By Rieva Lesonsky
Remember layaway programs? If you’re a Baby Boomer like me, you probably remember your parents paying for purchases like the family’s winter coats, a new dining room set or other major purchase “on layaway.” Here’s how it works: The customer essentially puts a product “on hold” with a retailer, then pays a certain amount per month until the entire cost is covered, at which point he or she picks up the item.
With the wide advent of credit cards, layaway pretty much died out since it was no longer necessary. But ever since the Great Recession, layaway programs have been having a resurgence–which makes sense, since they first sprang up in the Great Depression, as this JWT Anxiety Index on the topic explains.
According to JWT, Sears and Kmart first started the layaway ball rolling back in holiday 2009, and retailers like Best Buy and Toys R Us have since joined the game. What’s more, layaway isn’t just for brick and mortar retailers—ecommerce companies are getting into the game, too.
How can your retail or ecommerce business benefit from layaway? Using layaway can help you make sales you might not otherwise make, eliminate credit card fees since customers aren’t using the cards to buy, and increase customer loyalty and spending. All pluses, right?
It’s not too late to get your layaway program going for the holidays. Here’s what you’ll need to do.
- Create a policy. You need to create a layaway contract that spells out terms and conditions, including what happens to the product if the customer doesn’t pay, when payments are due, and any fees involved. Visit the Bureau of Consumer Protection website for guidelines on what type of information should be included in your layaway policy.
- Keep costs low. Stores typically charge a fee for layaway, but more and more major retailers are waiving their fees. If you don’t want to eliminate the fee altogether, consider refunding it when the purchase is completed. That way, you know you’ve made the big sale and can afford to lose smaller fee.
- Implement online tools. Forget about tracking customers’ layaway purchases by hand—now there’s software to help streamline the system. eLayaway and LayawayPro are two layaway management programs to consider; both can help you track layaway customers, manage payments and more, and work for ecommerce, too.
One more thing to do? Don’t wait—holiday shopping season is almost here!
Image by Flickr user julesxt (Creative Commons)Google+