How Buy Now, Pay Later Is Helping To Put Tambo Teddies On The Map

Merchants in retail sectors beyond clothing and footwear are beginning to embrace buy now, pay later (BNPL) options to help consumers pay for items more flexibly. These include home decor, fragrances, pet gear and even food — as well as more whimsical goods. Australia-based online toymaker Tambo Teddies began offering installment payments through BNPL provider Afterpay last summer to help the 30-year-old company boost its global visibility.

The company is named for the town of Tambo, where the original shop is located in the outback of central Queensland, but its renown is worldwide, with clients that include the Duke and Duchess of Cambridge and Prince Harry. The company creates handmade woolen sheepskin teddy bears that range in price from $65 to $450, depending on size, from a 10-inch Bickie Bear for babies to an oversized Goliath teddy more than three feet tall in its sitting position.

Tambo Teddies’ origins were not quite so warm and fuzzy: It was established by three entrepreneurs in the early 1990s to help the outback town survive a major drought and a downturn in its primary industry of wool-growing by creating jobs. Co-owner Alison Shaw bought the toy store in 2014 with two other associates. In a recent interview with PYMNTS, Shaw discussed how the internet has made it possible for the Aussie retailer to help lift the local industry by connecting with consumers beyond Tambo’s population of under 400 residents.

“It’s literally put Tambo on the map, because we’re only a tiny town,” she said. “The impact and enthusiasm of the public has been overwhelming, and the business has grown. Tambo Teddies takes pride in being in homes all over the world, and our famous teddy bears have made our little town of Tambo the outback teddy capital of Australia.”

Online sales currently make up 40 percent of the company’s business, while the rest of its sales come from customers visiting its Tambo store, often on vacation. It also has a warehouse for manufacturing and order fulfillment nearly 500 miles away in Toowoomba, Queensland. Not surprisingly, most of the customers who buy these collectibles are parents and grandparents. Tambo Teddies, like American Girl dolls, are made to be treasured keepsakes, and separate accessories can be purchased for them as well. “The bears are quality, long-lasting products,” Shaw said. “[Each one is] named and numbered, and we record where they go and live.”

The BNPL Difference

Tambo Teddies began offering a layaway program in 2018, but replaced it last year with an interest-free BNPL option at online checkout. Layaway programs are similar to BNPL in that they require installment payments, but there is a major difference: Customers receive layaway items only after the full balance is paid, rather than right away, as with BNPL. Shaw explained that the former method was high-maintenance, as her staff had to not only establish invoices, but also ensure that customers were making the payments and chasing those who missed one. Traditional layaway made up only 5 percent of sales.

The company’s BNPL initiative was designed to grow sales based on the incentive for shoppers to get their hands on purchases after making only the first of four total payments. Implementation of Afterpay has achieved just that, with about 15 percent of the merchant’s customers now using the payment option at checkout — a number that Shaw expects to increase.

Luxury toy retailers like Tambo Teddies are strong candidates for BNPL, as the method can widen the customer base to those who might not ordinarily consider a purchase. A recent study reported that about one-third of 1,000 consumers surveyed would not have been able to afford their most recent purchases if not for a BNPL plan. Nearly 73 percent were also enticed to add extra items to their carts to increase the total purchase amount. Shaw said she has not yet noticed a difference in spending between BNPL customers and those who pay with credit or debit, but this could very well change.

The payment method also shows particular promise with the region’s millennials and Generation Z consumers, who are turning to BNPL to avoid taking on debt. Nearly 79 percent of young female shoppers in Australia are using installment payment plans. Shaw’s experience confirms this, with customers under 40 years old comprising the company’s primary BNPL users.

The key benefits of using Afterpay extend well beyond regional borders, however. It also operates in Canada, New Zealand, the United Kingdom and the United States, poised to help Tambo Teddies expand its global reach to capture even higher revenues. Member merchants of Afterpay’s network are automatically listed in its high-visibility online directory and receive additional support. Being part of a BNPL provider’s network thus exposes online retailers to a much broader audience, putting even businesses in the smallest towns in the spotlight.