Currently, an estimated 47% of U.S. consumers are unable to obtain items that cost $400 or more, such as mattresses, without alternative payment options, due to cash flow issues. With sky-high inflation gripping the nation, this problem is worsening, as almost all items, including basic necessities such as food, gas, and rent grow increasingly more expensive, and more consumers are forced to live paycheck to paycheck. Katapult, the leading lease-to-own provider that integrates with major omnichannel platforms across industries, helps empower nonprime customers by enabling them to obtain the items that they need through a modern and transparent lease-to-own model.
Many times, nonprime consumers – the consumer group most often in a bind when they must purchase durable goods such as tires, refrigerators, etc. – also have the greatest difficulty paying for them because they face another barrier: lack of access to credit. Today, half of the adult consumers in the U.S. have a FICO score below 700. Nonprime consumers are regularly left out of the financial conversation, but they deserve to feel seen and included. The good news is that more retailers are recognizing the opportunity that this once-ignored consumer group represents, acknowledging that everyone should have the ability to obtain the items that they need, like a comfortable mattress to sleep on.
By offering Katapult’s lease-to-own as an option to your consumers, you not only are you furthering the financial inclusion discussion and helping nonprime consumers obtain the items that they need when they need them, but you are expanding your customer base, and reaching a new group of consumers who previously had no path to obtain your products and other durable goods. What’s more, Katapult’s lease-to-own customers have high repeat customer rates, and retailers offering this alternative payment solution typically see an increase in both conversion rates and average order value. To sum it up, not only does offering lease-to-own introduce your products to a wider market, it also increases customer loyalty and establishes long-term relationships between buyers and sellers.
You might think that adding Katapult’s lease-to-own solution to your purchase options would require a lot of integration expenses—but that is often not the case. Katapult seamlessly merges with a number of existing point of sales systems and there is no additional equipment required for set-up and maintenance. Katapult also takes on much of the payment risk and funds its retail partners the next business day for products that were delivered to customers. Finally, if a customer wishes to return a product after a merchant’s return policy is up, the product can be returned to Katapult, so there is little risk involved on the merchant side.
Katapult is just as easy for customers to use as it is for retailers. Unlike previous lease-to-own models, Katapult is simple, quick, and transparent – the application is straightforward and the application decision from Katapult can be returned in seconds. It is for these reasons, and because of the choices that are afforded to consumers when lease-to-own is an option, that Katapult and other lease-to-own payment solutions have risen in popularity over the past few years. In fact, approximately one-quarter of consumers stated they would buy more durable goods next year if lease-to-own options were available from traditional retailers. That is particularly significant at a time when big-ticket items are expensive and can account for a large part of a consumer’s budget.
Offering alternative payment solutions like Katapult is not only the right thing to do, it is smart business. Every person deserves choice and the ability to buy the mattress of their dreams (they do spend almost half their life sleeping on it!) without being treated as second-class citizens. At the same time, by including lease-to-own in your payment options you are now on the market for consumers who previously may not have been able to purchase your product. Over time, lease-to-own will continue to be a viable option for consumers in all financial situations, especially nonprime consumers, for obtaining mattresses and other durable goods.