In a recent turn of events that highlights the persistent challenge of high website cart abandonment rates in Japan, local fintech startup Smartpay has secured a substantial $7 million in its pre-series A funding round. Japan, with an abandonment rate of 89%, stands significantly above the global average of 70%, indicating a unique challenge for online merchants within the country. This issue, however, presents an opportunity for innovative payment solutions, as demonstrated by Smartpay’s recent success.
- Launch of BNPL Services: In 2021, Smartpay introduced its Buy Now, Pay Later (BNPL) services, aiming to mitigate the high cart abandonment rate.
- Impact on Average Order Value: According to Smartpay, users of its BNPL service report an average order value of US$240, which is more than 40% higher than that of non-users.
- Expansion of Services: Beyond BNPL, Smartpay offers digital in-store payments and Smartpay Bank Direct, allowing direct bank account purchases online.
Smartpay’s Growth Indicators
| Year | Average Order Value (US$) | Funding Raised (US$) | Merchant Network Goal |
|---|---|---|---|
| 2021 | 240 | 7 Million | 30,000 |
- Recent Funding Round: Led by SMBC Venture Capital and supported by Angel Bridge, Matrix Partners, and Global Founders Capital.
- Growth Aspirations: Aiming to increase its customer base to 2 million and expand its merchant network to 30,000 within three years.
The Context of BNPL in Asia
- Challenges in the BNPL Sector: The BNPL industry in Asia has faced setbacks, with notable closures including Bukalapak’s BukaCicilan, ShopBack’s PayLater, and Atome’s exit from Vietnam.
- Emerging Players: Despite the challenges, significant entities like GoTo Group are planning to introduce new BNPL services, signaling continued interest in this financial model.
Understanding the high cart abandonment rate in Japan requires a closer look at consumer behavior and market dynamics. Cultural factors, payment preferences, and concerns over financial security all play a role in shaping this phenomenon.
Through its services, Smartpay not only aims to reduce friction in the online shopping experience but also educates consumers about the benefits and safety of digital payment methods. This approach is gradually altering perceptions and habits around online shopping in Japan.
Globally, the BNPL sector is experiencing growth, with companies like Klarna and Afterpay expanding rapidly. Japan’s adoption of BNPL, facilitated by firms like Smartpay, indicates a convergence with global e-commerce trends, offering insights into how diverse markets are tackling similar challenges differently.
Retailers partnering with BNPL services like Smartpay can leverage these platforms to address the high cart abandonment rates. By offering flexible payment options, merchants can improve conversion rates and enhance customer loyalty.
As BNPL services grow, regulatory frameworks will need to evolve to ensure consumer protection. Japan’s approach to regulating these innovative financial products will be crucial in maintaining consumer trust and market stability.
The entrance of new players into the BNPL space, alongside existing companies like Smartpay, will drive innovation and competition. This dynamic is essential for the continuous improvement of services and the overall growth of the e-commerce ecosystem.
Smartpay’s recent funding achievement amidst Japan’s high online shopping cart abandonment rates highlights the potential of BNPL services to transform the e-commerce landscape. By providing flexible payment options and addressing consumer hesitations, Smartpay and its contemporaries are paving the way for a more robust and accessible digital marketplace. As the company looks towards expansion, the future of BNPL in Japan and across Asia remains a keenly watched space, with implications for consumers, retailers, and the broader economy.
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Featured Image courtesy of DALL-E by ChatGPT