eBay tests product warranty program for consumer electronics
In its ongoing effort to offer everything under the sun, including a higher level of customer confidence, eBay Inc.’s eBay.com is testing a warranty program for computers and consumer electronics. "We’re already seeing a lot of traction from buyers," Mike Rudolph, director of strategic development, tells InternetRetailer.com.
The warranties are being offered under an agreement with warranty provider N.E.W. Customer Service Companies Inc., which also works with major retail store chains such as CompuUSA. Rudolph says eBay has set two goals for the warranty program: to drive up sales among consumers who might not otherwise make a purchase, and to create a new revenue stream for eBay’s sellers.
He adds that, for retail sales in general, including online and offline, many consumers are known to have a higher tendency to buy a product that comes with a warranty program. 25% of consumers will buy a consumer electronics product only if it comes with a warranty, and an additional 35% will buy a warranty if the benefits are explained to them, he says.
Sellers that provide a link to the warranty program as part of their listings can earn a finder’s fee equal to as much as 50% of the "final value fee" they pay eBay at the completion of a sale. The final value fee ranges between 1.5% and 5.25%, rising along with the amount of the sale price. For a sale price of $1,000, for example, eBay charges a final value fee of 2.75%, or $27.50. If a warranty were sold as part of a $1,000 sale, the seller would receive a finder’s fee, or cash bonus as eBay calls it, of $13.75.
The pilot program is offering introductory warranty prices ranging from $9.99 (for products selling for up to $50) to $299.99 (for products selling from $3,0000.01 to $4,000). The warranty period begins 30 days after purchase and runs for one full year, covering 100% of the cost of parts and labor. The program also offers 24/7 customer service and a "No Lemon" guarantee that replaces any product needing more than 3 repairs, at not cost to the buyer.
Although eBay says it may derive revenue from the warranty program in the future, it’s currently offering it only as a value-added option for buyers and sellers. "We’re building a better marketplace," says Rudolph.
Back...
