Gary Rohloff, is the co-founder and MD of Laybuy, New Zealand’s biggest buy now, pay later service that is soon to officially launch in Europe with a major UK-based retailer.
Laybuy provides a solution to retailers’ in a promotional crisis by allowing consumers to make aspirational purchases. This is done by spreading the cost of purchases over more manageable payments.
Prior to co-founding Laybuy with his son Alex, Gary was CEO of New Zealand’s largest footwear retailer for seven years. In his role he oversaw 1,200 staff across 46 branches and revenues exceeding £200m.
Despite launching in New Zealand just 18 months ago, 5% of the country’s voting population (200,000 people) has already signed up to the company’s platform and Laybuy has forged partnerships with 2,750 online and physical stores.
Retailers partnering with Laybuy have seen an average increase in order value of 60%, an average increase in online and instore conversion rates of 50% and an average increase in new customer acquisitions of 30%.
Gary spoke to Business Leader about moving the business out of his native New Zealand and into Europe; what the main differences are between the areas; and why he chose to start a business with his son.
Can you give me an overview of Laybuy?
Laybuy is New Zealand’s largest interest-free, buy now, pay later service. Built by retailers, for retailers, our platform allows consumers to make aspirational purchases online or instore by paying one-sixth of the purchase cost at the point of sale and paying five subsequent equal interest-free sums, thus spreading the cost of purchases over a total of six weeks.
Despite only launching 18 months ago, 6.5% of the country’s voting population already use our platform and we’re lucky enough to have forged partnerships with over 3,000 online and physical stores across New Zealand and Australia.
Following our success in the Southern Hemisphere, we will soon be launching in Europe officially with a major UK-based retailer.
What made you want to expand your business out of New Zealand and come to the UK?
The UK retail sector leads the world. Not only is UK retail sector world famous for its historical and prestigious brands, but also its ability to innovate and embrace new technology. That’s what initially attracted us to the UK.
We achieved a great deal of success in New Zealand in 18 months. Though we’re still growing in our home country, realising our vision for creating a global payments platform naturally meant opening up an office in Europe and relocating to the UK; it just made business sense. Geographically the UK is also well placed to support any future expansion across Europe and the US too.
What are the main differences between the two countries from a business perspective?
Scaling in New Zealand was reasonably straightforward for us; it’s a bit of a village with a population of only 4.7 million people. Then came scaling in Australia; a market that is also relatively familiar with buy now, pay later.
The main difference is that having been a CEO in retail there for almost 20 years, I not only knew the retail market, but I like to think I had a very broad and somewhat influential network with access to retail decision makers. This made growing the business somewhat easier than in the UK, where my existing network is comparatively much smaller. That’s not to say we didn’t work damn hard, but I had a large list contacts to approach.
Scaling in the UK however, has been a brave new world. No one really knows what we do here, especially compared with the levels of awareness in Australasia and even in the US. Collectively this has been more challenging than perhaps I had anticipated, but we’ve managed to get some great partners around us and now we’re getting some good traction.
What was the inspiration behind the business?
The initial idea for Laybuy was born in the early 2000s when I was running a company called EziBuy (Australasia’s largest catalogue business). At the time we were looking for a way to improve our average order value as we noticed that whatever we tried to do, our customers’ discretionary income was finite, and we couldn’t increase our basket size.
Our directors, however, weren’t overly keen on the risk profile associated with buy now, pay later and we also weren’t able to perform a digital credit check the way we can today. This made the economics hard to justify.
Wind the clock forward to 2016, and, having observed the likes of Klarna and Affirm, as well as witnessing what was happening in the Australian retail market, I decided to leave the corporate world after thirty-five years and start the business alongside my son.
What made you want to start a business with your son?
The moment that sparked the idea for the business was when my son, Alex asked me why there wasn’t a safe and easy alternative to credit cards for spreading the cost of aspirational purchases, I couldn’t give him a solid answer. We then decided to join forces and create Laybuy.
I needed someone who was tech-savvy – not necessarily in a coding sense, but in terms of what’s happening in the world and the big technology trends. He was keen to be involved and things progressed from there.
I’d spent the first 20 years of my career in banking and finance roles, and the last 18 years as CEO of a number of retail companies, so the combination of the two backgrounds came together perfectly in a happy marriage.
How would you describe the growth of the company?
When we first launched in August 2016, our initial plan was to have signed 200 retailers by June 2019. In fact, we achieved this within three months, and that blew our forecasts out the window.
Initially, banks really struggled with the fact that we were offering unsecured consumer credit and just couldn’t get their heads around our exponential growth rate, the notion of what our debtor ledger actually was, and the pace the entire ledger turned over; it was all very new.
This meant that in the early days, securing the kind of funding we needed to be comfortable with our growth trajectory took about seven months. And, like a lot of other small fast-growing companies, we had no choice but to offer up more personal assets to secure it. Once we made that commitment, the banks were willing to get on board.
Can you tell me about your job history prior to Laybuy?
Prior to co-founding Laybuy, I spent the first half of my career in banking and corporate finance roles before transitioning to the world of retail, in which I held CEO and Director titles at some of New Zealand’s most iconic retailers.
In 2016 my son Alex and I decided that, in the 21st century, consumers should have more options when it comes to paying for goods and services. As a result, Laybuy was born, allowing consumers to stagger payments interest-free over six weeks, with the first installment made at the point of sale either online or instore.
What does the future hold for the company?
2019 is going to be another pivotal year for Laybuy. We’ll officially launch in the UK with a well-known retailer in Q1 and then throughout the year our focus will be on significantly growing our retailer base.
We will also be aiming to establish our brand with consumers here in Europe too, with the aim of becoming the go-to buy now, pay later option. This certainly doesn’t mean however that we won’t be ploughing the same level of energy and effort into increasing our market share in New Zealand and Australia. It’s going to be a busy year and I’m sure we’ll come across plenty of challenges, but I’m excited for what the future holds.