Former Shopify Employee is Disrupting Preorders: Why Full Price Up Front is Killing Your Sales w/ Diana Birsan Co-Founder @ Downpay

Jay Myers: Diana, it's so good to have you on the show. I've been excited for this conversation for a while because you. Come from the mothership. You are at Shopify and now you're in the startup space.

You're building for Shopify. In the Shopify ecosystem with people like me and so many others. And so from Shopify to startup, I want to go, I want to go to right into, quick little background on who you are, who you are, but then like what did you see? Tell me about that story. Like what did you see in the market that made you make that move?

Diana Birsan: Yeah. Yeah, absolutely. Happy to, uh, happy to share. Yeah, I mean, I, I'm not, you know, I've, I haven't been in e-comm for my whole life or anything. I kind of yo Yoed careers until I found the thing that, kind of drove me. And, uh, did a lot of film and television when I first started and then moved into it.

And that was actually how I jumped into, um, into Shopify. They were looking for someone to head up the IT team worked in Toronto at the time. And, uh, it was, yeah, I, I ended up building like a lot of the IT teams and like opening up the Waterloo office, um, building furniture for the Waterloo office, like getting it all set up, just like really crazy jobs because it was like back in 2015.

So it was very different world and it was amazing.

Jay Myers: I don't know if we, I don't know if we talked about this when we chatted before, but, so I, I've been to that water log. We've probably bumped into each other. I.

Diana Birsan: I bet you we have, I bet you we have. It's just, you know, like if you, you just like, yeah, I was in like the IT space, not the like product facing stuff. So yeah, behind the scenes kind of person.

Jay Myers: And for those who don't know that Waterloo office, you can probably still Google pictures of it, but it was pretty iconic. It was a like a Seagrams or a a, a whiskey

Diana Birsan: I think it was the Seagrams Yeah. Distillery. And they had like all the barrels for like, I don't even know how many stories, like two, three stories. It was

Jay Myers: Oh, it was, it was super cool. And I love that you kept all of the barrels there. Like it still felt like a whiskey distillery with desks inside of it and computers. Like, it was a probably one of the coolest offices I've I'd ever been in so you worked out of that office.

Diana Birsan: No, I, I actually just, uh, I helped set it up like when it was first launching and I worked out of the Toronto office back, uh, on Spadina, and then, uh, helped open up the office on wherever that other one was. Did a lot of that, a lot of it stuff, a lot of security stuff. And like I, yeah, I think I got into a point where I was like, do I become a, a software developer?

Like, you know, working in insecurity and stuff, or do I. Like, I don't know, it was just, wasn't fitting for me because it was very much like, you know, sit down kind of work independently, and I, I wanted to like work on the bigger picture or work with people or like, you know, just be more engaged with like, the people who the product is serving.

Um, and that's how I kind of found my way into product management and, uh, my first foray. And that was like. The merchant login stuff, like back in the day before the whole identity thing, it was like, okay, people have multiple logins, different passwords, so on and so forth. So I was like part of bringing that all together with a team.

It was cool. Yeah, it was, I mean, it was a huge, crazy project and it, it could disrupt a lot, but I, uh, you know, you're, you're just, you're learning so much about like what people actually use every day and you know, not to mess it up. And then, yeah, ended up, uh, becoming a product manager.

I worked in search, like admin search order management. I was part of the whole like, you know, let's bring subscriptions to Shopify natively. So my team focused on like, um, all the prepaid subscription stuff. And you know, like just how to bring everything into one order and not have all these multiple orders and, you know, duplicates and stuff.

So yeah, that, that's kind of like, it was an amazing time and, um, that's what made me fall in love with e-comm because you get to talk to merchants, see how they're using it, and then like iterate on the product itself.

Jay Myers: Well, it's so funny just to hear like our paths have been intertwined for many years. Like from the subscription space from Shopify, like, uh, just, and now here we, here we are on a podcast talking about an app that you're building, which, which I wanna get into, but I want it's talking, talk to me a bit about like.

Did you have your aha moment for building this or what you wanna do while you were at Shopify? Or where did you, tell me about how this came to be. We're gonna talk about Downpay, which is your company, but like, just before we get into that, talk to me about like the genesis of it.

Diana Birsan: Sure. Yeah. Yeah. So, yes, I, I, um, I pursued Downpay because I originally pitched fixing this problem at Shopify, right? So after the subscription stuff happened I started going, well, like, there's ways to extend these APIs to support more than one way of selling, right? So we, with subscriptions, you went, you kind of moved away from just.

Buy now, pay now. And you went buy now pay recurringly. And I was like, well, but there's so many other ways to pay. Like there's, you know, buy now, pay later. There's, buy now, partially pay the rest when it's ready, so on and so forth. And then you're talking like rentals Try before you buy like all these spaces.

And so that was like where I started thinking that this problem, like we could extend these APIs, we can make them work for more than one use case. And it means like. A larger addressable market for Shopify. And, um, my, yeah, my first pitch was about the fact that there are a lot of merchants selling things that aren't ready to be shipped yet.

Um, during that time it was, I think 2021. Pandemic hit supply chain issues. People who didn't even have this problem started having this problem, right? Like, people who were like, I, I understand where my supply, like my supply chain. I understand when things are coming, I can give people expectations.

And they couldn't do that anymore. And so I started talking to merchants in this space. I don't know if you remember, but like Uno, the, the pizza oven was super

Jay Myers: Yeah. I have, yeah, I have one. Yeah. Yeah.

Diana Birsan: yeah. I talked to them and they were like, yeah, like this is insane. You know, like there's canceled orders, there's issues with the fact that people are like, well, I can't pay for this upfront and then wait an undetermined amount of time until it comes in.

And so the pandemic exacerbated the issue. But the issue was already there, right. With you know, just standard businesses selling things that. Take time. So, I was like, pitched it, we did hack days at Shopify one of the years and we won, like we were in the top 10, uh, winners, right? And, uh, yeah, it worked out really well and we got a team rallied around it.

