E-commerce is having its moment. By the year 2020, Digital Commerce 360 reported that the amount had increased to a total of 861 billion dollars. In 2020, e-commerce represented 21.3% of total retail sales, a higher figure than any other year. The percentage has increased from 2019 when it was 15.8% and from 2018 when it was 14.3%.
The trend is clear. People are buying online now more than ever. Due to fewer obstacles to overcome when entering the market and a continuous supply of newcomers, the competition is very fierce. Retailers are going to great lengths to attract and retain customers.
Each seller is competing for shoppers’ focus and financial capability. The industry is continuously changing, so the guidelines for success have shifted. New channels emerge while others become insignificant. According to Hubspot, the majority of customers no longer have faith in advertisements on social media sites. You may be squandering funds if you don’t take on something innovative.
The challenges don’t stop post-acquisition. Once customers have accessed your online store, it can be complicated to convince them to make a purchase. Websites contain user-friendly interfaces, in-depth ratings, changing costs, and personalized deals. On average, only around 2.75% of customers finish buying something despite having all the facilities available.
Once you complete the competition, it’s time to move on to the next challenge: encouraging customers to buy again. The retention rate of existing customers was found to be 7.1% by Clever Tap for the twelfth week, and the rate for new users was 1.4%. Single-digit conversion rates across the board. Companies are having fierce competition in order to achieve even the smallest of improvements.
Retailers have to offer shoppers a personalized experience via platforms that stand out, inspire buying, and heighten customer lifetime value (CLV). At this point in time, if e-commerce businesses do not introduce new ideas and adjust to changing circumstances, they will lose their influence.
Get Ahead With Value-Added Services
As an illustration, major vendors like Amazon, Walmart, and Best Buy give their patrons plenty of picks plus supplemental advantages like installment plans, transport security, and merchandise security. In the past, providing these services posed a difficult challenge, so only the larger merchants could give them.
Firms such as Affirm, Route, and Extend are now providing extra advantages to both retailers and their customers. These platforms with a focus on technology provide premium services as a standard. They have made payment options, shipping insurance, and product protection plans available to everyone.
Extended product warranties can help foster customer satisfaction and encourage customers to make a purchase. An example of this is that Assurant discovered that extended warranties usually boost a customer’s desire to purchase something by around 25%. In addition, After has reported that having a good claims experience can lead to a long relationship with the company and a higher chance to buy more of their products and services.
What is Product Protection?
Products can be covered in a variety of ways. Many products come with manufacturer warranties that usually guarantee that there are no defects in the workmanship for any time between 6 months and a year. However, product protection plans offer more than what these warranties provide.
Product protection, which is commonly referred to as service contracts, is a type of assurance that your product will remain in a functioning condition beyond its expected life span. Product protection can come in many different forms:
Extended warranties.
These contracts lengthen the time frame of producer warranty insurance. Once the original manufacturer warranty has ended, these warranties will take effect and provide protection in the event of any mechanical or electrical issues for a certain time period.
Protection plans.
These service contracts guard products against specific damage or accidents. Each protection plan has different terms. A commonly purchased plan is accidental damage from handling, which can provide coverage for any damage occurring as a result of incidents such as drops, breaks, and spills.
Merchants can offer more comprehensive security which can allay customers’ worries when they purchase something. It is essential to remember that plans do not have to be incompatible with each other.
An outstanding example is the iPhone; numerous methods of safeguarding it exist. If your iPhone battery malfunctions due to an issue with production within the first year after buying it, that falls under the manufacturer’s warranty.
But that warranty doesn’t cover accidental damage. If you have a habit of accidentally dropping your phone, you may consider investing in AppleCare, which is Apple’s form of coverage. AppleCare provides protection from unfortunate accidents such as dropping your phone, so you would not be responsible for the costs if your screen were to be damaged.
Different Types of Product Protection
Product protection has been around for a century. In 1919, AIG was the first business to present these schemes to vendors. Until recently, safeguarding products was hampered by outdated practices for making claims and difficulty in getting them to the right people.
Moreover, the handling of claims tended to be a lengthy affair that could last several months, which provoked anger and dissatisfaction among customers. Technology like Extend makes product protection more accessible, meaning that merchants of any size, in any location, with any selection of products, can provide it to their customers.
Product Protection can also come in many forms:
- Replace – these service contracts work well with everyday items that may be relatively low in price. Think Skullcandy earbuds, it’s easier to replace a damaged earbud rather than try to repair it.
- Repair – these service contracts are for items whose value is greater than the cost of labor. It makes more sense to repair a Peloton bike rather than replace it.
- Plan Duration – these service contracts simply extend the manufacturer’s warranty so consumers are covered beyond the manufacturer’s warranty period.
- Simple Product Protection – these service contracts allow for a little more customization. They often extend the duration of the manufacturer warranty and may even expand coverage options. These plans kick in after the manufacturer’s warranty expires.
- Accidental Damage from Handling (ADH) Product Protection – these service contracts protect against more damage, like drops and spills, than a manufacturer warranty. Since they cover a different set of issues, these plans begin at the time of purchase.
There are plenty of choices available, meaning businesses have control over choosing the best coverage that not only suits their item but additionally appeals to their patrons.
Why Does Product Protection Matter?
Customers want product protection. It is clear that the size of the extended warranty market worldwide was $120.79 billion in 2019. Allied Market Research has estimated that this market will be worth $169.82 billion by 2027. There is clear market demand. It is an essential part of the e-commerce process.
Providing a warranty may also boost sales, which was demonstrated in the Assurant Connected Decade survey. Adding an extended warranty to video game consoles and streaming boxes increases the rate of purchase by 22%. There is a 21% greater chance that smart TVs and DVRs will be used.
