Friday, October 2, 2009

Nau Apparel’s Selling Strategy: ‘Pay Half Now, Pay The Rest Later’

By Elva Ramirez

Eco-friendly outdoorsy clothing company Nau has quietly rolled out Changing Room, an online-only payment option in which customers pay half of the full price upfront, then have 30 days to pay off the rest. You could call it a test drive, or, as the company prefers to call it, “premium layaway.”

Either way, it’s a way to get $350 jackets into customers’ hands.

The idea was first formed at the Portland-based company when executives tried to come up with a way to lure online customers into buying a new winter jacket. “It seemed like a great opportunity to convert customers that are looking at us or have heard about the brand but don’t have the ability to touch and feel [the products],” Nau CEO Gordon Seabury says. “There’s an extremely high level of confidence that they will be satisfied and never want to give the product back.”

At check out, customers are billed for half the price of selected Changing Room styles. After 30 days, if the customer has not returned the clothes, the rest is charged to their credit card. Returns within 30 days are credited for all costs incurred. The inaugural program, which is scheduled to end Oct. 31, includes four women’s and four men’s looks which range from $265 - $450. If customers respond well to the program, the company plans on turning it into a permanent feature, with a rotating set of styles available. The 50% offer doesn’t apply to in-store purchases; this is an outreach specifically to the online customer, who may be hesitating over buying a jacket they’ve haven’t tried on.

There are risks of fraud if someone decides to cancel their credit card before paying in full, but Seabury says that the company has several checks to monitor those who won’t pay. He also says the company’s sustainability and recycled material branding attract a socially-responsible customer base. “We’re hoping most people will be good and [fraud] won’t be a problem,” Seabury say.

But what about the idea of layaway tarnishing the brand’s high-end image (prices range from $100 cotton tops to $350 trench coats)? Nau’s CEO notes that before credit cards became ubiquitous, layaway programs were prestigious. “Whether it was a diamond ring or some other really special purchase that you truly wanted but couldn’t afford, you made a commitment to it,” Seabury says. ” The concept of this luxury layaway program was the foundation of our thinking.”

Readers, will “luxury layaway” entice you to buy high-end clothes online?

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