Built the APIs. And so like, yes, my idea came from the fact that I worked on fixing this problem. So I knew it intimately, but I actually left Shopify and just, uh, pursued like another career in, uh, like still as a product manager, but more as like a, like a lead at a different company. So I left E-com, didn't think I'd be back.

And uh, it just so happened that like my old team was like, Diana, like our work shipped, like it's all available. And at that time I was like. I don't know. I wasn't like super thrilled with where I was working and I was like, do I go find another job where I maybe have other problems with it? Or do I just try to go out on my own and solve this problem that I know is there and I know I can solve it?

Right? And so that's I convinced my co-founder Dennis to, you know, build this thing for me. We were like, I think we, we, we've been friends since Shopify, but we were at a, like a barbecue. And I'm like, yeah, I'm just like exploring this idea. And he's like, tell me. What are you exploring? I'm like, I'm ready to, ready to build something, ready to like work on this thing.

And, uh, you know, that's like when we started and I think it was, uh, 2022 you know, like September or something, 2022. So that's kind of like the history of like how we got to this idea and yeah, I mean, we'll dig into like what's happening now, but it's, uh, I'm so glad I did it. I'm

Jay Myers: That's a super cool story that you were at Shopify, you had the idea for the APIs, got pitched it to the team, Shopify ended up building it. Now you're building an app that uses the APIs that you pitched. I didn't know. That's amazing.

Diana Birsan: yeah, and now I'm, now I'm suffering from my decision making back then where I was like, let's scope it out. Let's just scope it out. It's not gonna work with this. Let's scope it out. You know, like, let's get it out to production. And I'm like, oh, there's

Jay Myers: You see what it's like being on the op side, right? Like yeah. That's amazing. That's amazing.

Diana Birsan: Yeah. It gives me empathy.

Jay Myers: Okay, so tell me about what, what is Downpay?

Diana Birsan: Yeah. So, so Downpay is a, um, is an app for Shopify that enables flexible payments. So what that means is being able to partially pay something upfront, being able to defer that entire payment until the future. Basically just making it more flexible so that it, it obviously encourages more sales when people can afford those products.

Right. So, it works really well, like. Where we're focusing is high value, custom made to order bespoke products, right? Like anything that has this inherent delay it's been fantastic for so huge furniture industry on Shopify, right? And a lot of them go out of stock or take a long time to build and.

Easiest way to reduce, you know, hesitation on checkout is, Hey, we're not asking you for full money upfront. We understand that, you know, we have to build trust with you, and we're gonna do this thing, and we're gonna charge you the rest when we can tell you that it's, it actually has a date, right?

Jay Myers: Amazing. And now, okay, so from a practical standpoint, this is like on the front of a store. They're looking at a, let's just say a couch and it's $5,000, but the merchant can say, you pay a thousand dollars today or half today, or you can set I, I imagine what that amount is.

Diana Birsan: that's exactly it. And then, yeah.

Jay Myers: and then, so they check out, they pay the $500.

Then when is the balance triggered? Is that adjustable from like on shipping on when it's ready to ship? Or what does that look like?

Diana Birsan: Yeah. So yeah, so at checkout big important thing we do is we store the credit card on file, right? So there's like some payment methods we support, like credit cards and uh, even PayPal Express. And so, uh, we store that on file so that you can automate. Collecting that payment later varies. Uh, there's two ways to kind of set it up.

One is like, Hey, I know exactly when that product's coming in and every product is coming in that day. So very much like the pre-order space of launching something new. You can automate collecting payment on or before that date, or you could do. Crazy things with our flow integration, like reminding people, you know, waiting a couple days, charging later, so on and so forth.

And then the other one is days after checkout, right? So it's like, hey it takes three weeks, it takes 12 weeks, whatever it is. You can actually charge based on that, and then of course you can edit it later if, let's say the date changes, so on and so forth. You're not like. Beholden to that date.

But that's, that's kind of like how the system is set up. And, uh, we also don't force you to automate the payment collection. Like it could be something, um, and I think it's a little bit more comfortable for a lot of merchants to say, Hey, I'm not gonna automate the charge. I'm gonna send you an invoice on that date, and you'll have a certain amount of time to pay that you know off.

And they use kind of like the. The card on file is like a risk reduction or like, you know, like if for some reason they just can't get ahold of someone, they're either gonna attempt to charge. But that's, yeah, that's, there's just, um, there's so many ways to use it and so it's I can give you one example, but like everyone does a different thing and it's, I think that's like, that's what we're building for, like not one size does not fit all much like the Shopify platform, right.

Jay Myers: Yeah. Can I rattle off a bunch of questions that probably merchants are listening to and they have? Okay. First question, is there a limit to how long a card can be stored and paid? Can it be a year later or can, is there a timeframe to that

Diana Birsan: Yeah, like the limit is the cards what's it called? Cancellation. Like what? Expiry, sorry. Yeah. Um, so the limits, the, the cards expiry date, however because you know, if Shopify's listening, I don't wanna encourage bad, you know, experiences. Something to, to keep in mind is, Shopify has to think about risk and chargeback.

Chargeback risk and everything. And so there are situations where if your, um, timeline is too long,

Jay Myers: Yeah.

Diana Birsan: they will hold some of your payouts, right? To say, Hey, like, this is way too long of a, of a timeline. Um. This encourages potentially charge like increases chargeback risks. And so it's something to keep in mind as you kind of extend those timelines.

I think the preferred timeline is like under 120 days. I think that's related to you can't do refunds on Shopify payments beyond that timeline. I think that's what it's, but it's just something to keep in mind. Not to say that it, they block you in any way, but we've seen some situations where.

They, they're gonna reach out and ask for more information.

Jay Myers: Gotcha. Okay. Second question. The original amount that's charged, I imagine you can refund that. If it's I'm ordering the couch and now the couch for some reason can't be, or the customer decides they don't wanna wait anymore and they say, I, and they're, as long as it's within cancellation policy, can you refund that initial part charged.

