It’s finally happening: eCommerce is hitting its stride. According to Digital Commerce 360, in 2020, the size of the market is expected to reach $861 billion. It is predicted that by 2020, e-commerce would account for almost 21.3% of overall retail sales. That is better than what we saw in both 2018 and 2019, which was at 15.8% and 14.3% respectively.
Clearly, the trend is apparent. People are purchasing goods via the internet in greater numbers now than ever before. Competition is fiercer due to a combination of fewer entry barriers and a steady supply of new competitors. Customers are being served in order to keep them from defecting.
It’s a cutthroat world out there. Every store is competing for consumers’ attention and their purchasing power. The game rules always change as the industry evolves. A number of new channels arise while others fall into obscurity. That is according to Hubspot, who claims that 71% of customers no longer trust sponsored advertisements on social networks. On the other hand, you may be squandering your money if you’re not trying something new.
The acquisitions are only the beginning, not the end, of the issues. It is quite difficult to convince customers to buy something once they have passed through your “digital door.” Online retailers include adaptive UIs, in-depth product evaluations, changeable pricing, and personalised deals. On average, just 2.75% of consumers actually finish a transaction.
Once you’ve run the rat race, it’s on to the next phase: getting more customers to buy from you again. For existing customers, retention over the course of the week is 7.1 percent, but for new users, it is just 1.4 percent. It appears that single-digit conversion percentages occurred across the board. That’s why firms are engaged in fierce competition over little improvements.
Consumer-centric platforms that are distinctive, increase purchases, and increase customer lifetime value must be provided by merchants (CLV). Today, every eCommerce business must find new and creative ways to develop and adapt, or risk becoming outdated.
Offer value-added services to get ahead
One such example is the well-known big-box retailers, such as Best Buy, Walmart, and Amazon, which all give their customers several value-added services, including payment plans, shipping insurance, and product protection. However, because of this, only major stores could offer these services.
In this current time, organisations such Route, Extend, and Affirm make value-added services available to every store and their consumers. Providing white-glove services is the selling point of these technology-first platforms. Payment alternatives such as finance, BNPL, and others have been democratised.
Product protection plans are especially helpful in increasing a client’s propensity to buy, and increasing customer loyalty. Assurant discovered that extending warranties by an average of 25% motivates consumers to purchase a product. Another study by After indicates that happy customers have greater lifetime value and are more likely to buy more items and services.
Product protection : An overview
A number of techniques can be used to cover products. In addition to manufacturer warranties that include faults in manufacturing for 6 months to a year, many goods come with a product protection plan that will cover product failures for one year or more.
Commonly termed as service contracts, product protection/service contracts provide that a product will remain in good functioning order for a long length of time. The form in which protection is provided to a product might be extensive.
This extended service contact increases the warranty coverage of the manufacturer. Mechanical or electrical faults are covered over the lifetime of the manufacturer’s warranty, with the length of coverage depending on the model of the product.
Protection against specified accidents or damages is ensured through service contacts. Each plan includes its own conditions. Damage covered by ADH includes incidents including spills, breakage, and drops.
Customers are provided with more complete product protection that eases their checkout worries when using merchants that offer product protection. Plans aren’t mutually exclusive, therefore it’s critical to point out that each has advantages over the other.
An excellent example is an iPhone, as it offers multiple layers of protection. It is protected by the manufacturer warranty if your phone’s battery fails because of a manufacturing defect within one year of purchase.
But the guarantee does not cover damage that was not caused by the buyer. If you’re likely to drop your phone, you ought to get AppleCare, which is Apple’s warranty and insurance programme. In the event of an accident, you won’t have to pay out of pocket because AppleCare includes accident coverage.
Why should you offer product protection plans
Customers desire product security. The magnitude of the worldwide extended warranty market in 2019 is obvious, as it is around $120.79 billion. According to Allied Industry Research, this industry is expected to increase to $169.82 billion by the year 2027. There is well shown commercial demand. You can’t have an effective ecommerce experience without customer personalization.
