Payment problemsIt’s based on a model known as “layby”, where customers reserve a shop item, then pay for it in instalments and collect it once it’s paid for. Layby is common in New Zealand and Australia, and was briefly practised in the UK under the name “layaway”. But the model has its own drawbacks – the consumer must wait until they’ve paid in full to get the product, and it’s a headache for retailers, which have to dedicate store space to the reserved item.
Laybuy, however, flips this model on its head. Customers can choose in store or online to “pay by Laybuy” – they sign up to an online platform, pay for one sixth of the product upfront, and settle the rest in instalments over the next five weeks. The consumer gets to take the item home with them straight away and can more easily budget paying it off, while the store makes the sale as usual. It’s relatively similar to the payment app Klarna, which allows consumers to buy now and pay later, but Laybuy’s repayments are more spread out and flexible. Also, it doesn’t make money from charging interest, but instead takes commission from the retailer of around four per cent. Laybuy has proven popular in the company’s home region since launching in May 2017 – it’s available in over 4,500 stores across Australasia, and has a customer database of around 500,000 people. It launched here last October, and currently has around 340 merchants on its UK platform, including big brand names like Footasylum and Bailey Nelson. What’s the appeal for retailers? We’re all aware about the perilous state of the high street, but Laybuy can bring more custom to these merchants. Instead of heavily discounting their goods in order to encourage sales, shops can sell products at full price, while consumers can use Laybuy to make the purchase more affordable. The company has data showing that its system helps to boost sales. “It’s a proven model now,” says Gary Rohloff, who co-founded Laybuy with his son Alex. “We’ve got all the stats to show that this increases the average order value for the retailer, and increases conversion online. Consumers are now coming to our website to look for other retailers who offer Laybuy, so that they can buy from them.”