Q&A: Gary Rohloff, Co-Founder and Managing Director, Laybuy
RTIH: Tell us about Laybuy
GR: Laybuy is New Zealand’s largest buy now, pay later service. We like to think it responsibly makes the desirable become affordable.
We offer customers the option to receive their purchase immediately, having bought it either online or in-store, whilst spreading the cost of the purchase over six weeks on an interest-free basis. Shoppers pay the first instalment at the Point of Sale and then choose the day of the week they want the subsequent five payments to leave their account over the next five weeks. It’s free to sign up, there are no hidden fees, and it is always interest-free.
Throughout the design process for the platform, we have always kept retailers front of mind. Not only do we absorb all credit, fraud and chargeback risk on any transaction, which totally safeguards our partners, our unique Laybuy Global feature means we can handle all foreign exchange fees on a retailer’s behalf due to its multinational capabilities. In a nutshell, our service is a win-win for retailers and consumers.
RTIH: What was the inspiration behind setting the company up?
GR: I spent the first 20 years of my career in banking and corporate finance roles, before switching to retail, where I held a number of CEO roles at some of New Zealand’s most iconic retailers. The initial idea behind Laybuy originated in the early 2000s when I was running a company called EziBuy (Australasia’s largest catalogue business).
At that time, we were looking for a way to improve our average order value as we noticed that whatever we tried to do, we couldn’t increase our basket size. However, our directors weren’t too keen on the buy now, pay later service at the time. The main reason was that we couldn’t carry out a digital credit check the way we can today.
I kept the idea at the back of my mind, and, in 2017, I felt the time was finally right to launch Laybuy. My son, Alex (then aged 20), played a big part in convincing me to leave the corporate world after 35 years and co-found Laybuy with him. He convinced me of the need and desire for greater shopping flexibility, especially amongst his generation.
RTIH: What has been the industry reaction thus far?
GR: Given we now have more retail partners than any other provider in the New Zealand market and having further strengthened our presence with our expansion into Australia, we decided the time was right to launch in the UK in March 2019.
Here, the market is a dynamic one. But yet, while the buy now, pay later concept is very much in its infancy, we are quickly seeing a growth in the demand for more flexible, interest-free payment options, which is where we come in.
In fact, according to research we conducted in the UK before entering the market, the majority of consumers here budget weekly (31% of the overall population). As we suspected, this reflects budgeting trends in both New Zealand and Australia, around which we have designed our six weekly repayment offering.
With competition in this area ramping up in the UK market, there really has been a recent spur in demand for an increase in payment choices amongst consumers.
"Truly understanding a varied set of customer needs that continues to grow is very much an ongoing challenge for retailers, and one that can either be exacerbated or indeed solved by technology"
RTIH: What has been your biggest challenge/setback?
GR: When we first launched in New Zealand in 2017, our initial plan was to have signed 200 retailers by June 2019. Within the first three months, we managed to hit this target, which we didn’t anticipate. This blew our forecasts out of the water, which, in many respects was a great problem to have. We basically just grew so fast that we were running out of runway.
For any early stage, fast paced business, the ability to access capital when you don’t have a longstanding track record is a perennial issue. We therefore had to ensure we met liquidity requirements to cope with that growth.
RTIH: What are the biggest challenges facing the omnichannel retail sector right now?
GR: Behaviour across different channels can vary widely, meaning that what those shopping on mobile want compared to those in-store isn’t necessarily the same thing. So, truly understanding a varied set of customer needs that continues to grow is very much an ongoing challenge for retailers, and one that can either be exacerbated or indeed solved by technology.
It’s increasingly important, therefore, for those of us in the business of supporting omnichannel retailers, to make technology solutions as seamless and intuitive as possible. We want to help retailers solve problems, not add to them.
RTIH: What’s the best question about your company or the market that’s been asked of you recently, either by an investor or a customer?
GR: The best and one of the most important questions I’m repeatedly asked, is why Laybuy runs a hard credit check on consumers as part of our approval process. There are a number of reasons why we choose to do this.
First, it is a legal requirement in the UK that anyone extending credit to consumers, who is accessing the bureau’s credit data, must leave a hard credit check. Laybuy is integrated with Experian and they provide us with credit and affordability checks to ensure we are operating responsibly.
The second, which is closely connected to the first, is that the introduction of the AML/CFT legislation globally requires all credit providers to comply with the Know Your Customer (KYC) procedures. Again, our integration with Experian ensures we comply.
Finally, by running a hard credit check, we are able to feed favourable data back to Experian and therefore positively impact an individual’s credit score. This means our customers can improve their credit score (or in many cases get on the credit scoring ladder) without the need for an interest-bearing credit card or another similar product.
RTIH: What can we expect to see from Laybuy over the next 12 months?
We will then aim to expand to other European countries and to ultimately become the go-to buy now, pay later option in these territories. We’re also going to invest the same level of energy to continue expanding in Australasia. The next few months will no doubt be incredibly busy and challenging, but I’m excited for what the future holds.