Diana Birsan: Yeah. Yeah, that's exactly it. Some people do non-refundable and by non-refundable it's literally, you make it clear in your terms that the deposit's non-refundable. You make it clear in like our app block, like everything and you know, kind of encourage people to understand what the expectation is.

But if you wanted to do refunds for, the end of time, that's totally fine.

Jay Myers: Right. Well, you.

Diana Birsan: we don't block it.

Jay Myers: It's like a hotel booking or something. You can cancel within X amount of time, but not whatever. Yeah, yeah. Now what does this look like in the backend? Does it create multiple orders or does it, uh, what does a emergency like? So let's say it's a $5,000 couch and there's a $500 charge.

Where do I see that charge is to go and refund it? Is it just in Downpay or does it show up in my order admin, or what does that look like?

Diana Birsan: Yeah, so the reas the, the goal behind all the stuff that I built at Shopify was to reduce duplication, to not screw up analytics you know, all that stuff. And like the hacky old way of doing things was like, oh, just like put a 50% discount on the order to take a 50% deposit and then create another one.

And it's terrible because now it looks like you sold two things and it looks like you also discounted those two things. And so this system is entirely. If you sold one couch, it is all in one order and the, the partial payment is like broken down and listed in that order in your payments card, right? So it's like fully native.

Integrated, all that good stuff. The card on file, you can see it in, uh, in that order itself. You can't see obviously the full card info and I can't either. But it is there for you to act on within that order. So it's like none of this like weird splitting, of data. It all exists in one place, so Yeah.

Jay Myers: Okay. And I'm asking very tactical questions here 'cause I know that's how people think when they listen, right? So on the initial order, it creates the order in

Diana Birsan: Yep.

Jay Myers: they see the order there, but it's indicated on the order that it is

Diana Birsan: Partially paid,

Jay Myers: part, partially paid. Oh, so that's the actual status, partially paid.

'cause you can have a partially paid order. Okay. So it's sitting in partially

Diana Birsan: Um, or pending if it's, uh, if you didn't take any money up front. So if you took zero,

Jay Myers: You can do zero and then fall.

Diana Birsan: with a card on file and you could charge the rest later. Yeah.

Jay Myers: Okay. Now the couch is ready to ship. Um, how do I as a merchant, I. Find the customer. So I know, I guess I would have like some type of, like an order like purchase, not a purchase order, but like a, a build order. Now the couch is ready. Do I go and down, pay and punch in some type of a number, the customer's email or their something, or do I go into

Diana Birsan: It is all through Shopify.

Jay Myers: Okay, so I fi I find the order in Shopify

Diana Birsan: Exactly.

Jay Myers: and I can trigger the remainder of the charge through there.

Diana Birsan: Or you can send an invoice through there. You can do either or you can automate the whole thing. So, an example would be, let's say you want to trigger the remaining balance. When the order's ready, let's say we, we put a hold on the fulfillment order. So that it's very clear that there's no action to be done until the order's ready.

You release that fulfillment order, um, with Shopify flow. 'cause there is an action to do that. And you can actually just trigger a collect payment if you wanted to in that

Jay Myers: When you change the order status to fulfilled

Diana Birsan: could do it. Or unfulfilled.

Jay Myers: or unfulfilled, ready to ship charges. Okay.

Diana Birsan: There's just so many ways, right.

To do it. And like you could even get, you know, crazier with like, you know, let's say you released the hold, you wanted to send people an, a reminder that they're, you're gonna charge their card first. You would do that, then wait a day, then charge their card. Like for a friendlier experience. Like that's all possible as well.

It's really up to like your, what your fulfill fulfillment process is right now. And then how you want to make sure people aren't caught off guard by like. Collecting, the second half of the payment.

Jay Myers: So that's awesome. So there's only one, like your order number is your source of truth. There isn't like a, a record

Diana Birsan: didn't make a new one ex. Exactly. We are like, and that's why I say like native, because I, the whole goal was not to be duplicative, right? Like you, we have all the resources related to orders and all this stuff in Shopify. Why would I like go create another place where a merchant would have to go and manage their orders?

Like, I don't wanna get in the way of the process. I'm just trying to make this part easier. Right. So, yeah.

Jay Myers: Is there anything that Shopify does to verify that the full amount is available on the card or is there some some risk that that initial $500 charge goes through? Now I'm ready to ship the couch. I go fulfill and it's declined. Or is there any hold or anything put on.

Diana Birsan: Uh, we once again have a mechanism to do authorizations. So if you wanted to, you could also build that in, let's say a week before production ends. You know, you wanted to test the card. Basically you could authorize the card on file, see if it succeeds for that remaining balance, and you can either keep that authorization.

And hold it until it's ready. And then you just capture the balance or you could release that authorization and then just capture later on. Like it's up to you. Like obviously the authorization period varies based on your Shopify plan. So if you're on, plus, it's, it's beyond the seven days, depending on the payment, uh, method.

But, um, that's a way to kind of like reduce that risk further without having to just feel like, oh, it's gonna be a, a chance that it doesn't work,

Jay Myers: totally. Totally.

Diana Birsan: to the day.

Jay Myers: And so to do that, they go to the Shopify order and you can authorize it there or do that through Downpay.

Diana Birsan: You can, uh, yeah. So we have like a couple systems. There's an action and flow. If you wanted to automate like, okay, one week prior to payment being due, authorize the order, uh, we also have. Triggers for if it fails. Right? So it's like, if authorization failed, do something like notify an internal team member, notify the customer to update their card.

Like all these kinds of things, like we have an update card what's it called? A little widget in the, um, customer portal, right? So like they can update their card on file if they want to. So there's like, you can build mechanisms there or there is a, we built an an extension as well as part of the order index list in Shopify where you can select an, uh, specific product and then, um, sorry, a specific order and then authorize that order as well through Downpay.

So there's a couple things we have to do through the app, but it's, we give you points. In various places to do it. Keep in mind, yeah, like, uh, we are currently going through building up tiers for our features, and so, uh, authorization will be a more premium feature.

