Year by year, e-commerce is catching up on traditional retail in the United States. According to government figures, online sales accounted for $453.5 billion in 2017, close to 16% up on the previous year. However, there is still considerable room for growth as e-commerce accounts for just 8.9% of total US retail sales. To boost Internet shopping figures, e-tailers are now increasingly looking to instant customer finance solutions. A survey carried out on behalf of Swedish payment solutions specialist Klarna in January, which was published during the Shoptalk conference in Las Vegas in mid-March, reveals that 64% of those polled regard this approach as a good way to achieve considerable new sales volumes. Close to half (46%) of the respondents believe it could help to reduce the rate of online shopping cart abandonment, which is one of the major challenges facing all companies that sell goods on the Internet. Giving customers the option of paying in several installments or on a delayed basis should boost the turnover of e-commerce sites, although it should be noted that Affirm, a FinTech firm founded by Max Levchin, which specializes in instant financing solutions, has just extended its tech offering to bricks-and- mortar retail outlets as well. Previously, any customer wishing to spread his/her purchase settlement over several installments had to go through a fairly onerous process, filling out a number of documents by hand. Affirm has modernized and streamlined the procedure by asking users to fill out a very short form (with just 4-5 questions) online by smartphone or using the retailer's Point of Sale terminal. This approach enables any customer who is solvent to get hold of the goods s/he wants immediately, arranging to pay over time, while the store makes a sale without having to bear the risk that the customer will not live up to his/her commitments. This certainly looks like a highly convenient tool for both merchant and consumer. The results of a survey published by Klarna last year reveal that 75% of consumers polled prefer to buy from e-commerce sites that offer this type of facility.
By Sophia Qadiri