Digital payments have seen unprecedented growth in the past years, entirely shifting consumer habits - most barely even still need a physical wallet when we leave the house these days! Along with this trend, we see the rise of a new form of digital payment - the Buy Now Pay Later (BNPL) service, which is taking retail by storm globally. In this episode of The Future Of Retail Asia Podcast, we get to hear from Jeremy Wong, Head of Strategic Partnerships at Atome, a leading BNPL provider. Jeremy discusses what BNPL is, and how the rise of BNPL will revolutionize the industry as well as consumers’ purchasing behavior.
Episode 17: “Leveraging Digital Payments For Retail Success” with Jeremy Wong
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IMRAN: Welcome back to another episode of The Future of Retail Asia, one of the top 50 retail podcasts in the world! I am Imran.
JUN: And I am Jun. Today, we have Jeremy Wong from Atome joining us over Zoom! Welcome to the show, Jeremy!
JEREMY: Hi guys! Very happy to be here. Thanks for having me.
IMRAN: Jeremy is the Head of Strategic Partnerships at Atome, where he sets the growth strategy and commercial frameworks for the company across the region. Jeremy has a wealth of experience in the tech and consumer space, previously having taken on similar roles of strategic partnerships and business growth in companies like Fave. We’re really excited today to hear his insights from his expertise in the digital payments industry. Welcome again, Jeremy!
JUN: Yes, Atome is a huge player in the BNPL market, especially in Singapore and the region. Maybe to start off, Jeremy, maybe you could give our audience a brief introduction about what is Buy Now Pay Later, and what kind of traction it has been gaining in the market?
JEREMY: Sure, thanks Jun! So Atome is BNPL, and what we do is, it is a new form of payment. It allows customers to split their purchase into three zero interest payments when they buy a product, and there are no fees involved. For us, we see very huge traction as more and more consumers and businesses go digital, and as millennials and Gen Zs start to have purchasing power. To give an example, in Singapore, if you purchase something for over $100, you can split that into three different installments. $50 you pay today, another $50 you pay a few days later, and the final $50 you pay at the 60 days mark.
IMRAN: I see, so that’s for the consumer. Could you share a bit on more on when you guys work with merchants, for example. When you talk about BNPL, how does it impact the various stakeholders within the retail ecosystem, what kinds of benefits does it drive?
JEREMY: It brings a new dimension to the purchasing ecosystem. Traditionally, when businesses and retailers sell items with high ticket prices, customers may not be able to afford it. But with Atome coming in with BNPL, we allow the customers to split them up, thereby increasing the affordability for the consumer. A lot of merchants who have come on board Atome recently also see that their sales not only increase, but they also get new customers. And more importantly, those customers that purchase also see an increase in basket size. On average, we see anywhere between 30-40% increase of average ticket size that each consumer purchases. That’s the direct benefit that the merchants always get to gain from signing up for Atome.
IMRAN: So it is a bit more than just an alternative mode of payment that is actually very significant - not even just incremental, but a significant jump in things like traffic, acquisition, and things like basket size.
JUN: You mentioned seeing BNPL as more than just a payment method. What other ways do you think BNPL will, in a sense, empower the retail ecosystem?
JEREMY: Thanks for your question Jun! So the way we view Atome is, we are definitely not only a payments platform. I think what we’re trying to build with not only the retailers but also the consumers is the entire ecosystem of digital services, from payment, fintech, and even a content and social point of view. The first view we want to go in with is definitely introduce this new form of payment (BNPL) to the retailers, and then from there building the ecosystem with more data points and also giving out new products to the merchants, for them to feel like they are growing with us together.
IMRAN: There are a lot of very interesting implications, with the nature of BNPL being a digital payment format. We could look at how it applies to online merchants, offline merchants, omnichannel merchants. There are lots of data being collected from the merchants and consumers side. How do you guys look at data, and try to derive insights to benefit the whole ecosystem and all the merchant partners that you guys work with?