Jay Myers: Yeah, well it totally, I could see the value in that. Like what went to my mind right away is pick anything, pick a piece of furniture, let's just say. And maybe the final step is to paint it, but 90. 5% of people like the, I've got seven types of wood. I've got something, whatever. If as long as I don't paint it, I can probably resell this.

But once it's, once I put their logo on it, let's say, or I put their family

Diana Birsan: like personalized, you know, thing.

Jay Myers: And that's the final step. That only takes a day. I would authorize it. A week before or even just a couple days before authorized go through now complete final step, then charge. Now I know I'm not gonna do the final step and then go to charge it.

It doesn't go through. Now I've got this $5,000 hunk of junk

Diana Birsan: exactly. Like how do you resell it, right? Absolutely. So yeah, there's ways to de-risk, like every step of the way basically.

Jay Myers: That's amazing. You've thought of

Diana Birsan: Oh, we

Jay Myers: even think of.

Diana Birsan: but we, we did, because, you know, we've been at this since, uh, yeah, like, I think I said 2022, like mid 2022, we started thinking about it, but like the first thing we did was start talking to people, right?

Like my gut kept telling me like, it's pre-orders. I'm gonna buy a game or I'm gonna buy a thing. And I'm like, yes, absolutely. Like there is that use case, but an underserved market that we really want. To help is this market of like custom high value goods. Right? And it's like, it's just painful for them.

Like their only option right now is to use a buy now pay later app and lose like six to 10% on every sale. Like that's. And, and they don't need the loan. Like they don't really need the loan, the loan aspect of buy now pay later. They aren't shipping anything. It's not even ready. They just need a better system for like partial payments and, de-risking some of the stuff as production moves forward, right?

And so I'm like, this is the spot that like people really need help and brands are suffering from low conversion. And I'm like, this is what we really need to build. And so we've been really focused on like making it really great for. For that space.

Jay Myers: I wanted to get into the buy now pay later topic. 'cause you've been vocal about when it doesn't work, and I've seen you post on LinkedIn and you've done talks about this and, and what, so what makes. Downpay different and better for high ticket items for those made to order sales versus Afterpay sizzle, zip klarna, all of those others.

Diana Birsan: Yeah, it's a hard conversation, right? Because like, buy now, pay later serves a huge market. Customers are like, this is great. Like, I can, I can afford more things. It does really well at, I wanna buy something that's in stock and, you know, I want it to tomorrow, like, I want it right away.

But I can't afford it. Or I, you know, wanna split it up. Great, right? But where it gets difficult is, high value product from the merchant's perspective, right? Losing that much. Like we have a, this amazing merchant that makes custom engagement rings, uh, out of Vancouver. Her name is, uh, Matt Foley, uh, Kathy.

And you know, each ring is like six grand if not more. And, uh, it's painful as a new business to lose that amount of money every sale. And you're like, oh, but the customers love buy now, pay later. And so like. The difference is that, there is yeah, there is more for the merchant, you know, to, to use something like this.

We do not charge anywhere near six to 10%. We are, you know, reducing that risk, but we are also still allowing you to like entice customers to. Split their payment and, and improve affordability. So it works really well I think for this space because you're not getting into the crazy interest rates that that you feel.

And customers see those interest rates too. Like, I don't know if you've, you've like shopped around for furniture online, but some furniture like is way over the limit of what you'll be qualified for, right? And so what are you gonna do then? You don't qualify for that, and you do have some money on your credit card.

You just need. Maybe two more months to like save up for, for something. It's so much easier to just say, okay, cool, I can pay for this, this amount and then defer the rest. Without, yeah, without risking maybe, going into the crazy interest rates if you miss a payment with buy now, pay later.

And so, like, I'm an advocate for it because I, I think it can. Dig you into a deeper hole. And especially for like, these expensive these expensive products. So it's, you know, like, I'm I think it has the time and a place. I just think that there has to be a better way for, for these kinds of systems.

And you're buying something that's like premium, high quality, the experience itself with buy now, pay later, just, you know, it feels very much what's the word? I don't even know what word to think about, but it's like very much like fast fashion and like get it now and whatever. And I'm like I think good things take time.

And so like that's kind of like the motto I go into this with. Um, and I think that's like, yeah, I think there's still, I. You know, space to make it better and to, you know, improve. Like, I, we have ideas on layaway. We have ideas on like splitting payment beyond, this like, you know, one deposit and one future payment.

Um, I have ways to do that already, but you know, I think automation's gonna be absolutely amazing to, to close that gap between what's missing and buy now, pay later. And what? Merchants need with high value products. So I have a lot of things to say. They're all jumbled. But I really think that, uh, I really think there is a differentiation here.

And it is really like the bottom line, you know, that it suffers from just using buy now, pay later.

Jay Myers: I think buy now, pay later is I. So from a lot of merchants that I've talked to who sell, actually one is a very close family member sells high-end furniture. And, and I've talked to a lot of other merchants that used various buy now, pay later. And the feedback that I've got is actually they see more buy now pay later purchases for smaller items for accessories.

But when someone buys a $10,000 coach, they're putting it on their credit card. So it's not necessarily people that use buy now, pay later are the people that just maybe don't have a, like I, I'm a fortunate person. I can buy pretty much any piece of furniture I want on my credit card. I don't need, I don't need a buy now, pay later.

I don't. I can just put on my card. I'm not going to use a buy now pay later service. In fact, I don't even. Subscribe to one. I'm not even a,

Diana Birsan: I

Jay Myers: a, I don't even have an account with one but the people I know that do use them and use 'em a lot, like they're using them for smaller purchases.

They're doing it with on their Amazon daily purchases. They're not doing it for large.

Diana Birsan: right?

Paying four for free, why wouldn't I split it? It's 0% interest. Right. But if you get, if like when you use their calculators to see what you qualify for Yeah. You're getting into the $10,000 couch. It's not gonna be free, interest free even for the customer.

