instant gratification and a frictionless shopping experience, which are important to this demographic, according to the study by Accenture.
Merchants that promote PayPal Credit, another pay later product from PayPal, see a 21% increase in sales, while retailers that use PayPal's new 'Pay in 4' installments solution can increase sales and get paid upfront at no additional cost or risk. This solution allows for a smoother checkout process, contributing to the seamless shopping experience millennials and Gen Zers value.
Moreover, 42% of merchants report that buy now, pay later financing options help reduce shopping-cart abandonment, according to a study commissioned by PayPal and conducted by Netfluential. This indicates that flexible payment options can help retain customers and boost sales.
PayPal Credit is subject to consumer credit approval, and loans to California residents are made or arranged pursuant to a California Finance Lenders Law License. The company offering the 'Pay in 4' product is Klarna.
In conclusion, the rise of buy now, pay later services is a response to the changing preferences of millennials and Gen Zers, who value flexibility, customization, and a seamless shopping experience. By adopting these services, merchants can tap into this significant consumer base and boost their sales.
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