JEREMY: Yup, yup. That’s a pretty interesting question. I think one key distinction that BNPL has from e-wallets and credit cards is how instant we can provide credit to users. If you apply for credit card, even today, you have to fill in so many forms and documents, and it takes quickest 10 working days to get a response on credit limit, and on whether you are being approved. I think with Atome, we are able to give you this within 1-2 minutes upon registration. The moment you register yourself, we do your KYC, we will give you a limit based on how our backend scoring system knows you as a consumer. So from a customer point of view, we are able to give that instant limit to all those customers who were previously credit starved. From a retailer’s point, when we started BNPL, it was a very conscious decision for us to go omnichannel like you said, and the reason is because we recognise that although digital is something that is really, really strong and growing really fast in the past two years, the offline segment is still something that will play a significant part in their sales. So whenever we speak to a brand, it is not only covering the e-commerce websites offline channels, but also seeing how they engage their consumers through social means. Whether its Instagram, Facebook, or even now Tiktok. And also try to dab into that to engage the customers that they have. So if you think about it, we always talk about O2O, and everyone always thinks offline to online. But a lot of us also are talking about online to offline. How do we then close that loop of not only serving customers, merchants, and also getting more data points from that. So what we gather is not only on their transaction data, but also how they browse, and also the traffic volumes. Then we create a story and narrative on the consumer demographic that we have for each brand.
JUN: Cool. Maybe you can share with us a few merchant success stories and some use cases, case studies that you can share with the audience?
JEREMY: Sure. I think what we see in Singapore, we have a very key partner - the Al-Futtaim Group. They are a distributor for brands like ZARA, Marks & Spencer, Bershka. When we onboard them, across the board they see about 30% of consumer spend increase after they sign up for Atome. And we also have a regional partner called Zalora. When we started with them in Singapore and Malaysia, even in soft launch itself, we were already seeing like a 70% growth in consumers using Atome. Now, I know people always like to say that these are cannalising and whatnot, but because the nature of how our platform works is we actually direct traffic to their website - we don't cannibalise their traffic. So we are able to also see the new users that come through that, and they are also able to track it. A third brand that I really want to touch upon is Apple in Malaysia, which are one of the keystone cases that we have, which the Atome team is very proud of. Before we signed Apple, electronics have always been a category which we deemed we need to be more cautious of to come on board with, because of the credit implications. But with the Apple, the team said let’s try and experiment on it. We’ve had them on for about a year now, and data has shown that firstly, a lot of these purchases are done through debit cards. 8 out of 10 customers are using debit cards for transactions. And this is almost unheard of, because when you buy a Macbook, you know how usually people like to buy with credit cards. Debit card represents a huge shift in the behavior that we would've thought would become. This also actually translates to any kind of fraudulent or risk activity. Our risk team actually said that Apple as a brand has outperformed other peers and even brands from other categories in terms of fraud and delinquencies. We are able to manage that even with users with no credit card. So I think this is something to be really proud of, and really just goes to show the kind of strength that Atome has, not only in the frontend for platform and apps, but also in terms of backend. How do we go about scoring customers, how do we manage risk, and simultaneously giving the value to merchants.
IMRAN: That’s fascinating! I think its very clear how a player like Atome can help consumers, and uplift the retailers as well, especially in this period of recovery. That said, with the space evolving and being very dynamic, all sorts of players moving cross-functionally, every marketplace and app aspiring to become the next super app, including with payments and various product features. Even questions from partners, like the issue of cannibalisation, competitive and fraudulent risk. How do you see this from Atome’s POV? What are the challenges as well as opportunities that you guys foresee coming up next?
JEREMY: I think that’s fascinating because whenever someone asks us that question, we always like to compare it to maybe 3-4 years ago, with the emergence of e-wallets. We like to always view challenges as opportunities, and the kind of parallels we see with e-wallets and with BNPL today are quite similar. Firstly, I think in society as a whole, we are at that inflection point. More and more users and businesses are coming onboard on digital. A stark difference that we observe is the number of merchants that come inbound to ask and say, hey, I’m actually interested in Atome, to get BNPL services - that has really increased in the past year or so. I would say, by and large we have brought about quite a good merchant awareness and education program that the team has started. Secondly, it is also, for us, how do we serve them once they come on board. And that’s why we have this entire online to offline kind of loop that we’re building, to continually serve their needs, because it’s really dynamic these days and things can really change fast. So we are always reacting, adapting. We also can’t ignore the regulatory side - as far as BNPL is a very fast-growing space, we are also in close conversation with the local authorities to share the kind of work we do to not only help brands grow, but also to give consumers the credit sustainability. We’re not going to be just a grow at all cost principle, but we are a grow but grow sustainably kind of model.
JUN: Interesting! I think zooming out from a micro point of view of retail and offline businesses, are there any industrial trends that consumers and retailers should watch out for, in terms of the adoption of BNPL? Like you mentioned, BNPL version 2.0. For instance, how do you foresee where BNPL will develop in the next few years, or how BNPL v2.0 will disrupt retail dynamics?
