The report finds that BNPL may boost subscription loyalty and help merchants to avoid discounts.
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GLORetailers find the advantages of subscription models in fostering brand loyalty, as repetitive purchases contribute to consistent top-line growth. PYMNTS’ recent Subscription Commerce report highlights several favorable trends in this regard. The adoption of buy now, pay later (BNPL) options in payments is emerging as a significant factor propelling retail subscriptions even further.
Data indicates a rise in retail subscription rates, with 31% of subscribers opting for scheduled or auto-fill subscriptions for most or all of their purchases. This shift results in decreased physical store visits, as over 40% of subscribers report reducing or entirely stopping in-person shopping.
Younger consumers, particularly millennials, are drawn to subscriptions, with 40% relying on retail subscriptions for the majority of their shopping. This demographic is crucial for merchants, as their spending power is expected to increase over time, offering substantial customer lifetime value.
Despite the positive trends, retailers face challenges in retaining subscribers. While there’s a notable increase in conversion index scores, retention index scores have seen a decline of 3.5%. Payment options play a role in customer satisfaction and the likelihood of canceling subscriptions.
Consumers express a preference for diverse payment options and flexibility, and the absence of buy now, pay later (BNPL) or digital wallet choices at checkout increases the likelihood of subscription cancellations. Specifically, customers are 2.9 percentage points more likely to cancel without a BNPL option and 2.4 percentage points more likely without digital wallet options.
Merchants can address these challenges by incorporating BNPL payment options, as the majority of consumers desire this choice. Additionally, more than 60% of merchants offer some level of discounting on goods, and introducing BNPL can potentially mitigate the impact of discounts on margins by spreading payments over time.
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