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Just popped into Sports Direct to get a new pair of walking trainers; saw that the pair I liked was £90, or £52 with Frasers+.
I assumed that this was some sort of 'members pricing' deal, and had a further look. Apparently it's nothing more than getting the item for significantly less if you choose to use their 'pay in instalments' option.
Given that there's no interest to pay if you pay in three installments, surely this is banking on people not following the rules, and being able to sting them with extortionate interest rates?
Member pricing is one thing, but this feels particularly heinous.
It's rather scary that credit defaults are now being seen as a legitimate income stream, so much so that you'd heavily incintivise people to pay in installments, in the hope that they end up in the hole.
Slightly different product/outcome, but John Oliver did a very interesting piece on how this is being done with used cars in the US:
To be honest I refuse to buy anything from that group. Rather buy or pay more elsewhere.
Unless a place is blessed with a good independent outdoors store (Norwich certainly isn't), I don't think there are really many ethical options these days.
For me I'd have had the option of Sports Direct, Go Outdoors, Jarrolds, or Cotswold Outdoor - all of which are broadly as bad as each other when it comes to harming independent retailers. In such an instance, I may as well go with whichever store offers me the widest selection at the best price.
So I'm guessing this works mostly the same as Klara does except Klarna take a slice of the pie whereas I imagine these folks just charge a fee as it's tied to your business.
So you're correct, I imagine they make money from: - Late fees. - People choosing to go more than the 6 months and paying interest. - Generally increased sales, which is weirdly a thing with these short-term cost spreading loans.
It is certainly weird just how much you do get off for using it though. You'd think it would be better for them to have the money upfront.
So I'm guessing this works mostly the same as Klara does except Klarna take a slice of the pie whereas I imagine these folks just charge a fee as it's tied to your business.
So you're correct, I imagine they make money from: - Late fees. - People choosing to go more than the 6 months and paying interest. - Generally increased sales, which is weirdly a thing with these short-term cost spreading loans.
It is certainly weird just how much you do get off for using it though. You'd think it would be better for them to have the money upfront.
My other thought is that, perhaps, it helps encourage/enable people to spend more?
Chummy goes in with £90 to spend, but realises that his trainers will only cost him £17.34 today, if he chooses to use Frasers+. Will he just leave it at that, or will he think 'ooh, I've still got £72.66 in my pocket; I'll spend some more!'?
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