South Africa’s retail growth sales of 8.6% in July show the retail sector is still a significant player in the nation’s economy – with online shopping, particularly of clothing and footwear, growing strongly despite challenging economic conditions.
A key driver of the online shopping is the proliferation of alternative payment mechanisms like Buy Now, Pay Later (BNPL) on local retail sites. PayJustNow for example, a leading BNPL payment solution, lets shoppers spread the cost of their purchases across three months interest and fee free, while receiving the goods immediately.
Craig Newborn, CEO of BNPL provider PayJustNow, said the way South African consumers pay and shop for their retail goods has changed fundamentally, with most major retailers pivoting their offerings to cater for the surge in online shopping.
PayJustNow says the business has seen a 260% increase in the number of transactions in the past six months alone, attracting 129 000 new customers in this period, now totalling 450 000 customers. Critically, nearly 60% of them return after making their first purchase.
“Shoppers use BNPL for a range of reasons. They want to be responsible with their finances, they like the convenience, or they simply don’t have a credit card,” said Newborn. “The model actually rewards good financial behaviour, because users must pay off one product before they can purchase another – and with each purchase, they build a better credit profile without the use of revolving credit.”
The BNPL boom is also proving good news for local merchants: PayJustNow’s merchants enjoyed a 22% increase in conversion rates, and a 40% higher average spend per customer, for the first six months of 2022.
“The rising popularity and uptake of BNPL is allowing more retail businesses than ever to compete in the ecommerce market. We’re seeing particularly high sales in clothing and apparel, footwear and lifestyle products, which are the three best-performing categories among our merchant base, and are contributing massively to online sales,” said Newborn.
The company also plans to launch a short-term facility early next year, which will offer qualifying consumers the ability to finance larger purchases with a range of repayment options.