💸 Save Now, Buy Later: The New Trend?
India is shifting from a savings mindset to a consumer mindset. Here's how 'Save Now, Buy Later' aims to change this.
Let’s face it - middle India is not saving enough.
65% of Indians account for just 1% of total savings.
And 80% of Indian employees run out of money before the month ends. Only 13% are able to save a decent amount of their salaries!
But our aspirations have no bounds:
75% of Indian Gen Z (out of 1,000 respondents) want to study abroad.
3 out of 5 Indian travellers want a foreign trip.
Where there's a problem, there are startups solving for it.
Say hello to the latest financial trend: Save Now, Buy Later!
What is it and how does it work?
What are the benefits of this model?
What are the challenges associated?
We answer these questions in today's piece. Read on!
🤑 Save Now, Buy Later: What?
Save Now, Buy Later is exactly what it sounds like: you save now and buy later.
Yes. Planning, saving and then mindful spending.
Huh, this is not really new. Our parents have always followed this mantra. And we do have banks for savings, so what's all the frenzy about?
You see, that's the thing with humans - give them anything new, make them count two benefits of it, and they will give in to that “new trend”.
What's the benefit here, you ask? Discounts and cashbacks!
This space is already booming with marquee investor-backed startups like Multipl, Hubble, and Tortoise.
Let's dive deeper to see how these platforms work.
🤔 Save Now, Buy Later: How?
Hubble: money is deposited into an escrow account* with its partner bank and you get a 10% discount on purchases through the platform.
Tortoise: money is deposited into an escrow account (by Razorpay). Once you reach your savings goal and complete a purchase, you get cashbacks.
Multipl: this app not only helps you save and get discounts, but also allows you to invest your savings in mutual funds to get higher returns (through its SEBI RIA licence).
You can also directly save with the brand you want to purchase from to avail discounts. In this case, the brand can also co-invest with you and help you reach your goal faster. How?
The brand adds a pre-agreed amount to your goal every month. On completion of your goal, the brand's contribution will be converted into a gift card!
🤩 Save Now, Buy Later: The Good
This model offers many advantages for customers (not just discounts!):
It promotes the age-old habit of saving
Helps you plan ahead and save for mindful purchases
Saves you from falling into the instant gratification trap, and the deeper debt trap that comes with exciting BNPL offers!
Offers higher returns than that on a savings account
Rewards, discounts, cashbacks!
Now, this is all good for us. What is in it for brands?
😲 Save Now, Buy Later: For Brands
In a world where brands nudge to buy more (Swiggy, Zomato, we're looking at you!), brands associated with SNBL platforms want you to save now and buy later. Here's why:
More sales: Indians are suckers for discounts. Offering rewards could increase sales and reduce cart abandonment rate (51%) for brands.
Better cash flow: In 2022, 50 e-commerce companies shut down due to lack of working capital. If users deposit their savings with brands, it would increase their cash flow and help them run smoothly.
Increased customer loyalty and retention.
Sounds like a win-win for all? Um, there's a catch. There always is.
👀 Save Now, Buy Later: The Catch
While the SNBL model looks promising, there are a few challenges:
You only get rewards if you actually make a purchase. If you change your mind at the last minute and withdraw the money, no returns!
Let's admit it - impulsive buying gives you dopamine like no other activity! This model comes with delayed gratification and a saving mindset: behavioural changes that might take time to execute.
This model is suited for aspirational, high-ticket expenditures like travel or electronics. This is a relatively smaller target market in India.
Users today have commitment issues - we are switching from buying products to renting them. So, is there really a need for SNBL?
The industry is at a nascent stage now. Startups in this space need to identify more long-term goals for users to save now and buy later.
What other use cases can SNBL have? Would you save now and buy later?
Let us know if you liked today's piece. If you did, please share this with your friends, and get them to subscribe :)
See you tomorrow, smarty! 🤓
If you are coming here for the very first time: Join us on WhatsApp and never miss an update! 👇
🤓 Noobs Corner: An escrow account acts as a temporary pass through account held by a third party during the transaction between the customer and the merchant.