Drapers explores the rise of try before you buy initiatives across the retail industry and examines whether the latest payment trend will bolster sales or hit the bottom line.
The advent of express, next-day, same-day and time-allocated delivery has raised shoppers’ expectations higher than ever before. Now “try before you buy” is bringing the shopping experience into people’s homes, where they can try on items and combine them with others in their wardrobes at their leisure, before deciding whether to purchase them.
Try before you buy allows customers to order items without paying for them up front. Instead they are given a fixed timeframe – typically 14 or 30 days – to try items and purchase or return them. Delivery and return costs vary between retailers.
Asos, JD Sports Fashion, La Perla and Topshop have already introduced try before you buy. So is try before you buy a gamechanger in in improving customer service and bolstering sales, or an unsustainable gimmick?
It’s about training the customer and making sure they trust the service, which can be challenging
Lee Bloor, Lavish Alice
A range of UK retailers across many categories and price points have been using try before you buy, but it is seen as best suited to fast fashion ecommerce.
Beata Roos, principal consultant at Practicology, believes this is because of the price points: “This methodology works for fast fashion, because fundamentally customers tend to buy more because it is cheaper. Businesses that thrive using this model have lower-value purchases but higher frequency, because their target audience is younger and will benefit from the ability to pay later.”
Klarna provides try before you buy payment functions for Asos and the Arcadia Group, among others. Vice-president and general manager Luke Griffiths believes the concept is particularly successful with fast fashion retailers because of the rapid product turnaround and demand for newness from shoppers.
“The ‘want-it-now’ millennial approach to shopping across mobile devices works well with pay-later initiatives for customers because of the ease and convenience,” he says. “But the retailer also benefits, as they are able to turn around and sell through product lines more quickly, rather than wait for ‘pay-day shoppers’.”
How try before you buy works
- Shoppers choose items online with a retailer and select “pay later” at checkout
- On completion of the purchase, the store will ship the order as usual. Shoppers receive a confirmation email letting them know when their payment is due, usually in 14 or 30 days, depending on retailer
- After the shopper receives and tries on the items, they can log in and pay for those they want to keep and return the others. Returns follow the normal procedure outlined by individual retailers
Fast fashion etailer Lavish Alice launched Klarna payments in February with its new website, says founder and director Lee Bloor: “We wanted to make the customer shopping journey as easy as possible to improve conversion rates, and allow greater flexibility and convenience for payments.
Lavish alice 4
“As a womenswear online retailer without a physical store, we struggled with customers buying multiple sizes because they were unsure of fit. This model is more convenient for customers. But it’s still a new concept, so it’s about training the customer and making sure they trust the service, which can be challenging.”
In combination with increased use of social media, the conversion rate on the new site has risen by 20% year on year, and average order values by 45%, leading revenue to more than double, rising 120%.
At the other end of the market, luxury lingerie brand La Perla was one of the first UK brands to adopt the concept by creating its own independent pay-later solution called “Try & Buy”.
Global head of ecommerce Emma Diddi Nihlén says the function brings the in-store experience to its site: “In physical retail we know, if we can get our customers into the fitting room, they are much more likely to convert. So, the theory was, if we could give our customers the chance to experience our products as they do in store, by enabling the sensory experience of touch and the opportunity to see if items fit before asking for payment, we would be able to influence sales metrics online positively.”
La Perla has had a three-digit increase in average order value and average unit selling price with try before you buy, and more baskets containing new product categories than regular online orders.
Founder of menswear brand Hawkins & Shepherd, Carl Thompson, introduced try before you buy in March.
He says: “I wanted to convert more visitors online to sales. I could see some hurdles from my analytics, such as customers repeatedly abandoning baskets when it came to the payment page. My customer base treats its time as the biggest commodity, and anything that can save them time will pique their interest.” Thompson would not provide details on conversion rates and sales uplift figures.
However, despite helping to boost conversion try before you buy has its challenges.
Retail analyst Richard Hyman worries this model would increase financial hardship and restrict cashflow: “UK retailers’ cashflow is under almost unprecedented pressure already, and to then essentially lend people products without receiving payment, or potentially losing the stock for the time period of trial to never receive payment in the end, is very interesting. I am really sceptical as to how it will work to benefit retailers.”
Etailer In The Style has yet not signed up to the concept. Chief marketing officer Dane Stanley acknowledges the potential benefits of the concept.
“Anything that reduces the upfront commitment and helps alleviate that size anxiety is a good thing for the customer,” he says. ”But brands will have to be able to monitor the impact on profitability before deciding how much try before you buy becomes part of their core proposition. Fulfilment and the potential for higher returns comes at a cost. That will need to be absorbed.”
Anything that reduces the upfront commitment and helps alleviate that size anxiety is a good thing for the customer
Dane Stanley, In The Style
La Perla’s Diddi Nihlén notes the organisational challenge: “To launch a service of this scale, you need buy-in and alignment of all areas of your business, from finance and logistics to merchandising, customer services and IT. This can be a large and challenging undertaking for any business, including ours.
“Inventory management is a fundamental consideration for us. Although we haven’t had any problems yet, we are mindful of the risks related to having larger inventory volumes out on ‘loan’, damage of product and abuse of the system. But we have dedicated customer-care and quality-control teams that work closely with the service to flag up any issues that may arise so we can take action if necessary. These are all pretty standard considerations for any online business.”
There can also be a risk when it comes to stock. Providing product to customers without taking payment may lead to increases in “intentional returns” or product damage, says Tim Denison, director of retail intelligence at Ipsos Retail Performance.
“The systems are open to abuse,” explains Denison. “Already people buy items on a Friday to wear over the weekend and return on Monday. If customers are given 30 days to use and then return items without an upfront payment, this may really open the product and brand up to the return of used or damaged merchandise.”
He adds that try before you buy is a “solution for the here and now” but may not have longevity: “It is all part of this experiential culture and, while it clearly does overcome some of the friction seen with online shopping, it is probably not an efficient and eloquent solution for the longer term.”
The Drapers Verdict
Retailers must innovate in the shopping journey to maintain relevance with their customer base. Although try before you buy may not appeal to all retailers, it is a strong model in the marketplace and is proving successful with various ecommerce operations with different retail propositions, whether using third-party payment providers or constructing an in-house platform for later payments.
However, given the challenges of cashflow and stock management, as well as the re-education of consumers and in-house teams about the initiative, retailers must think carefully about whether try before you buy is the right fit for their business.
La Perla’s try before you buy promotional video