D2C Coffee Brands Use BNPL as Upsell Tool to Drive Premium Purchases

With the growth of direct-to-consumer (D2C) options enabling coffee drinkers to access increasingly niche, increasingly boutique products, prices have been rising for higher-end brands and blends.

Now, the expansion of buy now, pay later (BNPL) is making it possible for some coffee snobs to purchase beans that would otherwise have been outside their price range, creating new sales opportunities for brands.

“Delayed payments or spreading payments is a new area for us — we’re seeing some customers use that a little bit, so that’s a new trend,” Maurice Contreras, CEO and founder of D2C brand Volcanica Coffee, told PYMNTS in an interview. “[It’s] really good for us, because we have some coffees that are over $100 per pound, [so it’s] helpful for somebody that can buy it and spread the payments out over a few months instead of one time.”

Certainly, there is some demand for more BNPL options, both for food and beverage (F&B) purchases and overall. Research from PYMNTS’ report “The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives To Traditional Credit,” a PYMNTS and Sezzle collaboration, which draws from a survey of more than 7,000 U.S. adults, found that 65% of consumers who use or would use BNPL options say they are more likely to shop at stores that offer BNPL, and 21% of consumers are interested in using it to pay for groceries.

Read the report: The New Credit Model: Why Financially Worry-Free Consumers Still Want Alternatives To Traditional Credit

BNPL has been slowly entering F&B categories. Take, for instance, aggregators. In March, DoorDash announced a partnership with Afterpay in Australia, and last month, U.K.-based food delivery service Deliveroo debuted the option in partnership with Klarna.

For coffee brands, offering the option can help them capture some of the consumers’ gifting spending during the holiday season, according to data from PYMNTS’ recent study “New Reality Check: The Paycheck-To-Paycheck Report — The Holiday Shopping Edition,” created in collaboration with LendingClub. The study draws from a survey of more than 3,400 U.S. consumers and notes that 59% of consumers who plan to engage in holiday shopping report that they will use BNPL financing.

Get the study: New Reality Check: The Paycheck-To-Paycheck Report — The Holiday Shopping Edition

In addition to BNPL, Contreras observed an increasing interest among consumers in paying for their coffee via systems that enable them to use saved credentials.

Research from PYMNTS’ study “How We Pay Digitally: Stored Credentials Edition,” created in collaboration with Amazon Web Services (AWS), and is from a survey of more than 2,100 U.S. consumers, notes that 63% of online grocery customers reported having paid for those F&B purchases using stored payment information in the 30 days prior. In contrast, only 51% had done so with manually entered information.

Download the report: How We Pay Digitally: Stored Credentials Edition

“We’ve been seeing more customers using the Amazon payment system, where they would log in with their, with their Amazon account and make a payment using [those] credentials,” Contreras said. “And a lot of that is just convenience.”