October 7, 2009, 12:00 AM

Kmart is now offering shoppers an online layaway option

Kmart will launch Friday an online layaway program giving shoppers the option of using Kmart.com to pay for holiday items over time. Web shoppers will be able to confirm product availability and make payments online or in stores.

Kmart will launch Friday an online layaway program giving shoppers the option of using Kmart.com to pay for holiday items over time. Web shoppers will be able to browse products, place selections on layaway and then pick up the items up at a local Kmart store.

Impetus for the web-based layaway program comes from double-digit increases in layaway customers and sales in 2008, Kmart says. “We have an entire generation of customers that grew up shopping online,” says Mark Snyder, chief marketing officer. “Launching layaway at Kmart engages these customers by allowing them to spread their payments out over time and better plan their spending.”

Shoppers wishing to use Kmart’s online layaway payment option sign a contract agreeing to pay for their product selections within eight weeks. Payments are required to be made biweekly either online or at the Kmart store where the layaway is held. When initiating the layaway process online shoppers enter their ZIP code and choose the local Kmart store that will hold the purchases for pick up once paid off. Shoppers also can start the layaway process in a store and make payments and manage their contract online, Kmart says.

Online layaway customers pay a $5 fee to start a contract and must make a down payment of $15 or 10% of the purchase amount, whichever is greater. Online customers can make payments with a Sears credit card or other cards, including Visa, MasterCard, Discover and American Express; debit cards; Kmart Gift Cards; or Kmart Cash Cards.

Online layaway contract management features include product availability, payment schedule and down payment information. The system, which was developed in-house, also sends customers reminders about payment due dates via e-mail.

The online offering is tied to Kmart’s National Layaway Week promotion, running through Oct. 9.

Kmart parent Sears also offers a layaway purchase option in stores but not at Sears.com. Sears Holdings Corp. is No. 7 in the Internet Retailer Top 500 Guide.

One vendor of online layaway services sees the Kmart move as further evidence of a trend. “Layaway has become more than just a payment option. It`s a commitment by the merchant to work with the consumer and fulfill their needs,” says Doug Salie, CEO of eLayaway LLC. “For Sears Holdings Corporation to see the benefits of offering online layaway validates the importance and relevance of our growing industry.”

ELayaway says it now has more than 1,000 participating merchants and recently launched an online shopping mall to get merchants started. The company enables consumers to pay for products in monthly installments through automated direct debits from a checking account. Payment periods can range from a few months to more than a year, depending on the merchant’s needs. The consumer pays a flat fee based on 1.9% of the purchase price, but no additional transaction fees, eLayaway says.

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