Layaway Plan

Posted in Marketing and Strategy Terms, Total Reads: 1171

Definition: Layaway Plan

Layaway plan is a method of payment in which the buyer pays money to the seller in installments and takes his/her possession of the product only when the full price has been paid. Layaway is a process of payment in which a customer deposits money for a product to ‘lay it away’ which can be collected later on the payment of the remaining balance amount. In online layaway, a certain amount of money gets deducted in intervals from the checking account.

To meet all requirements for layaway a client basically needs evidence of distinguishing proof appearing he/she is somewhere around 18 years old and a down payment. Since acknowledgment strategies are commonly quite loose, even individuals with past credit issues can meet all requirements for a layaway program.

Steps in Layaway Plan

Four basic steps in layaway:

1. Choose the item for layaway.

2. Make the down payment. Down payment varies store to store. Some stores let the customers choose the amount while others charge an amount fixed by them.

3. Payments in small installments. It can range from weekly to yearly depending on the amount and the store.

4. Once the full payment is done, the customer can take the product with him/her.

Layaway Plan

Importance of Layaway Plan

Layaway is especially for those customers who want to purchase a particular product but not able to due low disposable income or high price of product. These customers can buy products in small installments. So, sellers can sell their products to a greater number of people. Product reach will increase.

Advantages of Layaway Plan

1. People with low disposable income can also buy the product in small installments.

2. Sellers can sell their products to low income customers.

3. No interest is charged

4. The price remains fixed and the availability of the product is guaranteed as soon as the payment is done

5. Layaway provides more buying options like credit card, store card, etc

6. Availability of high demand items that might get sold within days. Customers who can’t afford the product then can put it in layaway

7. Layaway can be availed offline as well as online

8. Acceptance policies are easy

Disadvantages of Layaway Plan

1. Customer cannot take the product until the full payment is done.

2. Risk is involved for seller, payment might fail.

3. Sometimes a nominal fee like service fees, cancellation fees and restocking fees is associated as the seller has to keep the product in the storage until full payment is made.

4. Not all the stores or online websites provide the layaway option. Also, layaway option mayn’t be available on every product

Examples of Layaway Plan

1. ‘AAFES’ is one among the stores that offers in-store layaway.

Eligible Items: Clothing, jewellery, handbags and shoes items. The total purchase must be $25 or more.

Layaway period: Clothing, handbag and shoes- 30 days

Other merchandise- 60 days

Jewellery- 120 days

Service Fee: $3

Down Payment: 15% of the purchase price.

Cancellation Fee: $5

2. ‘Kmart’ offers both online and in-store layaway.

Eligible Items: All items available. Items which are eligible for online layaway has an “Available for Layaway” logo. The total purchase must be $300 or more.

Layaway period: Online layaway- 8 weeks

In-store layaway- 12 weeks

Service Fee: Online layaway- $5

In-store layaway- $10

Down Payment: 10% of the purchase price or $15, whichever is more.

Payments: Biweekly payments

Cancellation Fee: Online layaway- $15

In-store layaway- $25

Hence, this concludes the definition of Layaway Plan along with its overview.

Browse the definition and meaning of more terms similar to Layaway Plan. The Management Dictionary covers over 7000 business concepts from 6 categories.

Search & Explore : Management Dictionary

Share this Page on:
Facebook ShareTweetShare on G+Share on Linkedin