Merchants of all sizes across various industries urgently need new tools and strategies to drive growth, and "Huabei" interest-free installments have emerged as a new solution.

Original by @Xinshang

This year's Double 11, "national subsidy" has become the most frequently mentioned term. When entering major household appliance and furniture live streams, almost every anchor repeats the phrase "national subsidy" tirelessly.

Yet, attentive consumers may also notice that "Huabei interest-free installments" are often mentioned alongside national subsidies.

In fact, since "Huabei installments" officially entered Double 11 in 2015, it has annually become one of the most popular promotional measures among consumers, with many choosing to place orders specifically due to the interest-free option.

In this process, an increasing number of merchants have recognized the potential of interest-free installments to drive consumption and have joined the trend. Data shows that over 5 million merchants have leveraged interest-free installments to boost sales growth.

As a digital financial tool, "Huabei interest-free installments" have become a "must-have" and "growth coupon" for merchants.

01

Standard Configuration for Double 11 Merchants

A notable trend this Double 11 is the proliferation of interest-free installment options, not just limited to brand flagship stores but also extending to small and medium-sized merchants and even products featured in live streams.

Behind this trend lies the importance placed on interest-free installments by platforms and merchants, as well as a genuine need.

Frankly speaking, interest-free installments are not a new tool and have been available on online platforms for years. However, their significance among merchants and anchors has increased significantly, with many now considering "interest-free installments" as equally important as "discounts" as a promotional tool. From a long-term value perspective, merchants are more willing to invest in interest-free installments.

This change is related to the relentless price wars.

With daily promotions, merchant profits have been squeezed to the limit, and razor-thin margins have become the norm across industries. Merchants find themselves mired in a quagmire of "selling more but not making money, or selling less due to insufficient discounts."

As traffic reaches its peak, buying traffic to drive growth has become less effective and harder to entice consumers to make purchases. A marketing expert in the consumer sector bluntly stated, "The era of buying traffic to boost sales in e-commerce is over. It's no longer feasible to simply throw money at promotions, yet not buying traffic equals slow suicide, and sales are even more uncertain."

Hence, merchants of all sizes across industries urgently need new tools and strategies to drive growth, and "Huabei interest-free installments" have emerged as a new solution.

The logic is simple: Compared to various disguised price reductions in the past, every penny spent by brands can translate into actual GMV. More importantly, merchants can sell their products without significantly compromising prices or reasonable profits.

Currently, brands across industries are highly receptive to supporting interest-free installments. In particular, the 3C sector has a strong mindset towards interest-free installments, making it one of the most commonly used marketing tools. It could even be said that 24-month interest-free installments have become a necessity for smartphone manufacturers during new product launches. Brands such as Xiaomi, Honor, OPPO, vivo, and even Apple have all supported 24-month interest-free installments during their product launches.

Beyond high-ticket items, interest-free installments are rewriting the "rules of the game" for marketing across industries.

Numerous low-ticket categories such as beauty, apparel, and daily necessities have also jumped on board, with even clothing items priced below $200 supporting 3-month interest-free payments through Huabei. Data shows that during the first wave of this year's Double 11 sales, the number of merchants supporting Huabei interest-free installments increased by 17% year-on-year.

Moreover, this year's merchant support for Huabei interest-free installments exhibits new characteristics, with more options for longer-term interest-free periods. In categories such as home appliances, electronics, furniture, mobile phones, sports, and outdoor gear, many popular products offer 12-month interest-free installments. Data shows that the number of products supporting 12- and 24-month interest-free periods has increased by over 20% year-on-year.

02

Evolution of Consumer Mindset

Naturally, Huabei interest-free installments are not solely desired by merchants; an increasing number of consumers view them as a prudent lifestyle choice. Younger generations, in particular, are becoming more mindful about planned spending and prioritizing healthy cash flow.

Research shows that over 90% of consumers who have used interest-free installments consider them a money-saving tool, and over 60% prefer interest-free installments even when they can afford to pay in full upfront.

Behind this trend lies a shift in consumer mindset: Installments are no longer tied to affordability but have become an essential tool for savvy spending. By subsidizing interest for consumers, merchants and platforms do not increase the cost for consumers. "Interest-free installments" inherently lower the barrier to consumption, avoiding sudden large expenditures and reducing capital occupy .

