Correction: A previous version of this article mischaracterized how Sezzle implements a discounting feature on its product marketplace designed to increase customers’ awareness of products. The functionality doesn’t use an app nor is it branded.
Buy now, pay later company Sezzle has introduced a coupon feature that applies shopper discounts on items within the company’s product marketplace.
This might seem antithetical for a player in the BNPL industry, which generally pitches its product to merchants as a way to increase average check sizes, but Sezzle executives insist coupons will work for both customers and the company’s business clients.
The new feature went live in February with discounts ranging from 5%-20% on some products within the company’s marketplace, which has about 1 million items, a Sezzle spokesperson said Friday.
Sezzle’s coupon option automatically applies the best discount offers at checkout. Not every product at the company’s marketplace has a coupon.
Sezzle executives first mentioned the coupon feature in the company’s Feb. 25 fourth quarter earnings call.
“I'm certain that our typical customer uses them heavily, and in many cases, needs them to stretch their paycheck,” Sezzle CEO Charlie Youakim told investors on the call, referring to coupons and discounts. The coupon function is a way to retain existing customers and entice new ones with the prospect of saving money, he said.
For merchants, the BNPL firm sees the value of coupons as increasing their product’s exposure across more channels and to more shoppers. Customers who are price-sensitive will benefit from wiser spending and an easier way to compare deals, Sarah Hill, senior vice president of product for Sezzle, said in a March 6 interview.
“The core value propositions to merchants has historically been an increase in conversion or increase in average order value,” she said.
With the coupons, Sezzle’s merchant customers can attract more price-conscious shoppers, Hill said.
Analysts who cover the Minneapolis-based Sezzle have taken note of the new feature, but reserved judgment, citing its newness.
“I have not seen it deployed for any amount of time so it is too soon to make any judgments on its impact on revenue,” Hal Goetsch, a managing director for the investment firm B. Riley Securities, said in an email.
“It sounds like Sezzle is currently experimenting with monetization for couponing in terms of how much of a discount they give the customer to create attraction and retention and how much of it Sezzle retains,” Northland Capital Markets analysts Mike Grondahl and Owen Rickert wrote in a Feb. 26 investor note.
Grondahl declined in an email to say if he thinks the discounts will increase revenue for Sezzle, which offers BNPL services for merchants such as Amazon, Doordash and Target.
For the fourth quarter, Sezzle reported net income of $25.4 million, up from $2.9 million from the same quarter in 2023. The company had $98.2 million in revenue for the quarter, up from $48.9 million for the year-ago quarter.
