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Alipay's Huabei Offers Interest-Free Installments for Double 11, a New Path for Merchants to Escape Price Wars

This year's Double 11, "national subsidy" has become the most frequently mentioned term, entering the live broadcast rooms of major home appliances and home furnishings. Almost every host is tirelessly repeating the word "national subsidy."

Attentive consumers can also find that along with the national subsidy, "Huabei installment payment with interest-free" is also mentioned.

In fact, since the "Huabei installment" officially entered Double 11 in 2015, it has become one of the most consumer-focused discount measures every year, and many consumers are willing to place orders because of the installment payment with interest-free.

In this process, more and more merchants have seen the consumption potential driven by installment payment with interest-free and have joined in. Data shows that more than 5 million merchants have promoted sales growth by using installment payment with interest-free.

As a digital financial tool, "Huabei installment payment with interest-free" has become a "must-have" and "growth voucher" for merchants.

Double 11 merchants' standard configuration

This year's "Double 11", a clear trend is that the number of goods with installment payment with interest-free has increased, and it is not only brand flagship stores, but also small and medium-sized merchants, and even many goods in the live broadcast room can be paid in installments with interest-free.

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Behind this, it is the platform and merchants' emphasis on installment payment with interest-free, and more importantly, a "need".

To be honest, installment payment with interest-free is not a new tool, and it has been on online platforms for many years. However, now this tool has been highly valued by merchants and hosts, and a large number of merchants have regarded "installment payment with interest-free" as an equally important promotional tool as "price reduction". From a long-term value perspective, they are more willing to invest costs in installment payment with interest-free.

The change is related to the endless price wars.In the current era where daily promotions are the norm, merchants' profits have been reduced to the extreme, as thin as a razor blade, which is the real survival state of almost all industries. Merchants are sinking deeper into the quagmire of "reducing prices too much to make no money, and reducing prices too little to sell."

With the cap on traffic, the effect of buying volume to achieve growth is no longer obvious, and it is also difficult to attract consumers to place orders. A marketing expert who has been deeply involved in the consumer field said, "In e-commerce, the era of selling a lot just by buying volume has passed. It is difficult to make a splash with money, but not buying volume is also equivalent to slow suicide, and sales cannot be guaranteed."

Therefore, merchants of all sizes in various industries urgently need a new tool and a new way to increase growth. The installment plan with interest-free payment has become a new handle.

The principle is simple. Compared to various disguised price reductions in the past, every cent spent by the brand can be transformed into solid GMV. Of course, the more critical point is that merchants can sell goods without breaking prices as much as possible and under the premise of ensuring reasonable profits.

At present, the willingness of brand merchants in various industries to support installment plans with interest-free payment is high. Among them, the mentality of installment plans with interest-free payment in the 3C field is very strong and is also one of the most commonly used marketing tools. It can even be said that 24-month installment plans with interest-free payment have become a must for mobile phone manufacturers to release new products. Mobile phone brands such as Xiaomi, Honor, OPPO, and vivo, and even Apple, have supported installment plans with interest-free payment for 24 months during new product releases.

In addition to high-unit-price categories, installment plans with interest-free payment are rewriting the "rules of the game" in marketing across various industries.

Many categories with low unit prices, such as beauty, clothing, and daily necessities, have also joined in, and even a piece of clothing costing less than 200 yuan supports 3-month installment plans with interest-free payment. Data shows that during the first wave of sales for this year's "Double 11," the number of merchants supporting installment plans with interest-free payment increased by 17% compared to the same period last year.

Moreover, this year, merchants supporting installment plans with interest-free payment for Huabei have shown new characteristics, with more high-term interest-free products appearing. Among them, categories such as home appliances, digital products, furniture, mobile phones, sports, and outdoor equipment have provided 12-month installment plans with interest-free payment for many popular products. Data shows that the number of products supporting 12-month and 24-month interest-free payment has increased by more than 20% year-on-year.

Evolution of consumer concepts

Of course, installment plans with interest-free payment are not just the wish of merchants. More and more consumers regard installment plans with interest-free payment as a way of life for careful spending. Especially the younger generation, the awareness of planned consumption is gradually strengthening, and they pay more and more attention to healthy cash flow, focusing on saving where they should save and spending where they should spend.Research indicates that over 90% of consumers who have used interest-free installments consider it a money-saving tool, and over 60% would prefer to choose the interest-free installment method even if they can pay the full amount at present. This reflects a shift in public consumption concepts: installments are no longer linked to affordability but have become an essential tool for smart consumption. Merchant platforms subsidize interest for consumers without increasing their costs; "interest-free installments" can reduce the barriers to consumption, avoid sudden large expenditures, and decrease the occupation of consumer funds.

