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EcommerceBytes-Update, Number 249 - October 18, 2009 - ISSN 1528-6703     3 of 7

Giving Shoppers Confidence through SquareTrade Warranties


By Ina Steiner
EcommerceBytes.com

October 18, 2009
 



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AuctionBytes has covered SquareTrade's eBay and online dispute-resolution services from its beginnings, but the company now provides warranties for online purchases, and it offers specialized coverage for eBay users purchasing new, used and gray-market items. Consumers can go directly to SquareTrade to purchase warranties for their purchases, whether bought at Best Buy, eBay or any other store, but online sellers may also display SquareTrade warranties on their listings to increase shopper confidence. AuctionBytes checked in with President and CEO Steve Abernethy to learn more about its online warranty services. With all the talk about overstock, returns and the secondary market these days, SquareTrade may find itself in an industry sweet spot.

AuctionBytes: Many people think of online dispute resolution when they think of SquareTrade. Are you still in that business?

Steve Abernethy: We started winding down our online dispute resolution service a few years back, and ended it completely in early 2008. We have focused nearly all our attention on creating and delivering the world's best warranty service since 2004.

AuctionBytes: SquareTrade provides warranties for online purchases. How does it work, and are there any restrictions?

Steve Abernethy: We are available not just for online purchases, but for any item, whether a consumer buys on eBay, an online retailer, or their local retail store. SquareTrade is very different from any other warranty, which is traditionally pressure sold for an extremely high mark up. We give consumers a much needed choice to find a fairly priced, no-hassle warranty, no matter where you shop (online or offline). We're priced up to 70% less than other warranties.

For example, on a basic $499 HP laptop at Best Buy, they push a 2 year warranty for $129.99 on the consumer. A buyer can say no to this overpriced offer and come to www.squaretrade.com to buy a 3 year warranty for $59.99 - that's longer coverage for less than half the price.

As important as delivering a fair price, we also aim to deliver the best service possible, and give a 5-day service guaranty. In this web 2.0 world, consumers are always looking for a way to see what others think about a service. It's very hard to see this about the status quo warranty. Not so with us. We encourage our customers to rate us (good or bad) on sites like NexTag and ResellerRatings - where we're consistently given top ratings:

Many leading retailers with a strong consumer focus, like Amazon.com, Buy.com and Woot.com now offer SquareTrade's warranties as well.

For items bought from a retailer, we offer warranties on new and refurbished items bought within the past 90 days. The main restrictions are that we don't cover pre-existing conditions, items that are meant to be used in a commercial setting (e.g. an office photocopier), and consumer replaceable parts (such as memory cards or non-replaceable batteries).

We also have a unique program for eBay purchases, where we work with most electronics powersellers to offer warranties on new, refurbished, and used merchandise. When buying from one of our powerseller partners, you have 30 days to purchase the warranty.

AuctionBytes: There's a lot of talk these days about the secondary market, and it seems everyone wants to get into selling returns, refurbished items, and overstock goods. Are you seeing anything changing in the real-world marketplace, or is it just marketing-speak from retailers and marketplaces?

Steve Abernethy: Consumers clearly are looking for ways to stretch their dollar in the recession and refurbs/returns are a great means to do this.

It's very clear that retailers are no longer shy about promoting refurbished items - you're seeing larger retailers now prominently push them (before it used to be a small part of the website). So, there appears to be a growing number of stores and marketplaces trying to compete for this market. For consumers buying refurbished items, there is often a concern about the quality of refurbished merchandise, and so having a reliable warranty is of extra importance to the retailers in that space.

AuctionBytes: What types of items are shoppers most frequently getting warranties for, and why?

Steve Abernethy: Unlike other warranties, we price fairly, so we see consumers protecting just about anything from an $60 iPod shuffles to the state of the art $3000 55" Samsung LED TVs. In general, as devices get more sophisticated, there are more components that can go wrong with them. Even TVs and appliances now come with internal computers and advanced circuitry.

On laptops and other portable electronics, SquareTrade's warranty with ADH (accidental damage from handling) coverage is very popular, Many customers want peace of mind that they're covered in case of a mishap from a spilled drink or drop.

SquareTrade's program for iPhone's is unique and definitely one of our most popular programs. AT&T currently doesn't offer iPhone insurance. SquareTrade's iPhone warranty includes protection against drops, spills and other accidents, which is the key reason they fail. Our iPhone program current costs $4-6 per month for 2 years of protection and is extremely popular. In comparison, Best Buy offers a similar program for $15 / month - 3 times the price! The only other option is AppleCare, which doesn't cover drops and spills, which is what most consumers care about.