Right. So now both, both parties have to pay for the, the benefit of a, of a loan. Right. And it's like, yeah, you're, you immediately get deterred. Right. But I, and I, I'm just guessing, but I bet if somebody did offer you the option to pay 50% for a couch you wanted. You wouldn't wanna put the whole 10,000 on your credit card, right?

You'd be like, yeah, sure. I'll, I'll just do 5K today.

Jay Myers: I always do that. Like if it's, if it's for hotel bookings or if it's different things, if it's like pay now, pay the rest on I, why not? I like, who knows? Like life happens And a hundred percent. There's also a really interesting, I wonder if this ties into this, but something that comes to mind when I think about deposits is the, you've heard of the sunk cost fallacy.

Diana Birsan: Yeah. Yeah.

Jay Myers: So people make irrational decisions based on sunk costs. Right. And so like 80% of the clothes in your wardrobe you don't wear, but you've

Diana Birsan: true. How did you know?

Jay Myers: I just assumed. But if

Diana Birsan: I wear black t-shirts all the time. It's, yep. Yeah.

Jay Myers: I, uh, so, literally I have a black t-shirt section and then the whole arrest.

I,

Diana Birsan: Just like colors that you're like, these don't match anything I have. Why do I even keep them? Yeah,

Jay Myers: Well, I wore my colorful sweater on Easter Sunday. That, that, yes. But other than that, it's but so, you know, we, we have 80% of the clothes we've purchased, but we don't wanna throw it away 'cause we've paid for it. Or actually you've probably experienced this in product development where you, you build a feature, you spend six months building something and oh, now comes AI agents.

We probably should focus on something there. Ah, but we've spent six months building this. There's sunk costs there, and you make irrational decisions on

Diana Birsan: To justify, keep going. Yeah, exactly. It's happened so often, right. And it's hard to pivot. The more you go down that rabbit hole of like, okay, we're building this thing, let's, you know, and I, I think there's something to be said for, um, yeah, getting it out, getting first version out as quickly as possible before you,

Jay Myers: and I believe Sunk cost is one of one of the least tapped into buying behaviors. Like we talk about reasons people buy, they buy for fomo, like fear of missing Out, they buy for social. I. You know, we, we wore this shirt for some reason. Like, you put that shirt on 'cause you're like, okay, it makes me look casual.

Like a, who knows, whatever the reason is. But like, everything serves a purpose. You buy something for a purpose like sense of urgency, different things. But anyways, sunk cost is a reason. People make decisions that I think a lot of brands don't tap into. And. If there's a way, and I talk a lot about this for, like, for memberships, I talk about how it's better to get someone to to pay for a membership than to give them free points.

For example, if you, if you paid a thousand dollars a month to fly anywhere with Delta,

Now if you book with United, you actually feel like you're losing money, you're not. But if you just, if you collect United Points, you get click delta points, and if you just book with one, you just don't earn the points with the other.

You don't actually feel like you're losing money. So if you can. Tap into that and I think Downpayments can actually do this. 'cause you see car dealer, car dealerships do it. The second you go and test drive a car, they ask you to leave a $500 deposit. They're like, if you can leave, if you can leave a deposit, this, now the reason they do that is 'cause they know that now any other, you're gonna go look at five other car dealerships and if you pick a different car, you lose the $500 deposit.

It's just enough that like, okay, 500 bucks, sure I'll leave it. That means no one else can come and buy this car while I'm. Looking, but now I might find a car that's a better deal, better car, but I'll lose my $500 and I'll make an irrational decision to buy the car, left the the deposit on. So I wonder if you're gonna start seeing brands tapping into that with this.

Like

Diana Birsan: Yeah,

Jay Myers: another way they could use it.

Diana Birsan: absolutely like, it, it's funny because like there's, um, yeah, there's, there's the concept of like, I don't wanna lose like a depo, a refundable or non-refundable deposit. But there's also like, I feel special because I'm being given this chance to pay with a deposit. Like, I think there's an opportunity for, like you said, like loyalty development, and that's in the way of like, hey. We're dropping this product for ex, you know, like exclusive members. You can actually pre-order it for $0 today and like do this kind of stuff before it even reaches ev everyone else. Because now, like it's not a wait list. You have a real order, you are in line, right? And it turned the intent to buy something into, like an actual commitment.

Even if you took no money upfront you went through checkout. Like it's, it just feels. Way more connected and way more of a, like, commitment than Yeah. Just join this wait list and we'll let you know when the product drops. And I just think like we're getting into a spot where obviously everyone's tightening the purse strings and, and all this kind of stuff, and it's like, well, and have to find creative ways to encourage people to commit to you.

And so like I see it as a, as a lever for marketing campaigns. Like we have ways to, um, limit. The option to see it, to select customers with a tag. You know, like we've, we've thought of these things because there are ways to, um, incentivize it and turn it into a marketing strategy that improves conversion.

The likelihood that someone's gonna come back and cancel their order knowing that it's a real order. I just, yeah, it's, it's much lower than. You get on a wait list and you actually come back to check out, right? Like, that's

Jay Myers: So smart.

Diana Birsan: a harder lift than just getting the order up front, right? So, definitely sunco fallacy on like the larger purchases and stuff.

I think like, Hey, I made a commitment. You know, maybe there's an incentive for making that commitment. Like locking in a discount, right? Like, do it today. Lock in the discount. And then you've now positively incentivized someone as well. I just, yeah. It's, uh, the thing I say for the high value product is like. Like obviously these larger brands like have built trust with a group of people, but like to grow the amount of people that have trust with you, you need to come up with ways to like give people, uh, control over the buying journey. And I think the way I see our app and the way I see like our roadmap and what we're doing is like a trust exercise, right?

To say, Hey, like. I'm gonna, you know, I'm looking for, I'm looking for a couch right now, actually. And I'm gonna find something online that I love and they're not gonna let me do anything in terms of payment except try to do a buy now, pay later and pay a, a ton of interest. Right. And it's like if I had another option it immediately makes me feel like.