"Since interest-free installments come with no cost, why wouldn't I pay slowly and put the money into financial products to earn returns?" says white-collar youth Wang Yuan. Nowadays, even for products he can afford to buy outright, he tends to opt for installments. "I may not need to use it, but you must have it." In his view, interest-free installments are a more flexible and cost-effective way of consumption compared to paying the full amount at once.

When consumers purchase high-value items such as mobile phones, home appliances, and furniture, the advantages of interest-free installments with platforms like Huabei become more pronounced. Some consumers have calculated that buying a 10,000 yuan computer with a 12-month interest-free payment plan from the merchant means a monthly repayment of less than 1,000 yuan. If it's a 24-month interest-free plan, the monthly repayment is only 416 yuan, and by saving the remaining money in Yu'e Bao, they can earn tens of yuan in a year. The attitude of reverse consumerism is encapsulated in the phrase "Don't disdain the small gains."

For most consumers, avoiding excessive short-term occupation of funds allows for more relaxed planning, with the belief that "the more interest-free installments, the better."

Some consumers even adopt an "accrual of depreciation" accounting mindset, believing that durable goods like refrigerators, TVs, and furniture will be used for many years, and the money spent on them should be amortized over the future. Research data shows that when products are supported by a 24-month interest-free plan, over 30% of consumers would choose to purchase with a 24-month interest-free installment.

There is theoretical support for this consumer choice as well. From the perspective of the time value of money theory, a certain amount of money held currently has a higher value than the same amount obtained in the future.

On social platforms, it can be observed that some cost-conscious users have recognized the advantages of interest-free installments, helping to complete cross-period allocation of funds and consumption, thereby spontaneously "promoting" this service to more netizens.

Igniting the Growth Engine

The benefits brought by interest-free installments are also visibly significant.A report titled "The Value of Installment Payment Tools with Zero Interest" released by iResearch in 2023 indicates that nearly 70% of merchants have seen a significant increase in sales after offering installment payment services with zero interest. Among them, the average sales volume of products subsidized by interest-free installments has increased by 30%, and the overall store sales have been boosted by an average of 15%.

Huabei Installment has gradually evolved from a financial tool to a comprehensive solution that aids in merchant growth. Ant Group has opened up the interest-free installment feature to merchants, allowing them to independently set up their digital management backend and choose marketing tools such as interest subsidies based on their sales rhythm. Focusing on three key links in the sales chain, Huabei Installment can help merchants promote conversion, growth, and increase unit prices.

Previously, Huabei Installment cooperated with Honor to open a new sales channel in the Huabei channel, leveraging channel traffic for sales. Unlike simple "traffic flooding," Huabei applies its underlying digital intelligence capabilities and powerful computing power in commercial scenarios, pushing new products to the audience with the highest conversion rate.

He Jinqi, the head of Honor's mall business department, said, "Huabei's precise identification of customer groups and computing power have brought a qualitative change to our new product launches. For example, the Honor Magic 6 series launched in the Huabei channel saw a 30% increase in unique visitors (UV) compared to previous series, but sales volume and GMV increased by 400% and 500%, respectively. This set of data indicates that good operations do not rely solely on piling up traffic but also on improving the conversion rate of the audience. At the same time, the increase in sales revenue is greater than the increase in sales volume, which means that our average customer transaction value is increasing. This is what we consider the greatest gain from cooperating with Huabei Installment."

In May of this year, Hangzhou Stomatology Hospital also joined forces with Huabei Installment to launch an upgraded real-time scene quota solution for consumer medical expenses. By providing exclusive quotas for industry merchants, it helps consumers spread high medical expenses over several months, thereby reducing the pressure of single payments and effectively increasing consumers' willingness to pay. This offers consumers more choices and flexibility and also enhances the service capacity and efficiency of medical institutions.

Bai Yang, the deputy general manager of Tongce Medical, said, "Installment payments not only improve the user experience but also enhance the accessibility and acceptance of dental medical services by consumers."

In recent years, both offline and online, there has been a continuous struggle to break free from the quagmire of price wars. However, years of practice have proven that simply competing on price is not conducive to the long-term development of merchants and platforms. It is essentially a form of "involution" that leads to a lose-lose situation.

Interest-free installment payments offer an alternative. Merchants can avoid the infinite reduction of profit margins in price wars, improve their brand and pricing systems, and contribute to sustainable business operations. Today, this is an important driving force for merchants to continue stimulating demand and boosting consumer growth.

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