The value of product protection is obvious. The trend is clear. Customers appreciate extended policies, which allow companies to generate new income sources and value.
Why have eCommerce Warranties become so popular?
The exponential growth of eCommerce customers means that brands are under pressure to provide guarantees on purchases made through their eCommerce platforms to ensure customer satisfaction and protect their sales.
According to Allied Market Research, the market value of extended eCommerce warranty will skyrocket to $170 billion by 2027. And not to forget, those are just extended warranties. The total eCommerce warranty market is worth significantly more when taking into account third-party warranties, repairments, and replacement warranties.
Retailers are now being more conscious of their warranty processes due to these three significant competitive advances:
Loyal Customer Base
Customers are content and secure regarding the period of ownership that follows the purchase because of warranty programs. Clients require a sense of security and convenience when shopping, similar to any other form of consumer behavior.
The survey found that over half of consumers prefer to buy from brands that provide protection plans after making a purchase. There is a significant likelihood that more shoppers will develop loyalty if a company has an impressive product protection policy.
Better Customer Experience
Your customers will likely become exasperated if they need to make a warranty request, implying that there must be something wrong with the item.
By making changes and improving your regulations, you can help alleviate your customer’s disappointment by demonstrating that you are a reliable merchant and consider customer satisfaction a priority. Transforming an unfavorable or disadvantageous situation into a beneficial one would truly aid your brand name to increase and secure contented customers.
Unbelievable Profits
Making sure that you handle eCommerce warranty returns well can help to maintain good relationships with your loyal customers. This provides an opportunity to showcase your standard product line along with other items such as the latest releases or related goods, potentially drawing in more buyers.
The post-purchase experience of your customers can be used to increase sales which would not have happened otherwise, leading to a huge increase in profits.
Now is an opportune moment for a sophisticated online retail company to equip themselves with the strategies and strategies that will guide them to expand their venture and become an expert in eCommerce guarantee procedures. Otherwise, there is an enormous danger of falling behind while your peers may seize the opportunity.
Do Warranty Requests impact consumer behavior?
Yes, they do. Many retailers attempt to stay away from refunds and warranties as if it is some kind of downfall for the company. One must acknowledge and embrace warranty claiming as part of the road toward success when venturing into eCommerce.
Rather than disregarding eCommerce warranty queries altogether, you should concentrate on queries like “how to reduce the number of requests gained?” or “how to use the warranty requests to increase the business?”
Here are three main reasons why consumers care about eCommerce warranties:
Lack Of Risk Taking Ability
Purchasing items or services over the internet can be a daunting challenge for consumers who are unsure of the potential risks, especially for costly products or services.
According to a survey conducted in 2019, only 15% of customers reported feeling secure when making a pricey online purchase. That makes it evident that shoppers require constant reassurance both before and while carrying out large digital purchases.
This incorporates excellent customer service, a promise that the item will hold up, and, of greatest significance, a speedy guarantee substitution protocol.
Flexible Customer Service
Customers are thankful for B2B contracts that enable quick action and adaptability, much more than worrying about poor services and product malfunctions. B2B contracts and policies that are stringent can cause consumers to be cautious and avoid purchasing.
The capability to easily cancel, straightforward eCommerce warranty request processes and quick and open communication about the longer warranty will all greatly contribute to the satisfaction of customers.
Quality And Protection Of The Product
Items that are needed all the time are highly sought-after and prone to being worn out or damaged, like laptops, kitchen appliances, cookware, etc. Customers are ready and willing to pay for these commodities.
In exchange for their money, consumers are looking for extended warranties on online shopping purchases, product safeguards, verifications of quality, and coverage in case of an accident. This gives them assurance to make a costly purchase and encourages their loyalty to the company.
Guidelines to follow when offering an eCommerce Product Warranty
Follow Magnuson-Moss Act Rules
If your organization opts to offer an eCommerce guarantee, it must abide by the regulations enumerated in the Magnuson-Moss Act as mandated by the federal government. As a store owner, you must designate if the warranty is comprehensive or restricted, set down definite steps, and plan to comprehend documents that grant all the information linked to the warranties.
No matter the online or offline platform, always supply warranties when customers make their purchases. To ensure that all required laws and regulations are met, you should employ someone who is highly knowledgeable in business laws.
Clarify The Warranty Policies
Explicitly detail the aspects of the warranty that are provided, in addition to those that are not included.
If the product does not work correctly, make it clear if you are responsible for the cost of a new one and any labor required to install it. Do customers have to call you to get replacements or can they go to another store? Identify all questions that a customer could potentially ask in the future.
Mention The Length And Time Of The Warranty Period
Customers should be aware of the time period during which they can submit a refund claim or request a repair. Inform the customer how long you will be responsible for the product they buy.
If you are selling items that are expensive and of a sturdy make, which will have an extended lifespan, then you might consider offering a longer guarantee period. It is important to note that extending the length of your eCommerce warranty can give you an edge over your competitors.
Extended Warranties
If the shoppers have the option and the means to get extra warranties on their eCommerce purchases, they feel more secure and confident when spending a significant amount of money on your product and services.
There is a possibility that your clients might not opt for an extended warranty, which could result in you making a larger profit if you offer more products.
Department For Managing Warranty Concerns
A specific department should be set up to handle returns, address complaints, and facilitate replacements of the product. Consumers should have access to a representative from your organization for assistance with their grievances.
It is important to employ or assign personnel to this topic to guarantee that clients are wholly happy with their acquisition and will definitely think about shopping with you again in the future.
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