Today’s smart marketing idea in a nutshell: if you operate an ecommerce store, whether pureplay online or  clicks and mortar  (i.e. both online and offline channels), offer layby. Enable consumers to find their desired purchases online, put the products on hold and then pay them off over time.

Source of the inspiration? Kmart, who have recently launched an online center where customers can find, hold and make installment payments for the items they want to pick up in-store and give this holiday. Chief Marketer’s Big Fat Marketing Blog has the story, including the news that (according to Kmart) web users searched on the term “layaway” (aka layby) twice as much this past August as they did in the same month in 2008. Clearly the green shoots in the US economy need a bit more watering before they’re quite ready for harvesting.

This year more consumers than ever are expected to be grappling with paying down credit-card debt or facing sharp cutbacks in their credit limits. So ideas that enable consumers to pay for holiday gifts in advance — such as layby, or like the Christmas savings clubs that Sears and Kmart rolled out in August — may have even greater appeal in cash-strapped 2009.

Your online layby offering need not be as complicated as Kmart’s — because the retail giant offers a “pick up from a designated store” facility, Kmart has to ensure that stock is available at individual store level when the consumer orders, so that the product can be physically removed from the shelves and placed in storage until the final payment is received.

Here’s how the Kmart scheme operates, according to Big Fat Marketing Blog [the parenthetical  insights are ours]:

• The online layny feature lets customers locate a store participating in the program by entering their ZIP code at www.kmart.com.  [Our View: if you operate multiple offline stores and offer local pick-up or delivery, the NZ postal code is a handy indexing tool. If you only operate in the online space, however, the postal code lookup can serve another purpose, enabling you to determine the distance goods will need to be shipped from you to your customer, and therefore the final deadline for payment to ensure delivery in time for the festive season.]
• Kmart customers can also look for a special layaway icon against selected products in online commerce and indicate at checkout that they want to put those items on layaway at their local participating Kmart store. The icon indicator is needed because items have to be physically available in the store at the time of the order to be held on layby. [Our View: if you’re offering products on layby and taking customer monies on that basis, you’ll similarly need to flag items currently in stock — and keep them in storage for the customer.]
• Customers pay a $5 initiation fee to start a layby contract and must pay either $15 or 20% of the total purchase price of the items they want to place on layby at the start of the contract. They then make four payments of 20% of the total purchase of the merchandise over the eight-week hold period. [Our View: you’ll also need to offer a predetermined payment schedule, although if you’re an online-only operator you’ll probably want to automate that process through regular credit card deductions, to minimise transaction costs.]
• Once installment payments are complete, the customers who opened the layby accounts can pick up the merchandise, but only at the store contracted with. They must pick up merchandise within 25 days of making the last payment. If they miss a biweekly payment by seven days, Kmart can return the items laid away into stock. [Our View: you should probably be a little less blunt about your terms and conditions, but you’ll need to have boilerplate legal agreements on your site spelling out similar issues. Just remember you’re not Kmart and be appropriately gentle with your customers.]
• Online, customers can use their checkout receipt number to sign into the payment center and make their layby payments with a credit card, debit card, Kmart gift card or Kmart cash card. Shoppers can also make their biweekly payments in the store in which the layaway order is being held. E-mail alerts will remind shoppers of payment due dates. [Our View: large organisations such as Kmart inevitably require stringent processes to handle these sorts of multi-channel, multi-encounter transactions. For mom and pop online-only operations, the process can be far simpler: install shopping cart software that enables payment in installments. That solution can be as simple as using PayPal’s subscription plans or choosing an ecommerce program that offers an installment facility (we conducted a quick Google and found a number of shopping carts with installment options, such as this one).]

Whatever option you choose, now would be a good time to start. Only [mumble] shopping days left!