How Sewing Machines popularized Buy Now Pay Later
We think of the Buy Now Pay Later product for millennials as a modern invention but it is a more digital avatar of an existing product - installment plans which was short term credit offered by merchants to their customers to drive sales.
Singer Sewing Machines
The first merchant who offered installment plans was a furniture store in New York - Cowperthwaithe & Sons. But the concept was popularized by Isaac Singer & Clark who was able to sell Sewing Machines to women through installments. Since this was a large purchase but saved time to stitch from 14 hours to about an hour, he was able to convince that you could meet the installments through the regular profits earned or through savings.
Key Takeaways
Offering Credit to drive sales - The sewing machines were not the best or the cheapest but had “credit” as the unique proposition. This is used to target new customers who would generally not have considered the purchase and also differentiate in the market.
Take inspiration from other industries - The installment plans was already being offered by other industries like Furniture shops and piano makers. Clark was inspired by the piano makers who were near the headquarters and copied their model to increase sales by 300% in 1 year
Structured as rental/lease contract - Paying interest and burdening the family with debt was still a major emotional challenge. The installment plans were structured like a rental where the wife only was making the rental payments on the machine till the final payment when it completely became hers.
Read Buy Now Pay Later by Jonathan Shapiro for further history on the product & rise of Afterpay