"Since interest-free installments don't cost me anything, why not pay slowly and earn interest on my savings?" said Wang Yuan, a white-collar worker. Even for items he can afford to buy outright, he now prefers interest-free installments. "I may not use it, but you can't not have it," he said, viewing interest-free installments as a more flexible and cost-effective way to consume compared to paying in full upfront.

The advantages of Huabei interest-free installments are even more pronounced when consumers purchase high-value items like smartphones, home appliances, and furniture. One consumer calculated that for a $1,000 computer, using a merchant-provided 12-month interest-free payment plan would result in monthly installments of less than $100. For a 24-month plan, the monthly installments would be just $41.67, and depositing the remaining funds into a money market fund could generate tens of dollars in interest annually. The anti-consumerism attitude here is, "Don't miss out on even a small amount."

For most consumers, avoiding excessive short-term capital occupy allows for more relaxed financial planning. "The more interest-free periods, the better," they say.

Some consumers even adopt an "amortization accrual" mindset, believing that durable goods like refrigerators, TVs, and furniture will be used for many years, and the purchase cost should be spread out over time. Research data shows that when a product supports 24-month interest-free periods, over 30% of consumers choose the 24-month option.

This consumer choice is supported by theory. From the perspective of the time value of money, a given amount of money held today is worth more than the same amount received in the future.

On social platforms, some budget-conscious users have recognized the advantages of interest-free installments, helping them allocate funds and consumption across time periods. They spontaneously promote this service to more netizens.

03

Igniting Growth

The positive effects of interest-free installments are evident.

According to iResearch's 2023 "White Paper on the Value of Interest-Free Installment Tools," nearly 70% of merchants reported a significant increase in sales after offering interest-free installment services. Specifically, sales of key subsidized products increased by an average of 30%, and store sales increased by an average of 15% due to interest-free installments.

Beyond a financial tool, Huabei installments have gradually evolved into a comprehensive solution to drive merchant growth. Ant Group has opened up the interest-free installment feature to merchants, allowing them to customize their digital business backends and select marketing tools like interest subsidies based on sales cycles. Targeting the three critical links in the sales chain, Huabei installments help merchants boost conversions, growth, and average order value.

Previously, Huabei partnered with Honor during new product launches, creating a new sales channel within the Huabei section and leveraging channel traffic for sales. Unlike simple "traffic flooding," Huabei applies its digital intelligence and computing power to commercial scenarios, pushing new products to audiences with the highest conversion rates.

He Jinqiu, Director of Honor Mall Business Department, explained, "Huabei's precise customer identification and computing power have brought qualitative changes to our new product launches. For example, when the Honor Magic 6 series was launched on the Huabei channel, UV increased by 30% compared to previous series, but sales and GMV grew by 400% and 500%, respectively. These figures demonstrate that good operations do not rely solely on traffic accumulation but also on improving conversion rates. Meanwhile, the growth in sales value exceeding sales volume indicates an increase in average order value, which we consider the greatest benefit of our partnership with Huabei installments."

In May this year, Hangzhou Stomatological Hospital also partnered with Huabei installments to launch an upgraded real-time consumption medical scenario credit limit solution. By providing industry-specific merchant credit limits, consumers can spread high medical expenses over multiple months, reducing the pressure of single payments, enhancing consumer willingness to pay, and offering more choices and flexibility. It also improves the service capabilities and efficiency of medical institutions.

Bai Yang, Deputy General Manager of Tongce Medical Group, said, "Installments not only enhance user experience but also increase consumer access to and acceptance of oral healthcare services."

In recent years, both offline and online businesses have struggled to escape the quagmire of price wars. However, years of practice have proven that mere price competition is detrimental to the long-term development of merchants and platforms, essentially leading to a "rat race" and a lose-lose situation for all involved.

Interest-free installments offer an alternative. They allow merchants to avoid the relentless erosion of profit margins in price wars, refine their pricing strategies, and contribute to sustainable business operations. Today, they serve as a vital driver for merchants to continuously stimulate demand and boost consumer spending.