Innovative payment methods that eCommerce stores are using. Innovative payment methods that eCommerce stores are using.

How innovative payment models are helping eCommerce stores succeed

Payment at the point of sale has been eCommerce’s bread and butter for decades. A customer decides to buy, enters their credit card or PayPal info, and buys the item or service they want. But different, less traditional payment methods have been cropping up over the past few years as customers have become more comfortable with online shopping, customer data has gotten richer, and innovative companies have broken out across several varying industries.

But innovation tends to trickle down slowly. So while eCommerce may be on the cusp of widespread adoption of several new, more flexible ways to sell online, there’s still just a select group of pioneers piloting these new techniques.

Whatever your eCommerce business might be, you should always keep an eye on eCommerce trends—and these reimaginings of the payment process are certainly a growing one. Even if you’re not quite ready to incorporate these new payment models or you’d like more evidence of their benefits, your current and future consumers may be clamoring for them soon.

Financing options for large, and not so large, purchases

When you hear “financing,” you probably think of buying wallet-busting items like cars or new Apple monitor stands. But that isn’t necessarily the case in brick-and-mortar retail; there’s been a layaway option for lower-priced items like clothing dating back to the 1930s. Now, delayed payment options are becoming more prevalent and widespread on eCommerce sites, benefiting both the shoppers and the online stores

Companies including Afterpay and Bread help eCommerce stores split the cost of goods into multiple payments. Consumers pay a portion of the total fee up front, receive their product, and then pay the remaining payments on a schedule. A temporary line of credit is opened and is not attached to a credit card, something shoppers may not want to use or may not have.

While terms vary by the financing company, eCommerce stores are typically paid in full at the point of sale, and the financing company takes on the risk of the loan. And that’s not the only benefit to the eCommerce business—by offering financing options, they can increase conversions and average order value (AOV) rates.

In a case study of BBQ Guys, a retailer that sells grills and outdoor cooking equipment, Bread found that, “Since launching Bread, has seen a 9.5 percent increase in their overall conversion rate. Additionally, customers who used financing had a 32.6 percent higher AOV and checked out with 24 percent more items in their carts.”

By splitting one large payment into smaller payments over weeks or months, financing empowers shoppers to, say, get the grill brush and tongs set, too, because the monthly cost of a grill and brush set with financing is suddenly within their means. If you sell expensive items, financing could help you capture customers who are on the fence.

Innovative subscription models satisfy the demand for options

The “subscription economy” is alive and well in eCommerce, from monthly candle memberships to beauty boxes to digital streaming. Their popularity has, however, made consumers more discriminating, forcing companies to build creative subscription packages. Here are some of the new approaches to subscriptions that companies are using.

Flexible subscriptions

Rather than keep customers on a set delivery schedule, some subscription services are allowing customers to set and change their own delivery times.

For example, the shaving subscription service Billie lets customers choose how frequently they want to receive razors, and also offers optional one-time add-ons, like shaving cream and lotion, on each order.

Billie gives subscribers the option to add one-time products to their box.

With more control than ever, and by never feeling like they’re going to be stuck with products they don’t need, customers are more willing to subscribe. They can choose the frequency that works for them, and they don’t waste their money on more than they’re reasonably able to use.

Another key component of flexible subscriptions is the ability to “pause” a subscription service instead of canceling it. Again, this puts shoppers in the driver’s seat, but it also keeps customers in a company’s system. And that can mean better customer retention or reengagement.

Personalized subscriptions

Some subscription boxes work for everyone who’s signed up. Some work for a segment of subscribers. But some need an even more personalized touch—where they’re customized all the way down to the individual.

The makeup box subscriptions service Ipsy sends a personal selection of makeup products to subscribers every month. To make sure they’re sending the exact right things to the right people, new customers take an extensive questionnaire that covers skin care concerns, undertones, favorite brands, favorite shades of lipstick, and desired frequency for receiving different types of products. Ipsy customers buy items they will use instead of paying for a sampler crapshoot in the mail every month.

Ipsy gives new customers an in-depth quiz to learn their preferences.

By personalizing subscriptions to the individual, you increase the odds of customer satisfaction—which can ultimately lead to your customers spending more money. A study by Deloitte found customers are willing to pay a 20 percent premium for personalized products and 22 percent are happy to share more data in order to make that customization possible. (PDF)

Rental subscriptions

Rental subscriptions aren’t new—back when Netflix was a DVD company it let you keep a rental as long as you wanted provided your subscription was paid—but rental subscriptions are now expanding into all sorts of industries, including toys, furniture, cars, and jewelry.

