With Digital Trade Credit, Ankorstore drives increased spend and improved stickiness
The ability to offer trade credit is a key requirement in the world of wholesale and B2B marketplaces. For SMEs in particular, trade credit brings enormous benefits by enabling deferred payment of purchases, freeing up cash to direct towards business growth.
However, for the most part, trade credit processes remain offline. For example, even in e-commerce, it’s not uncommon to find credit application forms that must be printed and completed manually. And, even where credit is granted, the payment process is often outdated and riddled with manual tasks. Meanwhile, wholesalers typically need to provide financing off their own balance sheet, which exposes them to the risk of fraud and non-payment. Here we look at how Ankorstore – a digital B2B marketplace – overcame these challenges by implementing a Digital Trade Credit solution.
First launched in France in 2019, Ankorstore provides more than 300,000 independent retailers across Europe with a product catalogue of over 30,000 brands selling a variety of goods from scented candles to organic marmalade. Since its launch, Ankorstore has rapidly expanded across Europe and is present today in 28 countries.
In establishing its value proposition for retailers, Ankorstore identified the importance of offering an easy-to-use payments interface, akin to the checkout process used when paying with a credit card or digital wallet. It also wanted to offer up to 60 days deferred payment from the start of the trading relationship, which would set it apart from the 30-day payment terms offered by many competitors and often offered to retailers when buying directly from brands.
Determining a payments strategy
Ankorstore recognised that there were a number of challenges in realising its vision for the deferred payment component of its offering, including:
Identifying credit and fraud risks: Ankorstore had limited internal capability to assess credit worthiness or identify patterns of impersonation fraud. In order to offer large-scale financing to the majority of its customers, it would have to establish an internal credit function and invest in credit databases and / or buy credit scores to support its work.
Overseeing credit limits: Ankorstore wanted to offer deferred payment terms to 80-90% of its client base and to ensure terms were reviewed regularly in line with client needs. This would require significant capacity to oversee limit management.
Managing the financial costs of non-payment: while the short-term nature of BNPL lending means that Ankorstore would have been able to facilitate financing off its balance sheet, it was wary of the impact that late or non-payment would have onits finances.
Given these barriers, Ankorstore made the decision to outsource to a third-party provider. It discounted working with traditional factoring players, and, instead, sought to find a B2B version of the buy now, pay later (BNPL) solutions prevalent in the B2C world.
Selecting a Digital Trade Credit provider
Ankorstore first established the need for a Digital Trade Credit provider in early 2020 and selected a handful of providers, including Hokodo, to address their European market. However, given the limited number of B2B BNPL or Digital Trade Credit providers in the marketplace when making their initial selection and the importance of the deferred payments offering to its proposition, Ankorstore undertook a second review of the market in 2022 to ensure that it was working with the best of breed. This time it found more providers that could potentially meet its needs and assessed them against the following criteria:
Product and user experience (UX): the requirement was for an easy-to-use product that provided instant visibility on eligibility for deferred payment terms.
Geographical coverage: Ankorstore wanted to ensure that it would have a supplier for each of its major markets and an adaptable provider with a similar growth mindset.
Technical integration: solutions needed to be simple and quick to integrate (in weeks rather than months) and to fit with Ankorstore’s agile way of working.
Financial stability: eligible firms needed to be in a strong financial position and be able to weather any economic downturn.
Pricing: the price of the trade credit solution had to be competitive for the value offered, unique across all regions and in line with Ankorstore’s budget.
After undertaking this assessment, Ankorstore decided not only to remain with Hokodo in countries where they were already operating, but to make Hokodo their sole BNPL provider in all core markets. Ankorstore believed Hokodo to be the strongest provider against its set of requirements.
Benefits of implementing a Digital Trade Credit solution
Ankorstore has realised numerous benefits from implementing a Digital Trade Credit solution. Firstly, it notes that those retailers that take advantage of extended payment terms transact more frequently and have higher average spends. Moreover, customer stickiness is increased and platform bypass minimised, because retailers want to have access to favourable payment terms.
Secondly, the flexible nature of Digital Trade Credit also means that Ankorstore can be more retailer-centric in its credit processes. For example, it can adjust credit limits to be higher at key trading times of the year, such as Black Friday. In addition, Ankorstore and its trade credit provider are working together to offer trade credit to retailers that have not yet opened a store and who would not normally be eligible for credit due to lack of trading history.
Lastly, Digital Trade Credit has also brought significant strategic advantages. For instance, it has been instrumental in supporting Ankorstore’s international expansion. Each country has its own local requirements, for example, in some markets it is standard to pay using a bank transfer, and Ankorstore’s provider was able to develop the expected features for the given market. Similarly, it has helped Ankorstore to expand its deferred payment offering, for instance by introducing credit terms of 90 days. On top of this, there are also the benefits of frictionless operations, so that even if any adjustments are required on any transaction benefitting from trade credit, everything is automatically handled through the API.
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