Layaway

What is Layaway?

Layaway scheme is defined as the shopping method, in which the customer shops for a particular product by making a small deposit and saving the product for later pick-up. They make the payment of the balance when they are financially able to purchase the product.

The concept makes it easier for the customer to transfer payments in installments or in smaller amounts until they are in a financial position to complete the transaction by paying in full. For the supplier, a layaway concept guarantees that the customer will purchase the product soon.

History of the Layaway Scheme

The history of the layaway plan dates back to the 1930s when the Economy went through the great depression period. However, in the 1980s, the demand for such a plan decreased. Walmart also ended the layaway plan from its shopping schemes in 2006, stating that the demand for such a shopping plan had gone down. Five years later, the company resumed the layaway scheme and started to offer products to the low-Income group people.

In fact, some sellers started to promote the layaway shopping scheme in 2012. They mentioned that they were ready to sell the product for absolutely free given that the buyer meets the eligibility criteria. It has been more than 40 years for Kmart to support layaway shopping plans in the United States. There was a time when Kmart happened to be the only major retailer company to offer products in this pattern. Nowadays, online layaway plans are getting popular among low-level income groups.

How Does Layaway Plan Benefit the Retailers and Customers?

The plan is specially designed for customers who are not in a financial position to make the lump-sum payment for the merchandise. They are allowed to create a layaway plan and make a small deposit for the product. The seller stores the product for a particular customer. The seller might also charge a fee for storing the product for the customer until the payment is made in full.

The layaway plan does not seem to be risky for the seller. If the customer is unable to make the payment for the merchandise, the product will be back on the shelf for sale. Whether or not the money paid by the customer will be returned to them depends on the seller.

They could either forfeit the entire amount or return the paid amount to the customer minus a certain fee. Not only is it a great option for the low-income group people, but layaway plan can prove to be a lucrative business opportunity for retailers. It allows you to offer your merchandise to people who can’t afford the lump-sum payments. Since the customers make a small payment for the product and commit to buy it from your store later, there is no way they will back off. Not only because of the commitment, but they have already paid money for the product. It is only a matter of time until they make the payment in full and get the product.