They get me, they understand that money's tight, so on and so forth. And you just build those relationships much more easily. So like, that's how I'm seeing it. And I think there's just different avenues to use that technology and like experiment. And I'll give you another example too. Just before we we move on it, it's like, uh, I think, you know, you asked me at the beginning.

Hey, uh, can you do a different, like deposit amount? You know, and it's like, yeah, absolutely. Experiment with what gets you better conversion. Do 30%, do 50%, like which one's better? Like, which one are you more comfortable with? Which one covers, let's say your production costs, but then still like, gets you the best conversion.

Like, that's what, that's what it's about, right? So,

Jay Myers: It's gotta increase conversion. When you drive someone from an ad to a site and they just have to put down $250 versus pay 3000. Like it's, it has to, like, anytime you break down a large decision into small decisions it increases conversion. Yeah. A hundred

Diana Birsan: Well, no.

Jay Myers: all.

Diana Birsan: It's crazy, like, uh, just for, for the furniture space, like we worked with a, a merchant who, uh, we actually did outbound like outreach for, you know, that we, we just were like, Hey, I think this is a good fit for you. They sold like custom made to order, um, especially like sconces and lights and stuff.

But they also sold furniture and yeah, like I reached out like six, six months after they like started and they're like, yeah, 47% increase in sales. Sorry, 40% increase in conversion. And they're like, because. The conversion improved, we became a larger part of their vendors' supply. And it's like, that's ama that, that's what I want to hear.

And they like conversion numbers are pretty low for high value products already. So like any bump is amazing, but like 47% I was like, ah, I'm doing this for a good reason. And like, this is awesome.

Jay Myers: That is amazing. And actually my next question was looking on your site and, and in various on social life, like you've had real merchant wins and you've worked with like really cool merchants from saunas, electric motorcycles, like a lot of, you know, we keep using furniture as the example, but there's a lot out there.

You just mentioned that one, but like, can you share some other, like maybe success stories or unex unexpected success stories that you've seen from these flexible payments and just, some, what you've seen from merchants using it.

Diana Birsan: Absolutely. Yeah. I, I love the sauna space. Like a lot of sauna places are finding us and we have this like, amazing one in from Vancouver called Nka here in, in Canada. And it's really cool, they, they came over to Shopify, right? And like they had this thing, they knew they needed it in order to commit.

And I'm like, that's amazing. Like they they already understood that like. Probably 70% of the people that shop will be willing to do a deposit instead of pay in full or want to do a deposit instead of pay in full. And so like the I, this isn't the first time that I heard that, right? Like. Custom made jewelry you know, like anything high value really is like, it's an expectation, and I, yeah. One of the questions I ask brands after we like, they start working with us is like, yeah, like what are you seeing in terms of like how many people choose pan full versus, uh, deposit? And it's usually like 60 to 70, 70%. So that was like, yeah, that's just due deposit, right? And it's like, that's validating.

The other thing I learned, which is, was related to kind of like what we talked about with buy now, pay later is and this is just a happy little accident, I guess, where. They're like, when they leave a deposit is it possible to just like, hide the buy now pay later apps so that they can't like also do that?

And I'm like, that actually just happens because the partial payment stuff doesn't support buy now. Pay later. Right? And they're like, okay, great. Like I didn't know that that's like a wanted experience, but it's because like yeah, it would be, they would lose out, uh, you know, on that, the remaining balance and stuff.

And

Jay Myers: oh, so for the, for the remaining, so if they pay the first $500 deposit, they can't put the remaining 4,500

Diana Birsan: On a, like an installment plan or, yeah, exactly. And it's like, you know, I'm thinking to myself, I'm like, yeah you know, I, I want to do installments, but like, I think we can do installments eventually. So like, that's awesome. But they, they actually didn't want the ability because they would be losing out on more.

Right. And so that was a pleasant surprise to see that. Our tar like target market is like, this is great. Like this is actually helping me. And so, yeah. Outside of that, like there's, yeah, there's just boosts in sales from people who've never thought to use deposits, right? We've had, yeah, the jewelry space, you know, we have quite a few merchants in that space going, Hey, like.

My stuff takes time to make. And so it's, uh, they know what deposits are. This is not like a brand new technology. Right. It's just, it's something that maybe has not, hasn't been considered a lot in the Shopify space because, I mean, it's pretty, it's relatively new as well, so like we're kind of on the bleeding edge of it.

But it's, yeah, they're like, oh, not only did it like boost sales, you know, 25, 30%. But it also like reduced customer support tickets because people aren't constantly being like, where's my stuff? Where's my stuff? Like you give someone

Jay Myers: There's less stress. Like if you've prepaid $5,000, you're like, where's my, where's my couch?

Diana Birsan: Yeah. And then another space that, you know, like has become more, uh, relevant as well for us is, like you said, bookings.

There's people that do really cool workshops around the world or you know, travel, all that kind of stuff. And like you typically take a deposit to secure the spot. You don't take payment upfront. Um, and so like they're, they're also able to yeah, they're also able to. Support the, our systems with that, and they're seeing like really great success with people committing sooner because they don't have to pay upfront.

So it's, um, yeah, it's just like a, just giving comfort to people buying things, you know, like it's less of a panic of like, my money's on hold for X number of months, so.

Jay Myers: Yeah. Yeah. It's, I'm can definitely a hundred percent see the value in it. Increasing, like, not just conversion, but also the, the trust and like, there's so many things like to.

Diana Birsan: stuff.

Jay Myers: Yeah. I guess to, to flip it on a little bit, the other side, like if someone's listening right now and they're thinking like, okay, this sounds great, but I don't wanna complicate my checkout, or I don't know if this is gonna like, affect UX on product pages and stuff like that.

Do you have any advice for implementing it without hurting user experience? Um, maybe it doesn't really complicate checkout. I don't know. But if someone's thinking that right now,

Diana Birsan: Yeah, I mean, it, it is pretty straightforward. It is an extra option on the product page or an extra option on the cart page if you, if you'd prefer that. I

Jay Myers: But then once they get to checkout, it's the same checkout.

