Consumers get into credit card debt by purchasing big ticket items then paying a high interest rate. Retails Shops often feel “it’s the Consumers responsibility to manage their money”. It’s time everyone comes together to create a better option.
Meet Jon S.
If Jon spends $4k on a mountain bike using his credit card at 15% APR, that’s $600/year in interest. Jon’s bike has cost him at least $4,600. Imagine if Jon could pay $500/month for 6 months, getting the bike at a much cheaper 3k, and riding away from the Shop debt free.
How would this work?
The Customer must choose from a category or brand but not a specific item (“model”). I want a high performance Trek road bike for $4,000, I don’t care what model, just as long as it’s comparable to the Trek Madone. This is common for bikes, skis and kayaks.
The Shop would offer the Customer several choices but would not be required to keep a specific item in stock.
Pros
- Customers get a discounted price on their item.
- Shop is providing Customers with more payment options making it easier to buy (Shop will sell more bikes).
- Customer and Shop build a long term relationship instead of a one-time sale.
Cons
- Customers not covered under bankruptcy laws
How can Shops afford this?
Example Purchase Today:
Bike Retail Price: $4,000
Bike Factory Cost: $2,000
Credit Card Fees: $64 (1.6% X $4,000)
Profit: $1,936
The Customer has likely made their purchasing decision on price and may return for free service occasionally but has no loyalty to the Shop.
Example Purchase using Gear Layaway:
Bike Retail Price: $3,500 (a $500 reward for Customer using this payment option)
Bike Factory Cost: $2,000
Credit Card Fees: $0 (no credit card fees)
Profit: $1,500
During the layaway period of 6 months the Customer rents a Mountain bike 2 times, visits the Shop for a new helmet and accessories (tubes, cliff shots, shorts). The Customer has been added to the Shop’s mailing list, posted a review of the Shop on Yelp and told 5 of his friend’s about the Gear Layaway program.
Rental Profit: $150
Helmet Profit: $25
Accessories Profit: $75
Profit: $1,750
At this point the Shop has conceded less than $200 in profit and gained a long-term, satisfied Customer who’s future value far exceeds $200.
I am considering starting a company that would offer this program to Shops including a website for Customers to manage their account and make payments, tools for Shops to manage Customers and view Reports, and the Financial infrastructure for keeping Customer’s money safe.
Thanks in Advance for giving me your opinion on this idea.
Cheers,
Kelly