Warranty coverage can also assist increase sales, according to the Connected Decade report from Assurant. People who acquire set-top streaming boxes and video game consoles have a 22% increased probability of making a purchase if they are provided with an extended warranty. For DVRs and smart TVs, the chance increases by 21%.
Protection of the product’s worth is self-evident. The tendency is unmistakable. Customers value longer coverage, which unlocks new income sources and also has the potential to yield more profits for companies.
Protect the manufactured products
Buyers of extended warranty products benefit from having peace of mind. Customers are guaranteed to always have items they adore that are currently functioning. Customized product coverage is available, such as biohazard protection for appliances.
Resolves customer issues quickly
In order to transform a potentially unpleasant consumer experience into a pleasant one, products with integrity must be protected. For instance, with Extend, consumers may have 24/7 access to a virtual claims agent to respond swiftly to customers who are dissatisfied and deliver replacement items immediately – causing them to go from disgruntled to thrilled. This high-quality solution allows businesses and customers to strengthen their bonds.
Merchants can generate profits
The benefit of product protection is that it drives profits, boosts conversion, and enriches the consumer experience.
Also, for example, the good reputation for customer care that Extend enjoys is extended by partnering with SoClean. In order to guarantee that consumers had a simple way to deal with any issues with their equipment, they implemented this.
Extend enabled SoClean to put their warranty promise to the test. The introduction of a single new experiment produced a 167% boost in income.
Improve sales conversion rate
When customers see someone standing behind the goods they are contemplating purchasing, their level of confidence rises and they are more likely to buy. At first glance, it seems rather rational; clients enjoy the added validation.
Protecting your goods really improves the number of people who acquire them. After the firm started providing Extend product protection plans, total product sales conversion rates improved by 11% .
Offer better customer experience
Customers are far more likely to be loyal to a product if they experience only pleasant interactions with it. In the current climate, businesses must provide customers with a wide range of alternatives. Ecommerce is witnessing the most explosive growth in terms of payments (e.g. BNPL, finance, etc), but in the context of product protection, it’s skyrocketing. Merchants who have an effective product protection programme also have a way to re-attract customers.
This is an example of a claim being fulfilled by a merchant using the Extension service. After this occurs, consumers will return to the vendor site to order a replacement. Customers are permitted to replace a product they have purchased with a new product. This will constitute a new sale for the business.
It broadens the consumer journey by incorporating a multi-touch experience. The more good experiences customers have, the greater their loyalty will be.
Different forms of product protection plans
It’s been around for over a century that product protection plans are offered. The first business to provide these products to merchants was AIG in 1919. Until recently, the distribution difficulty prevented product protection from running well.
Claims processes might take months to complete, and because of this, many consumers were upset. Easy-to-use new technology, like Extend, boosts accessibility to product product protection, making it possible for any retailer to offer product protection, irrespective of their location, size or product catalogue.
Protection against product can be provided in a variety of ways:
This service contract works effectively when ordinary everyday products are priced inexpensively. When you have a broken earpiece, just pop in a new one, instead of just trying to fix it.
It’s beneficial to have these service contracts, as the repair costs are typically more than the price of labour. Repairing a Peloton cycle is far more sensible than replacing it.
These service contracts are essentially an extension of the manufacturer’s warranty, ensuring that buyers are covered for the duration of the manufacturer’s guarantee.
Simple protection plan
We all want the best and safest protection for our products, but sometimes there’s not enough room for complete customisation. They frequently provide an additional period of warranty and sometimes provide more coverage choices. Once the manufacturer’s warranty has expired, these policies will take effect.
Accidental damage from handling protection
Most damage insurance services provide accidental damage from handling (ADH), such as drops and spills, in addition to manufacturer warranty coverage. These plans begin when you purchase them.
There are several insurance choices for businesses, allowing them to find policies that work for them as well as their consumers.
If you’re in the retail business, the future is inscribed on the internet. Online retailers are competing in an increasingly competitive and rapidly changing industry. Their capacity to tailor their products in order to effectively serve their consumers will be critical to their success.
Retailers will require additional resources in order to fulfil the requirements of their customers and generate new income streams. Product protection programmes give businesses the potential to distinguish themselves from the competition, generate sales, and increase customer lifetime value.