Despite the online shopping surge in our country, many merchants have been seeing a 90% cart abandonment by visitors.
Sellers have also struggled with finding sustainable solutions that wouldn’t impact their bottom line too heavily.
That’s according to Stuart Thornton, CEO and co-founder of the Singaporean Buy-Now-Pay-Later (BNPL) app, hoolah.
Since launching in Malaysia in 2019, the BNPL app has already signed on major local fashion brands like FashionValet, Bonia, and Pestle & Mortar.
Are People Even Shopping For Non-Essentials Right Now?
Ever since the first MCO, many retailers have been forced to shut down. With the country’s recovery seeming distant again, plenty more are expected to the same this year.
Well-known department stores like Singapore’s Robinsons have closed for good, and many local F&B businesses, too, shared a similar fate.
However, the opposite is true for e-commerce. Malaysia’s online retail sales grew by 28.9% in April 2020 as we weren’t able to shop at brick and mortar stores.
This was an opportune time for hoolah to expand in Malaysia as Stuart noticed a strong retail demand from consumers. Yet, they weren’t in positions to afford big-ticket items without splitting the payments.
“With a market of 32 million people and only 4 million with credit cards, there was a great opportunity to bring a responsible solution to more deserving consumers to drive affordability, and personal cash flow,” he said.
And they’re doing this by promoting their motto of “Responsible Affordability”. It basically encourages consumers to only buy what’s within their means through the app’s predetermined credit limit.
Saving Retail In A Pandemic
Since partnering with FashionValet’s online platform in 2019, hoolah now accounts for roughly 15% of their orders. Their strong partnership even led hoolah to service its sister brand dUCK.
Equipped with a BNPL payment option, FashionValet could reach a wider audience looking for such alternatives. Because hoolah pays their merchants upfront and in full once a customer transaction is made, brands won’t have their cash flow impacted.
hoolah has also increased Focus Point’s sales by 15%-50% per purchase. It used to be an average of RM187 per purchase prior to offering the BNPL option.
Stuart further explained that the platform is free to use for both merchants and customers. However, they monetise by taking a cut from each successful transaction.
A Credit Card With No Interest
In case you’re not too familiar with how BNPL works, it essentially functions as a credit card but with 0% interest. To make it easier to understand, let’s use this hoodie from Pestle & Mortar (P&M) that costs RM329 as an example.
When you checkout, you’ll simply choose hoolah as your payment option. hoolah will pay the full amount to P&M first, and split the transaction into 3 instalments for you.
Meaning, you’ll pay around RM109.67/month for 3 months to own that hoodie.
Though hoolah isn’t the only BNPL platform available locally, I’d say they stand out because of the popular brands they work with.
Other homegrown BNPL startups are Split and Paylater which function similarly.
Anyone Can Afford Quality Products
When I wrote about Split, it was my first time coming across this payment option and I was sceptical. The concept sounded too good to be true, and it’s likely a sentiment shared by other less tech-savvy Malaysians.
Stuart’s team is well aware of the misconception consumers have towards the BNPL industry too.
“We want to allow customers to make an investment into quality products and lead the lifestyles they want or aspire. At the same time, we want to make sure they spend responsibly and don’t fall into debt,” he explained.
Instalment payments on hoolah are automated. Users get reminders of their monthly payments through the app. They also have the option to refund items or make early repayments whenever they want.
Much like Split, if a customer is unable to pay back on time, hoolah’s team will first try to understand their reasons. Stuart shared that it’s usually due to customers overlooking the payment date, or from an unexpected event like a job layoff or health issue.
If the latter reasons are true, hoolah usually ends up waiving the charges after verifying the customer’s issue.
“Ultimately we want to make sure that we’re always understanding these events and work with customers closely to make the payment happen in the right way,” said Stuart.
As the BNPL industry continues to grow locally, both consumers and merchants are becoming more aware that it can be a sustainable option.
Stuart believes that BNPL is also something merchants can pick up to help them to recover their business and get them on the right track for future growth.
He concluded of their journey thus far, “Having expanded into Malaysia last year, we have seen remarkable growth as a business and the awareness that we have driven is now taking hold, which is a strong testament to the growing consumer demand for BNPL services across various verticals, not just limited to the fashion industry.”
Featured Image Credit: hoolah Malaysia
