In a world where instant gratification is the norm and credit card debt is at an all-time high, saving up for big purchases can be difficult. That’s where Sugar comes in – a Save Now Buy Later (SNBL) startup that aims to revolutionize the way we save and spend. Founded by Dylan Tan and Vishvesh Suriyanarayanan, it is an alternative to existing BNPL services – encouraging users to save up for big purchases and only buy when they can afford it. By doing so, they hope to empower people to take control of their finances and avoid getting into debt.
How Sugar works – An introduction to Save Now Buy Later
At its core, Sugar is an app built to help you easily save up for the things you want. To illustrate how it works, Dylan shared with us an example. “Imagine that you’re moving houses in a few months and need to buy a new bed. But making the payment all at once is expensive. You can either walk into the store you pick out or go online and use Sugar to see what deals they offer. Then you can create a purchase plan that fits your budget and make periodic payments to the merchant. After the payment is completed, you can collect the bed.”
When creating a purchase plan with Sugar, you can set a target date and then begin allocating a certain amount every week or month. Users receive cashback rewards from merchants for each payment made – sometimes up to 100% for saving with the app. Users can redeem these rewards upon making the purchase. Of course, if you decide to change your mind in the middle of your payment plan, Sugar will refund your payments with no extra charges. “SNBL is a complete flip of BNPL. Instead of encouraging people to buy what they want now and go into debt, we encourage them to save up and buy what they want with their own money. Something vital with the current economy,” added Dylan.
The benefits of Save Now Buy Later for merchants
A pitfall of traditional BNPL platforms is that consumers can end up spending beyond their means. Whereas Sugar’s SNBL model is designed to help users responsibly save up and pay for purchases in full at a later date. It’s an approach that allows individuals to stay within their budget and avoid debt. At the same time, it also provides merchants with a secure customer base. For businesses, BNPL features risks such as potential chargebacks and cancellations – resulting in lost revenue and inventory. In comparison, Sugar’s SNBL model offers these businesses more committed and reliable customers.
Further, by placing itself higher up in the sales funnel, Sugar helps convert potential customers into real sales. Thus, saving time and money that’d have been spent on advertising or following up with customers that may not be ready to make a purchase. As a result, Sugar allows merchants to focus on providing better products and services while strengthening the trust and loyalty of their customers. Given the current economic climate and competition in the market, securing a reliable and loyal customer base has never been more critical.
From BNPL to SNBL: The story of a startup pivot
Dylan and Vishvesh are no new faces to fintech. Their latest product, Sugar, came from a decision to split off from their journey in BNPL – the polar opposite of SNBL. While running Split, they got a seemingly weird request from a merchant – to collect pre-payments from customers to buy products later. Initially, the duo shrugged it off. But then more and more merchants came with the same request. Then in early 2022, things started to change for BNPL.
The once fast-growing BNPL industry began facing unprecedented pressures. New players were entering the market and regulators began to worry about its risks to users. The final nail in the proverbial coffin for Dylan and Vishvesh was when a prospective VC pulled out when they sought to raise funds for a Series-A round. Reflecting upon this saga, Dylan shares, “I think it’s more likely that we would have come to the same conclusion as we have today, but after a longer period of time. The pivot would also be much harder with a larger headcount and wider customer base.”
Thus, the duo went back to the drawing board. During their research, they spoke to almost 100 Malaysian users and merchants. They discovered that many were already participating in group savings schemes known as duit kutu. Such schemes involved members contributing a set amount to a communal fund, which is withdrawn on a rotational basis to make high-value purchases. Recognizing the potential of this savings behavior, the duo saw an opportunity to create a savings app that would make it easier for users to save up for desired purchases and add incentives to encourage saving. Thus, Sugar was born.
Introducing consumers to the novel idea of SNBL
Image credits: Monkee
During its earliest days, Sugar faced a unique challenge. With BNPL, there’s the instant gratification of getting whatever you want to buy quickly. However, with SNBL, they had to educate customers on how it worked, and they would only get products in the future. Hence, the customer profile for the service proved to be very different. With Sugar, their target customers are planners or people looking to buy things they don’t need right now. Dylan says they have a lot to learn and figure out as it’s such a new space.
Finding merchants willing to take a risk
Dylan and Vishvesh were among the pioneers of BNPL in Malaysia with Split. Similarly, they’re now pioneers of SNBL in Malaysia. “When we began Sugar, we weren’t sure how customers would respond to the idea. So it was important to find merchants willing to be early adopters of SNBL. Luckily, since we’d already built a good rapport with many merchants as Split, we already had the trust of merchants,” said Dylan. Today’s merchants on Sugar include Apple, Samsung, Unbox, KingKoil, and DirectD.
The future of Sugar and SNBL
As of 2023, Sugar is focused on learning from its merchants and customers to improve toward achieving product-market fit based on their feedback. Dylan states that the company’s current approach will evolve over the next three to six months as they adapt to the market. Looking at the SNBL landscape, he notes that there isn’t a clear leader to follow. Hence, each player globally has a unique approach to the market due to the many ways SNBL can be leveraged. As such, Sugar remains committed to working with merchants to find ways to serve them effectively and, in turn, consumers. While the open-ended nature of SNBL poses a challenge, Dylan sees it as an exciting opportunity for Sugar to innovate and transform how its users save money.