E-commerce is approaching its peak period. The world is using online purchasing channels more than ever before since registration obstacles are gradually being reduced, and new entrants are increasing competitiveness. Retailers are struggling to attract and keep customers.
The industry is expanding, and the rules are changing. New sales channels emerge as others fade into obscurity. According to HubSpot, 71% of customers no longer trust sponsored ads on social media. So, if you don’t try new things, you could be wasting money.
Merchants must provide differentiated, customer-centric platforms that encourage purchases and increase client lifetime value. More than ever, e-commerce enterprises must innovate and adapt or risk becoming outdated.
Get ahead with value-added services
Amazon, Walmart, Best Buy, and other large retailers provide customers with a choice of options and value-added services, such as payment plans, shipping insurance, and product warranties. These services accumulate significant costs over time, therefore only large retailers may offer them.
Companies are providing value-added services to retailers and customers through technology-first platforms, including premium shipping, autonomous payment options (e. g. BNPL, finance), shipping insurance, and product warranties.
Product warranty plans, in particular, can help to boost customer loyalty and purchase intent. For example, Assurant, a worldwide risk management business, discovered that extended warranties enhance consumer purchasing intent by approximately 25%. Furthermore, effective consumer complaints can boost long-term brand loyalty, increasing the likelihood that customers would purchase further items and services.
What is product warranty?
Many different modes of product warranty exist. Typically, many products have a default warranty period of 6 months to one year if a manufacturing defect occurs; however, warranty plans have longer warranty periods.
Product warranties, often known as service contracts, guarantee the product’s operational condition for an extended length of time. There can be numerous types of product warranties, such as:
1. Extended warranty
Extended warranty service contracts extend the manufacturer’s warranty. The warranty period for this type begins when the manufacturer’s defect warranty expires and then extends to cover mechanical or electrical faults for a set period of time.
2. Warranty options
These service contracts cover the product against specific damages or difficulties. Each warranty program will have unique terms. One popular program is the unintentional damage from handling warranty, which covers damage from accidents such as drops, breakages, and liquid spills on the product.
With a product warranty, distributors can give more complete coverage to clients, alleviating customer anxieties about payment. It is worth noting that the programs are not mutually exclusive.
The iPhone’s warranty serves as a solid illustration. If the iPhone battery fails due to a manufacturer defect within one year of purchase, the manufacturer’s guarantee may cover it; however, the warranty does not cover damage caused by the incident. So, if you frequently drop your phone, you can purchase AppleCare, Apple’s warranty plan. AppleCare provides a crash warranty, so you won’t have to pay out of pocket if you drop your phone and fracture the screen.
Why is warranty important?
Customers demand warranties on the things they buy. This is obvious from the fact that the global extended warranty market was valued at $120. 79 billion in 2019. This market is estimated to be worth $169. 82 billion by 2027, according to Allied Market Research. Clearly, market demand has pushed warranties to become a significant aspect in e-commerce industry.
Offering a warranty can also help boost sales, according to Assurant’s Connected Decade report. An extended warranty for game consoles and streaming devices increases the likelihood of purchasing by 22%. This likelihood rises by 21% with smart TVs and DVRs.
The usefulness of a product warranty is clearly demonstrated, as are current trends. Consumers’ appreciation for extended warranties creates additional sources of profit and value for firms.
1. Product protection
Extended warranty provides consumers with piece of mind because it guarantees to remedy all issues that arise with the product, allowing customers to continue using their favorite products. Coverage can be adapted to a customer’s specific requirements for a particular product, for as animal biohazard coverage for equipment.
2. Quickly resolve problems
Warranty service improves customer impressions, turning the customer’s product experience from bad to good. For example, for extended warranty support, clients can talk 24/7 with a virtual assistant that specializes in resolving concerns, promptly getting feedback, and returning products, converting unsatisfied customers into satisfied ones. This service can facilitate the relationship between customers and retailers.
3. Increase purchase conversion rate
Consumers’ purchase trust grows when they realize that someone stands behind the thing they are considering purchasing. Customers appreciate the additional assurance, and it makes sense visually.
In reality, providing product warranties promotes sales conversions. BlendJet’s overall product purchase conversion rates climbed by 11% after it began giving Product Warranty Extensions.
4. Improve customer experience
Excellent product warranties increase customer loyalty by transforming unpleasant situations into positive ones. Customers today require a variety of options from retailers. The expansion of payment choices now includes warranty services.
Product warranties also give distributors a way to get customers back. For example, while reporting a warranty claim, the customer will go to the distributor’s website and request a return. If a buyer purchases a replacement product, the vendor will receive new revenue.
This multi-touch engagement strategy adds a new significant touchpoint to the consumer journey. Positive customer interactions and transforming potentially bad encounters into positive ones can boost consumer loyalty to the brand.
Types of product warranties
Product guarantees have existed for a century. In 1919, AIG was the first corporation to offer these services to retailers. Until recently, product warranties were hampered by antiquated warranty claim procedures riddled with distribution issues.
Furthermore, the warranty claim process might take months to resolve, leaving customers disappointed. New technology will increase product warranties, allowing any distributor, regardless of size, geography, or product category, to provide product warranties.
Product warranties can take numerous forms:
- Alternative: These service contracts are ideal for everyday products that are reasonably priced. For example, replacing faulty headphones is easier than repairing them.
- Repairs: These service contracts cover products with a value more than the cost of labor (for example, bicycles).
- Warranty plan term: These service contracts just extend the manufacturer’s warranty, ensuring that clients are covered beyond the warranty period.
- Basic warranty: these service contracts allow for extra adjustments, often extending the manufacturer’s warranty period and perhaps expanding warranty alternatives. These programs will take effect once the manufacturer’s warranty expires.
- Accidental Damage Warranty (ADH): These service contracts cover additional damage to the product beyond the manufacturer’s warranty, such as drops and liquid spills. Because of their extensive reach, these programs are effective from the time of purchase.
With so many alternatives available, the distributor has the ability to tailor the insurance coverage not only to the goods but also to the consumer.