Watchmaker Shinola wanted to see how online shoppers would respond to being able to finance their purchase, rather than pay the full cost up front.
“The prices for our product are high,” says Shinola director of e-commerce Dennis Kopitz. “We thought a financing option for folks who aspire to own our products was another way to pay for them which better fits their lifestyle, particularly for the younger crowd.”
Shinola’s watches sell online for $475 on the low end, with some women’s watches approaching $3,000. Top500Guide.com data shows that roughly 30% of Shinola’s online shoppers are under the age of 35. Shinola, No. 349 in the Internet Retailer 2017 Top 500, decided earlier this year to offer an online purchase financing option through online payments vendor Affirm.
When a shopper checks out on Shinola’s site, she is given the option to pay for her purchase by making monthly payments through Affirm. Selecting this option will give the shopper a breakdown of what her monthly payments would look like over 12 months. For example, on a $600 watch, the default price is $52.75 over 12 months at a 10% annual percentage rate, meaning a shopper choosing this particular option would pay $633 total. APRs offered by Affirm are 10% to 30%, depending on a shopper’s credit history. Upon deciding to pay with Affirm, the shopper will then be sent to Affirm’s site to complete the purchase.
Shinola first began offering payments through Affirm in early August.
“We started promoting it on product detail pages and added it as another payment method, along with the other ones we offer,” Kopitz says. “We include it in some of our [email] newsletters speaking about Affirm and the other payment options.”
Since implementing the checkout button, Kopitz says he has noticed that shoppers who opt to pay in installments through Affirm are spending more money than those who pay via a credit or debit card.
“The average order value (when paying with Affirm) is about 70% higher than all of our other payment options,” he says. “If you’re going to choose to use a financing option, you’re likely doing it because it’s on a purchase that’s more expensive, which is sort of what we expected.”
While shoppers using Affirm are spending more on average, Kopitz says it’s too early to say whether the service has had a discernible impact on Shinola’s sales. He declines to say how much the retailer pays to use Affirm’s technology.
“Affirm is still a small percentage of our checkouts,” he says. “It is too early to make any assumptions about Affirm’s impact. We expect as we move into the holiday season that it’ll become a more popular option. That’s where we do the bulk of our business because of the gift-giving nature of our product.”
Kopitz says online accounts for about 20% of Shinola’s annual sales, though he declines to provide exact sales figures. Internet Retailer estimates show that Shinola generated $75.9 million in online sales in 2016, up 11.7% from $68.0 million the previous year.
The watchmaker has 25 retail stores throughout North America, but the integration between its e-commerce site and physical locations has room to improve, Kopitz says.
The company plans to roll out omnichannel functionalities, such as buy online pick up in store, shipping online orders from stores and the ability for shoppers to return online orders to stores by the second quarter of 2018, Kopitz says.
Affirm will be part of any future online initiatives Shinola might implement. “We want to offer financing in the stores and we want to do it with Affirm so we can keep that [unified] omnichannel experience,” Kopitz says. Shinola is in talks now about linking Affirm to -in-store sales. “We feel like the success we’ve had online will translate directly to the retail stores,” he says.