Arvin Singh & Joel Yarbrough Explain BNPL Business Model, Responsible Lending & the Future of Retail

Earlier in January, hoolah’s co-founder Arvin Singh sat down with Joel Yarbrough, Rapyd’s Vice President of Asia. The 44-minute long conversation, which was held in-person and under safe distancing procedures, highlighted how the “Buy Now, Pay Later” (BNPL) model has gone mainstream and will remain in the public conscience in the years to come.

Here’s an insightful summary of what went on:  

Benefitting both Merchants and Consumers

For the uninitiated, “Buy Now, Pay Later” is a type of service that allows consumers to purchase goods and split the payment over several instalments. Some services require customers to pay interest at the end of the day while others, like hoolah, are interest-free.

But what’s in it for merchants?

“On the merchant side, we provide a solution that helps them drive conversion, basket size, lift and demand generation,” Arvin says.

What about the consumers?  

“(hoolah) is helping them enable a purchase of a product that otherwise may have been outside of their ability to do. We have become that enabler that lets them get that thing that they want to get.”

Sticker shock — the dismay experienced by the potential buyers of a particular product on discovering its high or increased price — is a common phenomenon, explains Arvin. Many customers are not as comfortable as they were before when purchasing big-ticket items, especially during such unprecedented times.

Being Consumer-centric means using responsible marketing strategies

Several new BNPL payment services have popped up within the region these days. Even Southeast Asian ride-hailing service giant Grab and e-commerce platform Shopee have begun offering BNPL payment services to its users with Southeast Asian markets.

What sets hoolah apart from its competitors is the company’s proactiveness in stopping and preventing consumers from making multiple purchases. While hoolah wants consumers to responsibly afford the things they need, the omnichannel payment service does not advocate consumers to impulse spend.

“It’s just not responsible to put out marketing campaigns that encourage customers to make excessive transactions within a short period,” Arvin explains.

Consumers, who have too many outstanding orders, are required to first pay up before being able to use its service again.

Related Article: Buy Now Pay Later: The retailer’s solution to cart abandonment, conversion, and loyalty

Shedding the once online-exclusive feature and venturing into the retail space

It’s been a year since the pandemic and Singapore’s Circuit Breaker. Companies and start-ups have adapted, embraced e-commerce and moved online. Such shifts also highlight consumers’ changing buying behaviours.

During the period of self-isolation and lockdown, a report by McKinsey highlights consumers’ willingness to spend online, shop closer to home, and support sustainable brands. BNPL services thus played a paramount role in being an enabler for consumers and the retail eco-system.

As countries and societies look to lift lockdown and experiment resuming life-as-it-used-to-be, consumers’ buying behaviours are set to change again. “It’s been interesting to see customers coming back to retail, and it’s been really positive with hoolah,” Arvin says, acknowledging hoolah’s impact in the retail industry where consumers can also buy now, pay later in physical stores.

On whether traditional retail is dead, Arvin remains hopeful. “I’m not sure about that extreme position. I think there’s a stronger complement now with e-commerce.”

For smaller retailers, massive value with hoolah

On what merchants think of hoolah, Arvin reveals hoolah’s multifaceted persona, which runs the gamut from being a typical payment service to a marketing partner, and to a demand generation partner.

Merchants, Arvin reveals, have started recognising hoolah as an important source of traffic when they looked into the analytics.  

“Folks are essentially browsing on the hoolah website and the hoolah store directory, or finding new places to shop. For a lot of smaller retailers, there is massive volume value to that.”

Is hoolah a moral product?

The question is a relevant one. Especially even more so today.

Acknowledging how the BNPL approach can imbue a false sense of security and encourage people — especially the financially illiterate and younger generations who are perhaps enamoured at the payment service’s flexibility — Arvin reiterates hoolah’s stance on educating consumers appropriately.

“We don’t want people to slip into the path of non-payment,” Arvin says, when Joel probed on the morality of hoolah’s BNPL strategy.

At its core, hoolah does not want consumers to feel uncomfortable when they make a purchase. And while customers who make their payments late will be fined, the company does not profit from these late-payment charges.

“(On our blog), we put up basic financial tips for our consumers,” Arvin says.

hoolah is also advocating customers to get the products they really need. Whether it’s an ergonomic chair to fit in with the home office situation during the lockdown or helping newlyweds afford the furniture they need for their home, hoolah’s stance has always been about investing in better quality products.

“We are asking customers to make a strong investment into higher quality products that last,” Arvin says.

Check out the full interview here.

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