Laybuy CEO and managing director Gary Rohloff likes a challenge, which is just as well. As he tells Douglas Blakey, when he launched Laybuy in 2016 with his wife and two sons he had a dream of creating a ubiquitous global brand. Today, global domination will have to wait until he has cracked the UK market.
To say it has been a mixed year for Laybuy runs the risk of gross understatement. Indeed, if any firm demonstrates the sheer rollercoaster nature of BNPL, it is Laybuy.
Let us take the positives first at Laybuy. That is basically the drive of its founding family, shareholder support and BNPL sector growth in its core markets.
Laybuy CEO and co-founder Gary Rohloff is responsible for the overall management and strategic direction of the company and has a strong track record in retail. Examples include his experience in CEO roles at Number One Shoes, Warehouse Stationery and EziBuy. Add in his experience in the financial services and banking sector with treasury roles and crucially, the support of his family and external shareholders and he has a fighting chance of achieving his ambitions for Laybuy.
He tells RBI: “I come from a country of 5 million people – New Zealand – and our philosophy is to go big or go home.”
RBI editor Douglas Blakey speaks with Gary Rohloff
Laybuy CEO global ambitions on hold
Ongoing shareholder support is evidenced by the most recent Laybuy capital raising. Specifically, Laybuy raised $27m in May this year to accelerate its UK growth ambitions.
So for now, Rohloff’s global ambitions are on hold. “There will be growth beyond the UK but for now all the focus is the UK.”
He argues that investors globally underestimate the strength of the UK market. In particular, he highlights that the UK market is approximately 2.2 times the size of the Australian market.
He adds: “We have carved out a niche as one of three credible players in the UK. The UK is also a market where a higher proportion of retail spending is online.”
And now Laybuy’s attack on the UK market is boosted by the launch of a virtual card, allowing customers to use Laybuy for contactless payment in-store. Until now, BNPL has focused on using BNPL as a payment option in an online checkout. The Laybuy digital BNPL card launch means customers will be able to benefit from Laybuy’s pay-in-six instalments in-store.
Customers will need to load the card into their smartphone’s wallet through the Laybuy App. They can buy goods and services with Laybuy as if they were making a contactless payment using a physical card. Laybuy is only issuing customers with a digital card which can be held securely in their smartphone’s digital wallet.
Laybuy launches virtual card in the UK
Rohloff, adds: “We’re delighted to launch ‘Tap to Pay’. People love using BNPL because it’s simple to use, charges no interest and allows people to pay in six manageable instalments.
“The vast majority of our customers don’t like using credit cards. They have been asking us how they can get the benefits of Laybuy, but on the High Street. In fact, 86% percent of our customers looking to return to stores have explicitly requested the option of using Laybuy in-store, too.
“Over the past four to five to six years, there has been an explosion of BNPL use in the Australasian market. BNPL is taking command if online and more recently in-store shopping as consumers eschew credit cards in their droves. And now BNPL is becoming incredibly popular in the UK.”
Well, yes, there is growth, but from a low base. And turning to the challenges facing Laybuy, consider these numbers, in the birthplace of BNPL in Australia.
According to data released by the Reserve Bank of Australia, in a Review of Payments in November 2019 – BNPL sales for 2018/19 totalled A$6bn. This includes all BNPL operators in Australia. BNPL at A$6bn versus total payments of A$1.24trn, brings out a mere 50 basis points.
Even if one accepts the BNPL firms own figures, brings out a sector total for 2018/2019 of A$8.9bn or 70 basis points. So BNPL growth this year and last starts off from a low base and however much excitement the sector generates, it remains meantime, a small niche segment of the market.
The launch of the virtual card in the UK will be eagerly watched by industry watchers and Laybuy’s peer group.
Can it make money and when will Laybuy break even, let alone post a profit?
Says Rohloff: “We do not do deals to lose money. Our merchants will attest to that. Every tap to pay transaction using the virtual card will make money for Laybuy. In-store, it is effortless for consumers and retailers and since launch, the inbound inquiries about the product gives me confidence it will really accelerate our growth in the UK.”
He adds: “We have a path to profitability and the base to continue to grow in our existing markets.” The market is, by contrast with Rohloff’s optimism, less convinced, at least in the past year.
Share price ‘hugely disappointing’: Laybuy CEO Gary Rohloff
The Laybuy share price peaked last September at A$2.30. It endured a difficult fourth quarter and kicked off the new year at A$1.30. Since then, for the calendar year to date, the share price is down by a further 59% to A$0.53.
Says Rohloff: “I feel the pain of all shareholders. Our family feels it the most. It is hugely disappointing, especially when you consider that we have virtually doubled the size of our business since the IPO. But since then, the share price has fallen by more than half.
“The sector has been on a rollercoaster and higher inflation and interest rates have come to the fore. By any metric that we run and the broker community runs, Laybuy is grossly undervalued against our peers. Some time, there has to be a re-rate here. All I can do as CEO is to focus on the things we can control, growing our business and our revenue.”
The rollercoaster has some way to run and market watchers will not tire any time soon of covering the twists and turns of the major BNPL players.