India’s festive spirits and e-commerce shopping are like a well-oiled machine. According to reports, about 48% of consumers shop more during the festive season, and this year, we are witnessing a quantum surge in sales for the first-time post-pandemic. At the end of the first phase of the holiday shopping season, in October, the e-commerce titans saw a 5.4x increase in daily sales contributed by 50-55 million shoppers [1]
Online shoppers are now tapping into the potential of BNPL to boost their affordability more than ever. This has resulted in a significant increase in the number of unique visitors opting for BNPL offerings and a 50–60% rise in BNPL spending during the festival season [2]
Product returns & BNPL
The festive sale carousal does not end with the purchase. The purchase lifecycle is complete only if the customer is satisfied with the product — which is not the case all the time! Customers can return a product for various reasons, from getting a defective item to simply changing their minds about the purchase. While returns disrupt the overall shopping experience, returns in the context of a BNPL purchase is another issue altogether. BNPL lenders, along with e-commerce partners must fine-tune their returns management to build trust, gain customer loyalty, and improve retention.
That said, we at Finflux, deeply understand the subtleties of returns management in the BNPL scenario.
In the next section, we will discuss and illustrate the return scenarios and how Finflux handles them like a pro.
LMS for BNPL – Full returns & partial returns management
Finflux’s LMS for BNPL serves as the answer to lender challenges in returns management. There are differences in how returns are factored for card-based and non-card-based BNPL programs, here we will focus on non-card programs.
There are typically 4 scenarios that can be configured & offered to customers by the e-commerce and the BNPL lending partners.
- Partial return with a waiver
- Partial return without a waiver
- Full return with a waiver
- Full return without a waiver
Let’s understand these scenarios with some illustrations.
A customer goes to an e-commerce site, and purchases 2 items worth INR 1,00,000 using Buy Now Pay Later option with a lender partner listed on the e-commerce site.
Base BNPL program
|
Principal |
INR 1,00,000 |
|
Tenure |
3 Months |
|
Processing fees |
INR 2,000 |
|
Interest charges |
INR 2920.24 at 24% Per annum |
|
Total interest + processing charges |
INR 4920.24 |
Loan disbursed on 1st Aug 2022 with 3-month schedule.
Scenario #1: Partial return with a waiver
The customer returns one of the items worth INR 35,000.
Illustration:
· Loan disbursed on 1st August with INR 100,000.
· Partial returns done on 28th August for INR 35,000.
· Billed interest on INR 35,000 till 15th August will be reversed and refunded back to the customer.
· Unbilled interest on INR 35,000 from 16th August to 28th August will be waived off.
· Processing fee of INR 35,000 which is billed at the time of disbursement or with the first due date will be reversed and refunded back to the customer.
Scenario #2: Partial return without a waiver
Illustration:
· Loan disbursed on 1st August with INR 100,000.
· Partial returns done on 28th August for INR 35,000.
· Collect processing fee and interest on returned INR 35,000 till 28th August.
Scenario #3: Full return with a waiver
The customer returns all the products bought worth INR 1,00,000.
Illustration:
· The use case is like the partial waiver scenario with the amount returned being the full loan amount availed.
Scenario #4: Full return without a waiver
Illustration:
· The use case is like the collect scenario with the amount returned being the full loan amount availed.
Launch your BNPL program with Finflux
At Finflux, our LMS has powered BNPL programs across non-revolving & revolving credit line products with top players. If you would like to partner with us in launching your BNPL program, schedule a demo with us.
Reference
1. First phase of festive ecommerce sales witnesses 5.4X growth in daily sales
2. BNPL catches festive cheer, ecom spending up 60% despite regulatory hiccups