JEREMY: If we can sort of visualise this growth and progression, the way we see it, in version 1.0, a lot of the work done is to build a foundation and lay the groundwork - getting the merchant network, increase consumer adoption, and enhance payment capabilities. This is to make sure the system is always there, always up, and payment is done as quickly as possible. BNPL 2.0 will actually build upon that. We will start to introduce more products for the consumers to enjoy - we already see this in the form of Atome Plus in Singapore. With the remote points, we will likely expand that regionally once we see more success. We are seeing really good traction and adoption in the Singapore market already. On top of that, as an ecosystem, we can never be close-looped. We need to work with industry players, partners across the market to make sure that we continue to deliver value to merchants and consumers. Open-looped payment service, things like credit cards, e-wallets, and so on - this should definitely accelerate BNPL acceptance, because then the users can use BNPL at more places, merchants can accept them for more customers. Once you have all these, how do you then introduce more value-added services to the merchants as well. Merchants are a very key partner for us, and we always want to make sure that we introduce more capabilities like CRM, co-marketing campaigns, loyalty rewards that they can leverage on as well, especially connecting them with consumers through more services.
IMRAN: That’s a great segue towards our closing. You mentioned at the start that you went omnichannel because physical retail is still a very key segment of business for your partners. Do you think physical retail will continue to be king?
JEREMY: Firstly, physical retail always flourished because we as consumers like to always visit stores. E-commerce brings the convenience, yes, but nothing beats the experience of walking to a shopping mall, going to a retail store to try on clothes or products, and having that human interaction. I feel that physical retail will still be a significant part of any brand and business owner. Having said that, the digital side of it is definitely catching up a lot, and is already a very decent chunk. Every mall and brand owner now needs to take these two into account in their business and growth strategy and planning.
JUN: Absolutely agree. Coming to the final question we always ask our guests, if you had a mall manager in front of you today, what would be your one piece of advice to him or her?
JEREMY: I think a very good advice is to always embrace change, because change is the only constant you have. Don’t be resistant to it. The pandemic taught us that if you always adapt and start small, even if you fail, there are still lessons to be learned from that. Change is something that people will always need to be used to, and from there iterate and continue to grow.
JUN: I see. I think there’s one point that I want to bring before we end our conversation. It’s actually something that we’ve discussed before, which is that the shopping pattern in the West and Asia are very different. Just now you mentioned e-commerce, offline. I recall a conversation we had with offline, you mentioned when Atome started in SEA, you already see that we need to be very focused on the offline market. Maybe you can share a little bit more about that for us.
JEREMY: In terms of our strategy, and growing offline?
JEREMY: I think the reason is because we always know that online and offline will never replace each other. It will always be complementary spaces, and every brand will recognise that. So yes, with the various lockdowns in the past two years, we have moved largely online. But once the economy opens up, people tend to go out more. From our experience looking at data of how consumers shop, we recognise that offline will always be a significant chunk of malls’ businesses. In our strategy, it is consciously made that the partners we work with - PSPs, e-commerce enablers, and even technology platforms - we want to make sure that there is always an offline element there to capture a confident, holistic view of our partners, and serve our customers more accurately. Also, let’s not forget that BNPL, while it is a form of payment, the backbone of it is a lot more financial service related. Having more data from offline and online will also help us to serve and score our customers better, so that’s why the strategy of keeping online and offline.
IMRAN: Makes sense. And if you had a merchant or retailer in front of you, what would your piece of advice to him or her be?
JEREMY: I think it is to try small, keep trying and keep experimenting. From there, even if it fails, we are able to get lessons learnt. If it succeeds, it succeeds big. So what’s the harm in trying?
IMRAN: Iterative methods, right.
JEREMY: That’s right, that’s right.
IMRAN: Jeremy, thanks so much. You’ve given so much golden advice in a very short conversation. With this, unfortunately, we have come to the end of the episode. Thanks again for sharing your insights on this episode. For those who are watching, if you want to get in touch with Jeremy or ask him any questions, of course send your questions to our socials and I’m sure Jeremy will be more than happy to get in touch with you or answer your questions as well. Please tune in to our next episode of The Future Of Retail Asia, see you then.
JUN: Thank you.
IMRAN: Bye bye.
JEREMY: Thanks guys.
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