Industry Spotlight: Buy Now, Pay Later (BNPL)

Weekly updates on the innovation economy.

Today’s newsletter discusses the Buy Now, Pay Later (BNPL) industry. Specifically, we highlight these 6 BNPL topics:

1. American E-Commerce Retail Sales

2. Introduction to BNPL

3. Four Main Distribution Models for BNPL

4. Leading Factors and Focus Areas for BNPL

5. Risk Factors

6. Supporting Industry Research and Data on BNPL

American E-Commerce Retail Sales

As displayed in the chart below, American e-commerce retail sales increased from less than $10 billion in Q1 2001 to greater than $200 billion in Q1 2021. Of course, the coronavirus crisis accelerated e-commerce adoption, and nonetheless, it’s likely for the large e-commerce tailwind and rising long-term trend to continue over time. Additionally, payment methods and technologies have evolved with the growth in e-commerce, and the “buy now, pay later” trend is an example of this. 

Additionally, the share of consumer spending via e-commerce has historically increased over a long time horizon, as shown by the chart below:

E-commerce market share as a percentage of total retail sales is nearly 13% and has enjoyed multi-decade growth. Significant growth prospects exist in this under-penetrated market. When both retail sales and the market share of e-commerce increase over time, e-commerce “wins” twice.

Introduction to Buy Now, Pay Later (BNPL)

There are several big trends in e-commerce and payments, and today’s newsletter focuses on “buy now, pay later” (BNPL). The following 5 summary highlights help to define and introduce BNPL: