Loading...

We are processing your information.

Please hold tight for a few seconds!

WE Secured
MORE THAN
$1 BILLION
IN Financing
For BUSINESS
OWNERS national business capital logo

Retailers Are Getting Rid of Layaway in Favor of Buy Now, Pay Later Options

Listen To This Article

Voiced by Amazon Polly

2 min read. October 6, 2021 – by Amanda D’Auria

With supply chain problems growing more frequent, many retailers are encouraging shoppers to start their holiday shopping early this year. In the past, some of those customers would’ve put items on layaway and paid for these purchases over time. 

But this year, retailers are either scaling back or getting rid of layaway plans altogether. For instance, Walmart announced it’s getting rid of layaway for the 2021 holiday season. Instead, the company offers buy now, pay later (BNPL) options through its partnership with Affirm.

Buy Now Pay Later Affirm

The rise in buy now, pay later

Layaway has typically been preferred by customers who don’t have the cash to pay for an item but don’t want to finance it with a credit card. When you put an item on layaway, the store will hold your items for you while you make payments on them. 

Once you’ve paid for your purchases in full, you can take them home with you. In comparison, when you use BNPL options, you can take your purchases home with you immediately. 

From there, you’ll make installment payments until the item is paid for in full. But while layaway comes with zero fees, BNPL options can come with an APR range between 10% and 30%. However, 0% APRs are available on certain promotional items.

Layaway had all but disappeared by the early 2000s, but the financial crisis of 2008 prompted many retailers to bring it back. As recently as 2018, 33% of shoppers said they planned to use layaway for their holiday purchases.

Many popular retailers are embracing BNPL options for customers as an alternative to layaway. BNPL is typically on items that cost $150 to $2,000. These financing plans are especially attractive to millennial and Gen Z customers who are more reluctant to take on credit card debt. 

Benefit of BNPL

BNPL is seeing tremendous growth, and it’s currently the fastest-growing e-commerce payment. Well-known retailers like Best Buy, Sephora, Macy’s, and Apple all have embraced BNPL options. 

If you’re considering offer BNPL financing to your customers, here are some of the biggest benefits: 

  • More convenient: Many retailers have found that BNPL is more convenient for customers because it gives them more options when it comes to their purchases. It’s also a good option for customers with poor credit, and the approval process is quick.
  • Increased average order: Businesses that implement BNPL usually see an increased average order per customer. Because the payments are broken up over time, customers can afford to spend more.  
  • Higher conversion rate: BNPL plans convert customers at a higher rate since it removes many of the obstacles to making the purchase. For instance, customers that would balk at a $200 payment are more open to four monthly installment payments of $50.
  • Attract new customers: Many retailers find that BNPL options attract new customers that may not have shopped with them otherwise. For instance, Macy’s saw an increase in younger customers after partnering with Klarna.
Last Updated on September 30, 2021

National Business Capital is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!

About the Author, Amanda D'Auria

Amanda is the Marketing Coordinator for National Business Capital. She’s a graduate of Ziklin School of Business at CUNY Baruch College and holds a B.A. in Advertising, Marketing, and Communications. Amanda has extensive experience creating content, directing outreach campaigns, and managing operations. She is passionate about small business and helping entrepreneurs reach new heights.

https://www.linkedin.com/in/amanda-dauria/


Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advise from National Business Capital and the author. Do no rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely in this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there maybe errors, omissions, or mistakes.