Home e-commerce company Overstock: The BNPL boom is entering the low-order market

It is learned that according to the latest report from Digital Commerce 360, Jonathan Johnson, CEO of US home furnishing e-commerce giant Overstock, said that the usage rate of BNPL (buy now, pay later) among the platform's low-priced products has increased slightly recently, and young people with insufficient credit points are the main group using this method.

Currently, orders using BNPL account for only 2% to 3% of Overstock’s total sales. But in fact, Overstock is one of the earliest e-commerce platforms to provide BNPL services, and it started working with Klarna in 2015.

In recent years, due to the lingering shadow of high inflation, Americans' demand for BNPL has increased significantly, especially in furniture and home products, which has also driven the further increase in the usage of BNPL on the Overstock platform.

But the most obvious change recently is that this payment method has slowly begun to penetrate the low-price market. According to Johnson, the average price of products bought with Klarna ranges from $10 to $400, which is a large price range. A pillow priced at $25.19 is also purchased in four installments over six weeks.

Overstock: A buy now, pay later pioneer

It is understood that Overstock first offered Klarna as a payment option in 2015, earlier than most retailers and even several years earlier than Amazon officially partnered with Affirm, another largest BNPL service provider, in 2021.

So far, Overstock has insisted on cooperating with Klarna, and its CEO believes that Klarna is the best BNPL service provider that can reduce shopping friction.

At the same time, BNPL usage continues to rise in the United States. According to DigitalCommerce360's ranking of the top 1,000 online retailers, 28.2% of retailers offered BNPL in 2020, and this proportion rose to 45.7% in 2021.

As of April 2023, 54% of online retailers in the United States offer buy now, pay later services, of which 18.4% of retailers work with PayPal, 14.8% use Affirm, 13.3% use Klarna, and 11.7% use AfterPay, with other services following behind.

It is reported that Overstock also provides a rent-to-buy method, renting some categories to consumers for a long period of time, paying rent on a monthly basis, and transferring ownership of the items to the buyer after the lease term expires.

BNPL penetrates the low-order home furnishing market and attracts young people to buy

According to early data from Adobe, the application trend of BNPL has shifted so far in 2023. In January and February 2023, BNPL usage increased by 10% year-on-year, but revenue fell by 19% during the same period. This shows that consumers are using BNPL for low-priced goods purchases.

Adobe found that furniture and groceries are the two categories with the fastest growth in BNPL usage through 2023, with furniture purchases using BNPL increasing 38% in the first two months of this year.

These trends are also seen in the sales of home furnishing e-commerce OverStock. Its CEO Johnson pointed out that the platform's BNPL users are mainly young people with low credit scores, and they are the group with the strongest demand for BNPL.

Johnson believes that as the risk of recession increases, and given the higher average order value of furniture and home furnishings and the strengthening of online sales, the use of BNPL will continue to grow among its customers.

Editor✎ Ashley/

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