Diana Birsan: Shopify checkout. Yeah, we don't have extra logins. We don't have anything like that. The only thing to consider is, is like, uh, I think I mentioned a little bit, and this is just me being very candid, that like we are beholden to certain, um, systems in Shopify supporting partial payments.

So Shop pay doesn't apple Pay Google Pay, like these, uh, accelerated checkout systems don't support it yet. Um, and so you'll see. Uh, less options when you're checking out with partial payment. And that's unfortunately not something that we can fix, but it's the only thing that I'd say to consider.

However, with the way we've built it, you can still offer the option to pay in full and have all those options as well. So it's, you know, it's not a, it doesn't block you. From doing anything that you are already doing it's pretty easy to also just run an experiment on one product if you wanted to, or one collection or something like that, right?

Jay Myers: Can I ask what? Has been like some, some don't dos if you're implementing Downpay. Like what are things to avoid? Some, if you've seen any brands make any big mistakes, implementing it, um, whether that's bad ratios of the Downpayment or how they implement it or wording or too strict of policies or anything, like any checklist of like, okay, here's some things to watch out for.

Don't do this. Mistakes that others have made.

Diana Birsan: yeah, we don't, I, not mistakes per se, but like there's a lot that goes into, yeah. Like best pr, like I have a whole best practices guide because I think it's really important when you're doing this kind of system that like stores someone's card on file that you're very transparent about what's going on.

And so, I think, you know, using. A best practices guide, like the one we have to say, Hey, like, make sure your cancellation policy's super clear on like, what's going on. I also like another thing that, uh, I usually recommend is to use like a terms and conditions like checkbox or something on the cart page to be like, I understand what's going on, especially if you have very long delays.

Yeah. Just so that you don't end up with some sort of chargeback later on. Um, there's best practices like that I think are really critical and like having. Some sort of timeline on when people can expect. The thing I think is just, you know, it reduces that panic that someone's gonna have with, regardless of if, if it's a deposit or pay in full.

It's like, I need to know when something's coming in. And so, not to say that anyone's really done anything like, very painful, but it's like ways to make it even like more frictionless. That I think there's lots of ways to, to kind of like. Optimize it, but it's, for me, it always comes down to like, be clear, be transparent with customers.

Be as like, yeah, as verbose as possible about what's going on with the experience. I think I've had people get caught off guard with like, why is shop pay not available at checkout? Right. And it's like, I can, I am trying to be as clear about that as possible. Or we support select payment gateways, Shopify Payments, Stripe, Aiden, PayPal Express and stuff.

But some of them we don't. And there's nothing I can do to like prevent that. So I block countries on the Shopify listing page because I'm like, well, the likelihood that they don't have one of those is pretty high. So I wanna be as focused and clear as possible with people, but just things like that, that are like, just test it first, test the whole flow first, you know?

And, and then, yeah.

Jay Myers: It's the same. You would support all the same payment. Gateways and cards and such that like for subscriptions, like through Shopify,

Diana Birsan: Believe it or not, no, believe it or not, no. There's less available. I know, I thought so too. I don't know why, but, uh, there's slightly less available than the subscription stuff. So that's why it's like, it's a little confusing, for a merchant to be like why? You know, and so it's hard to explain.

It's getting better over time, which is awesome. So it's just a matter of like, this stuff is new. You know, Diana made decisions to scope things out, uh, back in 2022 or 2021 or

Jay Myers: all your fault,

Diana Birsan: oh yeah, I curse my own name. Quite often.

Jay Myers: Do you mentioned, um, adding terms on the checkout, like, and I know subscription apps by default when we when, 'cause we have a

Diana Birsan: when you build them. Yeah.

Jay Myers: Yeah. So when someone uses both subscriptions and if the customer adds a subscription item to the cart, they go to checkout, Shopify automatically adds a subscription disclaimer at the bottom and

Diana Birsan: Same with us. Yeah,

Jay Myers: Merchants can go in the theme settings, and I think it's under called theme copy. You can tweak it if you want.

Diana Birsan: You can. Yeah.

Jay Myers: do so Downpay adds that automatically, or Shopify adds it for

Diana Birsan: yeah.

Jay Myers: or, okay.

Diana Birsan: Back in, back in the day, which I'm sure you remember, it used to be an actual, like forced checkbox. So

Jay Myers: Yeah. I don't think it is anymore. It's just the, yeah.

Diana Birsan: blurb which like people can miss and stuff. And so like, if you're really concerned about I need people to read this stuff.

That's why I usually recommend like, hey, there's a ton of free apps for like terms and conditions on the cart. Just so people really get it. Just yeah, to reduce your risk, to reduce customer support load later. Um, just make it super clear. So yes. You can customize that at checkout, but if you wanted something a little bit more heavy handed and like to force people to read something do that as well.

Jay Myers: Do the, okay. And then your best recommendation for that is like, I know there's a ton of apps out there, but just use like a, a checkout, like checkout blocks might was, is one, but there's a

Diana Birsan: Yeah, so for, plus it's like checkout blocks. Yeah, we have like the code, like we have a, a help doc of like, how to build your own, basically if you want to. Or there's even like a ton of free apps that do it on the cart page. Um, there's like so many different ways, so, yeah. Yeah.

Jay Myers: Gotcha. Okay. I've learned a ton. I mean, so you Okay, Downpay, I think. Can I share like the numbers? I don't, you, I think you've posted this publicly, right? Yeah. You, you, you put in some GMV numbers for year one.

Diana Birsan: Oh, yeah, yeah, yeah, yeah. Absolutely.

Jay Myers: secret, right? Yeah. So you, you hit you, you Downpay. Processed through Downpayments 50 million in GMV year one on your launch, which is amazing. That's first of all like huge kudos. I can only imagine like what year two and year three is gonna be. So, what's been the biggest driver of growth and then like, what does success look like for Downpay in the next year or two?

