Shrinking In-Box Warranties Spur Big ESP Opportunities
Thin is in. And that’s not just for flat panels, but also for the in-box warranties that are packed along with them. The trend began to emerge about 18 months ago when appliance manufacturers started offering shorter terms on warranties. CE manufacturers are now adopting the practice, which is helping retailers sell more margin-rich ESPs. Since the limited in-box warranties make one of the best tools for convincing customers they need an ESP, retail sales associates should keep up with the manufacturers’ terms for different brands in various categories, warranty providers said.
Appliance manufacturers, for example, have decreased some major in-box warranties to one year from five years. Similar decreases are beginning to percolate in the TV market, particularly with microdisplay warranties, which are shrinking from one year to between 30 and 90 days, said Keith Meier, senior vice president and general manager for extended service at Assurant Solutions. Smaller electronics, such as gaming devices, digital cameras, DVD players and secondary TV brands, are also being affected, he said.
“If companies are competing on cost, they are taking a harder look at their warranty coverage,” Meier said. “It’s been a gradual process.”