On major purchases like TVs and appliances, SquareTrade offers an inexpensive way to safeguard their investment against the high cost of repairs, which can run several hundred dollars for parts and labor.

Consumers can see common failure types and details about our service in our learn more section.

AuctionBytes: Give me some examples of where shoppers can find value with warranties.

Steve Abernethy: In addition to the examples highlighted above, we are generally 40-50% less expensive than big box retailers like Best Buy. We have a low price guarantee, so if a consumer finds their retailer is selling a comparable warranty at a lower cost, we will refund them 110% of the difference.

The other part of warranty value is in knowing that you will get the best service possible if you need to use your warranty. With SquareTrade, our customer reviews illustrate how our service is so different and worth buying. Other warranties are designed so that you forget about your protection: you must dig through shoe boxes for receipts, call several times for claims, and are often charged for shipping in your item for repair.

At SquareTrade we make things easy to remember and use. SquareTrade gives you a "My Warranties" page online where you can see all your warranties in one spot, so you don't lose or forget them. You can file a claim online and even transfer or cancel it and get a refund online without even needing to call us. Transferring is a convenient feature around the holidays when buying gifts. You also can fax us receipts so we have them on file electronically for the future, so that you don't have to worry about losing paperwork. And of course you can always call us too at 877-Warranty.

AuctionBytes: How can online sellers capitalize on SquareTrade warranties? Can they advertise SquareTrade warranties in their listings, and what are the costs and benefits?

Steve Abernethy: On eBay, it's very simple to offer SquareTrade as a seller. Just visit www.squaretrade.com, click the Merchant Solutions tab, and it takes just a minute to enroll. There is no cost or effort for sellers. SquareTrade does all the work, posts a warranty banner on their listings, addresses all consumer questions related to the warranty and pays them a commission on sales. Consumers get a fair low priced warranty and confidence that their item will last or will be repaired or reimbursed within 5 days if an issue during the warranty term.

AuctionBytes: What requirements must sellers meet to display the SquareTrade warranty in their listings? For instance, what if a seller is not an eBay PowerSeller?

Steve Abernethy: We do not have formal requirements. However, we believe the program is most useful for those selling over $1,000 in CE products per month.

AuctionBytes: What if I sell on Bonanzle or eCrater or Craigslist, can I offer warranties on those sites, and what about my own storefront or a Yahoo Store, for example?

Steve Abernethy: Other than eBay, we do not currently cover any other auction site or any P2P site (like Craigslist). We will shortly be rolling out a solution for ChannelAdvisor-hosted sites, and hope to roll out with other providers as well (e.g., Yahoo Stores).

We work with many websites directly (e.g., Buy.com, Woot, eCost, etc.), but unless the website is selling millions of dollars of consumer electronics / year, we aren't able to spend the resources to integrate.

AuctionBytes: Are SquareTrade warranties only for consumer electronics such as laptops, televisions, cell phones and such?

Steve Abernethy: Yes, SquareTrade warranties can be purchased to protect most consumer electronics and appliances.

AuctionBytes: Sellers grant SquareTrade permission to email their customers to provide Service Contract information. How often does SquareTrade email buyers?

Steve Abernethy: We work with sellers in many ways and it's really up to the seller. Most retailers integrate us into their website checkout; others put banners that direct customers to SquareTrade; some may send emails by themselves; some may use our platform where they customize if they want zero, one or more emails sent. Sellers can also download fliers and insert them when packaging their items.

AuctionBytes: It says SquareTrade shares revenue with sellers who display the SquareTrade warranty on their listings - what kind of commission?

Steve Abernethy: Sellers earn 10% to 40% of net warranty revenues (i.e., after underwriting/admin costs).

Bronze Seller: 0 - 49 warranties a month, earning 10% of net revenues

Silver Seller: 50 - 99 warranties a month, earning 20% of net revenues

Gold Seller: 100 - 249 warranties a month, earning 30% of net revenues

Platinum Seller: 250 warranties a month, earning 40% of net revenues

SquareTrade Links
You can learn more by visiting the following pages on the SquareTrade website.

SquareTrade home page (link)

SquareTrade Merchant Solutions (link)

eBay Care Plus Agreement (link)

SquareTrade "10 Kindles in 10 Days" Anniversary Twitter Giveaway (link)

About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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