Diana Birsan: Yeah. Driver for growth has just been honestly, it's been organic, inbound. We've had like a lot of interesting merchants who are migrating to Shopify go, Hey, I, I need this thing. And it's funny because Shopify's recommending us. You know, like when there's certain customers that come in, but I don't know who's recommending who, who do I have to thank?

You know, it's just like, I wish I had a closer connection there. So that's really, that's been awesome, but also would love to nurture that relationship. I think it's, it's super powerful. 'cause I see it as like, I, I mean, I see apps as a way for Shopify to be like, Hey, like we'd love to partner with you and work with you to solve this problem because we're focused on.

This for the main platform, right? Like that's what the app store was all about. Um, and so like that's been great as an organic growth driver. Obviously the app store has been great. But like even agencies find us through like my posts, my YouTube, my, my very limited videos on YouTube, which I, I do plan on making more.

It's just time. And, uh, yeah, but it's like, you know, now we're getting to a point where I think there's like really powerful app partnerships to build that, there's just really complimentary features that work really well together. So like, I'll give you a couple examples. 'cause I, I just, I love how well it worked for some of these.

So one of them being we partner with, uh, angle 3D, which is like a configurator app

Jay Myers: Oh yeah. Yeah,

Diana Birsan: uh, yeah, like, cool guys out of Montreal. And uh, it's like a no-brainer. Like you're making a custom product, you're picking different options like. Leave a deposit for the thing. 'cause it's likely gonna take a while to, to build.

Right. And then there's another great app that, uh, we just recently started working together called Flare. They are, they let customers choose a delivery date, right? So it's like if you, if the customer chooses to get their hot tub delivered, for the seat like maybe October or something, they can ha they can give the option to defer payment or split payment or whatever with us.

So I'm seeing all these really great. Like complimentary features. And I'd rather partner with like really strong and really valuable apps than like, okay, let's build everything and try to like, do this thing all ourselves. So that's gonna be, I think, huge. And I think it's going to, yeah, level us up to the next.

The next phase of, of being a startup. And then agencies as well have been great. Like they come back to us with different, different customers because we're just like, we're the people that like they can just ask everything. And we are the experts of the thing. So they're, they can lean on us to kind of get things get things going for different brands.

So that's been awesome as well. So gonna keep trying to like, build those and nurture those and, uh, try to. Get more videos out on, like some of the stuff that I said because like, you know, I don't like that people are surprised that we can do this stuff. I want it to be out there and be like, Hey, here's all the things you can do with our platform.

And I think we don't do a great job of that yet.

Jay Myers: Well, you'll get there. Yeah. The three, the 3D ones, I mean, are a perfect fit. The ones that come to mind, 3D kit, uh, next Tech, next Tech, ar um, there's a bunch out there, but yeah, that makes, that makes total sense. I want to, I think we're, we're right at time here. I could, I, I got through about half

Diana Birsan: for days.

Jay Myers: I got through about half of the questions, which is pretty good, but I think, you know what, it's, uh, sometimes I, you know what it's how they go.

But, um, is there anything let's, uh, let's end on I guarantee you there's people listening right now who would love, who would love to try this, and I, I, I would think, honestly, you know, we, we talked a lot about these really high end things, but like, even for. Probably items in the few hundred dollars space, it probably, that could, probably doesn't hurt to try and like to, I imagine the lift to install it is relatively like, can you be up and running in hours, minutes?

Like I.

Diana Birsan: Oh yeah. Absolutely. I like it. I think it's, uh. You know, we've built it in a very self-service way. And I think that's too, like it's been one of the best decisions we made because I don't wanna stand in the way of people just getting started. I love building relationships with merchants and, you know, like really understanding the problem.

'cause then it makes the product better. And so like. Complexity why, like complexity of the app is uh, can be higher if you want it to be right. Like we have an API, we have Shopify flow workflows. Like you can, you can really like scale it depending on what you're looking to do. But if you wanted to do a test, like it's very, you can, yeah, you can get started in several minutes.

You know, and then yeah, like, if anyone is interested, please connect with me. Like I'm happy to

Jay Myers: Where can

Diana Birsan: ear off about,

Jay Myers: obviously I love it. Where, where can people go to, uh, to like, to learn more, to install it? Try it. How much does it cost? Uh, if someone wants to get started, gimme all the details.

Diana Birsan: yeah, yeah, yeah, yeah. So, I mean, with me, connect with me on LinkedIn, um, send me messages like I'd, I'd love to hear from you. Um, it's probably the easiest way to contact me or my email. Diana@highpound.io. Uh, high Pound was our old name. I'm not gonna get into it. We're now doing Downpay. That domain redirect is gonna be a pain, but

Jay Myers: will have it all on the show notes as well, so yeah.

Diana Birsan: Yeah. And then our websites get Downpay.com, so you can like review that and see some of the details. We're actually going through a major redesign of our brand and like everything, so it's gonna be really cool. This like first half of the year. So that might change. So that'll be fun. And um, yeah.

What else did you ask me? I

Jay Myers: Any type of a, a like free trial or how does that work

Diana Birsan: Oh, yeah, yeah, yeah, yeah. So, yeah, so I think, uh, yeah, you'll see it on the app listing page. We have a 14 day free trial. It's 9 99 to start with a nominal transaction fee. However, we're, yeah, we're making strides right now to like build better tiers and like.

Clearer pricing. I think we've gotten a lot of feedback on like, hey, like I don't wanna do the math in my head of like, what, this will cost me. So we're moving towards that hoping in the next, you know, month or two. Um, so it'll be easier for you to self-select plans, but you know, anything like over a hundred KA month in like those kinds of sales, we always do custom uh, pricing as well.

Jay Myers: Makes sense. Diana, this has been so fun. Thank you so much for the time. I wish you so much success. I think what you're doing is amazing and um, hopefully this helps spread the word a little bit to our listeners and just really thank you for the time for coming on.

Diana Birsan: Yeah, thank you so much for having me. This was, uh, this was a blast. I, uh, I can talk all day about this kind of stuff. So

Jay Myers: I love it. All right, take care.

Diana Birsan: thanks.