Ice.com Inc. sees extended deferred payments as an excellent marketing tool to boost holiday sales and to help its online jewelry shoppers deal with the current credit crunch, the online jewelry retailer says.
In previous years, Ice.com, No. 182 in the Internet Retailer Top 500 Guide, offered qualified shoppers a deferred payment program of five extended payments on purchases of higher-end items.
Now as an alternative marketing program and to boost sales, Ice.com this holiday season is offering qualified buyers a 10-payment option on jewelry purchases of $300 and up. The program debuted in November on Ice.com and in a series of banner ads on MSN.com.
Since the program went live, the average order value of people that use deferred billing to pay for their purchase has risen by about 25% to more than $300. “We have conventional marketing programs that get people to the site, but this is an alternative marketing and customer service program that gives customers different ways to make a purchase over time,” says Ice.com CEO Shmuel Gniwisch. “The program is so successful that we will extend it through Valentine’s Day.”
Customers can select the 10-payment option once they’ve placed an item into their shopping cart. To qualify for the program, Ice.com, which runs its own internal finance and credit risk management operation, runs a credit check and processes the application. The process, which can be almost instant for returning customers with established credit, requires customer to make their first payment after the order has been processed. “The first of the 10 payments is taken as soon as we ship and the rest are taken every 30 days for the next nine months,” says Gniwisch.
The company also isn’t charging annual percentage rates on customers using the 10 payment option. “We don’t charge interest,” says Gniwisch. “If there is a lapse over a certain period, we give the account to a professional collections company.”
By using deferred payments as a marketing tool to drive sales, Ice.com is avoiding the trend of having to continually discount holiday merchandise in order to drive traffic and sales. “The holiday sales are up over 60% this year over last due to several reasons, including out recent idea to allow for 10 payments instead of five,” says Gniwisch. “That has increased our average order value by 25%.”
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