But perhaps the industry that’s seeing the most success with rental subscriptions is clothes.

One of the biggest players in that space is Rent the Runway. At first, their focus was renting one-time event clothes; customers could choose to keep items for four days or just over a week. Now, through Rent the Runway Unlimited, customers can keep clothes for as long they wish and can exchange them for new pieces when they want new outfits. Die-hard brand fans use RTR Unlimited as a constant wardrobe refresh, not just for special-occasion clothing.

Rent the Runway's Unlimited option is popular with customers looking to keep clothes indefinitely but temporarily.

Rental subscriptions keep customers’ options open and tap into the increasingly popular “sharing economy.” Rather than buying more stuff, consumers can rent and swap things out when they need to. If your business has goods that could potentially be rented and returned, trying out a rental subscription service could help you reach consumers who want more flexibility.

“Pay what you want” replaces discounts

Back in 2007, Radiohead asked customers to pay whatever they wanted for their album In Rainbows. This was one of the first times anyone had opened a “pay what you want” (PWYW) model online, and, for years afterward, it had people investigating whether or not it “worked.” Today, the online marketplace continues to experiment with, and find success with, the model.

Everlane, for example, has replaced their website’s traditional “sale” section with a PWYW section.

Everlane's Choose What You Pay section.

When a customer looks at any “choose what you pay” item on Everlane’s website, they are given three different price options. When you hover over a price, a description of what that price covers for the company is revealed, from the mere cost of goods at $34 to staff overhead at $41 to future product development at $48:

Everlane's different prices, and what they mean.

Everlane reports that around 10 percent of customers pay more than the lowest price under this scheme, which the company has been running for years.

Let’s say 250 shoppers purchased the jeans above, with sales broken down as follows:

  • 90% of shoppers paid $34
  • 5% of shoppers paid $41
  • 5% of shoppers paid $48

Everlane makes $8,762.50 off their surplus jeans. If they simply discounted to $34 and 250 people purchased, they would make $8,500. That’s a difference of +$262.50 under the PWYW model that they never would have captured under a regular “sale” model.

PWYW works especially well when consumers connect with a brand’s values or a charitable mission backed by the company. Ethical factories and transparent pricing are at the core of Everlane’s brand; one can assume that, in our hypothetical example above, the 10 percent of shoppers who paid more than the minimum would feel Everlane’s values are worth supporting.

The PWYW model is not fit for an entire eCommerce store, so setting up constraints is key to success. We like Everlane’s limited selection of PWYWY items and the three price options they give—everyone has to pay enough for the store to break even. Introducing this type of limited choice may help you engage consumers with your core mission if you explain where their money goes. Plus, it could net you more money than a flat-out sale section if customers connect with your brand and are willing to pay more than the deepest discounted price.

Key takeaways

When you’ve got your eCommerce shop up and running, it can feel like you’re locked into your selling model—but that’s not necessarily true. eCommerce is a fast-moving space, now more than ever, and ignoring innovations in payment systems could be costing you money.

► Financing can be a good option for purchases big and small

If you have more expensive inventory or stock luxury goods—or just want to give customers an option to make smaller, more palatable payments over time—financing might be a great way for you to open up your sales to a wider range of customers. With third-party companies handling the financing for you, the hard work and risk are taken care of.

► New subscription solutions can keep customers happy

If you already offer a subscription, see where there is room to play around with frequency and personalization. And if you don’t offer subscriptions but have a product that might work on a rental basis, it’s something to consider adding to your site.

► Potentially increase revenue by replacing your “sale” section with “pay what you want”

If you have a sale section, it might be worth converting to a PWYW model for a trial run, especially if you are a company with a charitable or ethical mission. You may be able to recoup profit that you would otherwise miss out on, because customers want to support businesses that align with their values.

Lauren Christiansen
Lauren Christiansen is a passionate content marketer and writer. Outside of thinking about all-things eCommerce, Lauren is an avid sports player and fan. Her writing and numerous side projects can be found on her website.


    1. Hi Bryan,

      A few of the most popular are AfterPay, Bread, and Klarna, which allow eCommerce merchants to offer financing directly to their customers as a service. There are many options, though, including PayPal Credit, Sezzle, FuturePay, Laybuy, ViaBill,, LaterPay, SplitIt, etc.

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