As a seller of home furniture, appliances and electronics, ABC Warehouse finds a lot of customers need financing to afford the high-ticket items. For years, the Pontiac, Mich.-based retailer’s point-of-sale linked to a host of lenders in order to serve all segments of its customer base. The problem was that as some lenders shifted their focus or became less aggressive in the market, ABC Warehouse would have to find new lenders and install new links to them. It was an ongoing process to keep lending offers current, says Dave Dirven, COO and vice president of operations for the 42-store Midwestern chain.
“Our point-of-sale systems are integrated so we can get real-time offers from multiple lenders.”Dave Dirven
Several years ago, the company switched to a system from Vyze that provides access to multiple lenders with just one link. Even when lenders change, ABC Warehouse doesn’t need to make adjustments to its operating system. “Now our POS systems are integrated so we can get real-time offers from multiple lenders,” Dirven says.
Serving more demographics
When a customer needs credit in order to make a purchase, the store associate takes down the necessary information and sends it to Vyze, which then matches the customer requirements with the lenders it represents and finds an offer that best fits the customer. The shopper uses the credit card pad at the POS to read the disclosures and accept the credit offer. The whole process typically takes less than one minute.
The result is that ABC Warehouse can focus on its core business. “The Vyze team and process allows us to concentrate on the business of selling appliances and lets them focus on bringing lenders to us,” Dirven says. ABC Warehouse is using the Vyze connection at its bricks-and-mortar operations right now, though Dirven says it could expand to online sales in the future.
Having access to many lenders typically means a retailer can increase sales by reducing the number of customers who get rejected for credit. While Dirven declines to say how ABC Warehouse’s sales were affected, Vyze CEO Keith Nealon says most retailers have to decline about half of credit requests. With Vyze, retailers typically can approve between 65 percent and 80 percent of credit requests, resulting in higher overall sales.
The advantage most retailers find with Vyze is the ability to offer credit to a wider range of demographics. “Most individual lenders underwrite to a specific demographic,” Nealon says. “But retailers typically serve many demographics, which means they need relationships with multiple lenders. We plug the holes by allowing them to connect to just one platform and yet get offers from multiple lenders.”
‘The best deal’
Vyze currently works with more than a dozen lenders, with products ranging from prime loans to secondary markets and leasing offers. Using a process Vyze describes as “weighted distribution,” incoming consumer credit applications are routed to one or multiple lenders based on preconfigured weighting percentages. Nealon says that with most retailers, Vyze looks first to see if the customer could be approved for a prime loan and then moves down the line until it finds a loan the customer could get approved for. The result is the best deal for the customer.
“We prescreen the customers so their credit score only gets one hit,” he explains. Most of the retailers Vyze works with are larger chains with at least $500 million in annual sales. “We work with a lot of big box, appliance, furniture, electronics, lawn equipment, auto parts and jewelry retailers. Typically, those with high-ticket items are our customers,” Nealon says.
About 85 percent of the loan requests Vyze sees are from bricks-and-mortar operations, but more requests are coming from retailers that are exclusively online or have a lot of online sales. Online retailers often see the biggest increase in loan approvals: While bricks-and-mortar stores may only approve an average of 50 percent of requests, Nealon says, ecommerce retailers’ approval average is closer to 25 percent.