Many consumers schedule their shopping activity around discount events like Prime Day and Black Friday. Consumer spending for these major retail events continues to set record highs. In fact, CNBC noted that 2022’s Amazon Prime Day was the largest to date, with shoppers purchasing nearly 300 million items (more than 100,000 items for every minute) during the sale.
Consumers need financial flexibility now more than ever. As affordability becomes a priority, retailers, tech providers, and third-party Buy Now, Pay Later (BNPL) fintechs are acquiring much coveted wallet share. With holiday spending drawing near, now is the time for credit unions to incorporate these major shopping events into the banking experience.
Financial Flexibility from Purchase to Payment
Past portrayals of major shopping events depict shoppers lining up for nice-to-have items – like the latest consumer electronics – but research shows this trend is shifting. According to Numerator, products like Dawn Dish Soap, FritoLay variety packs and Cascade Dishwashing Products rose in popularity this year during Amazon’s recent Prime Day event and household essentials ranked as the top shopping category. Global Newswire reports that 33 percent of shoppers said they waited to make a purchase until the Prime Day sale.
What does this mean? First, as prices continue to rise, consumers are using discount shopping events to stock up on essentials – a sign that consumers need more financial flexibility, even for purchasing basic household items.
Second, your members want to know which flexible payment options – like BNPL – are readily available and can help them stay on track with their financial goals. If you’re not already top of wallet at checkout, your cardholders are also deciding which card to pay with or which new account to open to make these purchases.
Why Discount Shopping Events Matter
With each passing shopping holiday, BNPL becomes more recognizable as a source of flexible spending. By using BNPL, shoppers take advantage of breaking up a large purchase into smaller, easier to manage payments without the fear of accruing long term interest. With recent discount events like Back-to-School shopping and Labor Day sales, and the coming holiday season, BNPL use is expected to grow.
Major discount shopping events are where payment trends are formed. These events may cultivate a “need-it-now” mindset, leading shoppers to be more receptive to new products and payment methods. This increased event spending creates the need for flexible payment options upon check out. Additionally, the promise of deep discounts may prompt many shoppers to open store credit cards or use BNPL from a third-party provider.
Discount shopping events matter to third-party BNPL providers because they are prime dates (no pun intended) to displace financial institutions and acquire new customers (read: your cardholders).
Incorporate Shopping into Your Banking Experience
There’s an important underlying message here for credit unions: When it comes to consumer acquisition and member engagement, shopping is an integral part of the banking experience.
Increasingly, your members are choosing which financial products to leverage while shopping. These are critical moments where your members experience the impact of your partnership. Rising costs may push shoppers towards payment installments for essentials and cause them to evaluate new and existing payment products as they shop.
When managing their finances, members are quick to turn to their trusted financial institution. However, this trust can be divided when credit unions are not meeting their members’ needs. Credit unions attract and retain members when they offer advanced, convenient, and flexible BNPL solutions that provide consumers with manageable spending options.
As major shopping holidays continue to appeal to consumers nationwide, it is essential that credit unions support their members throughout their financial journey. Credit unions have access to valuable member data that can assist in creating personalized installment loan offers that fits the members’ financial goals. These offers can enable members to purchase the items that they may otherwise have difficulty affording. Make it easy for your members to engage deeper with you by providing them with the flexible financing tools – like BNPL – that they need to go shopping this season.
Bryce Deeney is the Co-founder and CEO of equipifi, a Scottsdale, Ariz.-based provider of BNPL solutions for banks and credit unions.