May 2, 2017

The average sale of a dog or cat wouldn’t be the sort of thing that would have either you or your customer thinking in financing terms. If we’re talking about a few hundred dollars, as with a typical pet store purchase, you’d almost have to question the financial status of a purchaser who didn’t have the available funds for such a transaction.

It would make you ask, “If he can’t afford $500 to buy the dog, how is he going to feed it?”

Good question. It’s probably in the dog’s best interest to think pretty carefully about that.

But what about the higher-end customer—the one who wants to get a purebred, which might run $2,000 or more if acquired directly from a high-end breeder? If you don’t work with suppliers like that, but you’d like to, is it feasible to offer customers leasing as an alternative to buying?

There are actually companies out there that specialize in pet leasing deals and that work through retailers. One of them is called Wags Lending, and it’s a division of Reno, Nevada-based Bristlecone Holdings. Wags takes applications from would-be lessors, connects them with pet stores or directly with breeders, negotiates lease terms and—if everything checks out—provides financing for the deal.

Would it make sense for a pet retailer to work with a company like this so customers would have the option of leasing?

When you’re talking about high-end, purebred animals, a retailer might be attracted by some of the added value available from the better breeders. Not only do they weed out parents with health or behavioral problems from the breeding pool, but they also take a lot of precautions to limit the owner’s risk for major vet bills. And the routine vet checkup at $25 a pop is not the concern we’re talking about here. We’re talking about the heart problem that could run the owner into the thousands of dollars—in many cases exceeding what was paid for the animal in the first place.

If a pet retailer wants to partner with breeders like that, you’re now giving customers access to much more desirable animals. That can bring in a whole new clientele that could spend some serious money in your store over the long term.

But if the customer bought the animal directly from the breeder, the cost could very well be $2,000 to $3,000, or even more. Put yourself into the picture as a retailer/middleman and now the price will have to go up even higher so you can get your cut. This might be when leasing, or at least leasing-to-own, could be a reasonable option to consider—even for a customer that has a solid income and can afford to take care of the animal.

This might also present you with an opportunity to protect your customers by checking out the breeders to make sure they’re reputable. We’ve all heard sad stories about people who purchased an animal from a backyard breeder who didn’t really know what he or she was doing and then the owner ended up taking on a world of problems and unanticipated costs. If you can tell a high-end customer you’ve run background on the breeder and can attest to his or her reputation, you’ve provided a lot of value to that customer.

But what potential downsides should you consider in working with a leasing company?

First, if you’re going to take on the task of vetting breeders, then you have to vet breeders. Do you know how to do that? Can you devote the time and the resources to it? It’s easy for someone like me to sit here and say, “Hey, offer a value-added service to your customers! They’ll love it!”

They will if you can do it successfully—but you’re the one who has to do it, not me. So, you have to decide if you have the expertise and the capacity to pull it off. Remember: as far as the customers’ concerned, you’re the one leasing them the animal—not the breeder and not the leasing company. If you get it wrong and there are problems, you’re the one they’re going to hold responsible.

That gets us into another cautionary area with this whole idea: The more people you’re dealing with in any transaction, the more complicated it becomes to maintain control of your risk and exposure. Theoretically, it would be to your advantage to have a finance company pay you up front in larger transactions, then deal with the customer on payments and so forth. That’s all great, as long as it works the way it’s supposed to. I’m not saying this to cast aspersions on any particular finance company, but the more parties you have involved in anything, the more potential there is for entanglements.

A customer who pays you $500 for an animal—whether via cash, debit or credit—has just graced you with $500. And you now havc a two-way relationship with that customer. That’s the easiest kind to manage. It’s not a $3,000 purchase, but there is such a thing as a high-cost sale, not only in terms of your acquisition cost but also in terms of how much maintenance the after-sale relationship will require.

Finally, it’s important to understand what we mean when we talk about “leasing” an animal. When you lease a car, you turn it in at the end of the lease. You didn’t buy it and you don’t own it. Surely that can’t be the way it works when you lease a pet. If “lease” is merely a euphemism for the financing of a purchase, fine. But even then, what happens if the customer defaults? Does the leasing company repossess the animal? A car doesn’t care who owns it. A pet does.

Of course, these are the same considerations any pet retailer has to deal with when completing a transaction. An animal is a very special kind of merchandise, and it has to be handled in just the right way. If everybody involved in “leasing” a pet sees it that way, then maybe such a novel concept can actually work.
But if they don’t, who do you think is going to hear about it? That’s right. You are.

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