Extended Warranties – these offers to extend an existing product warranty by a year or two to give you a little extra peace of mind in case something goes wrong with something you bought – have long been part of the selling process than you were buying from Big ticket items in large stores. Today a startup announces a large round of funding to help democratize the concept. APIs make extended warranties something that even the smallest retailers can offer for the lowest cost items.
Extend works with companies like Peloton, iRobot, Harman / JBL, Advance Auto Parts, Traeger Grills, BlendJet, SoClean, 1More, August Home, Balsam Hill, NewAir, Evolve Skateboards and around 1
Woody Levin, the company’s CEO and founder, said in an interview that his goal is to remove the barriers facing smaller retailers (especially those in the direct selling space) by offering extended warranties for their products and for consumers Remove the stigma that associated with the concept. Some see this as simply taking advantage of people’s insecurities and not being worth the paper they are written on (or these days the splash screen that they appear on in the checkout flow of your online transaction).
“The extended warranty has been a stigma for far too long,” he said. “We want to create more elegant experience. We want to expand Apple Care for everything. ”
Levin – a repeat founder who has sold several other startups – added that the company now has a guaranteed gross merchandise value of more than $ 27 billion.
With Apple pursuing the goal, Extend is working with the right VCs that are on the top shelf of investors. The round will be led by Meritech Capital, which has supported Facebook, Salesforce and Tableau among others, with the participation of PayPal Ventures and previous supporters such as Great Point Ventures and Shah Capital Partners.
PayPal is a major investor here: it is one of the most ubiquitous providers of online payments and other services for merchants and will forever be on the lookout for those building technologies that will drive more conversions, especially in the current market where social distancing insists has sparked a boom in e-commerce, which in turn has resulted in a much more competitive landscape: more places to buy things, more discounts, and more technology to keep people from navigating away and buying elsewhere.
“Merchants of all sizes can benefit from extended warranties, but their implementation and maintenance has been too complex for many companies,” said Jay Ganatra, partner at PayPal Ventures, in a statement. “Extend Shares PayPal is committed to providing merchants with easy-to-use tools that enable them to better connect with and support their customers. Additionally, the Extend team has greatly improved the end user experience by using their chatbot for conversations. We look forward to investing in Extend as this area is constantly being redefined. “
Extend has raised $ 56 million to date and is not disclosing a valuation.
Extended warranties may depend on the idea of adding more security to buyers who turn off Apple Care, for example, to ensure their expensive iPhones don’t cost a fortune to be repaired or to be thrown away after a year’s mishap. But from the retailer’s point of view, they are of great help in getting an over the line sale.
And in the past few years, as dealers have realized this, they have applied the extended warranty to a lot more than just the most expensive items.
“The top 1% of dealers have benefited from this peace of mind,” said Levin. “If you look at Amazon, they have extended warranties on backpacks worth $ 40. That’s because the purchase rate goes up if even an extended warranty is advertised. “
But advertising isn’t everything: Extended warranties generate a a whopping $ 130 billion in 2019The numbers grow by around 7.4% annually.
The obstacle for many so far has been that the companies that offer extended warranties are old and only work with the biggest sellers. Companies like SquareTrade and Asurion only work with the “top 1% of companies” and ignore smaller companies, according to Levin. “These are legacy companies that focus on one-time integrations,” he said.
Extend’s solution was to take the modern approach: creating an API that can be built into any ecommerce storefront or checkout flow (it works with others like Affirm too who are also trying to to disrupt and modernize this process). Actual price can be as low as $ 19.99 or far more than that for one- or two-year plans.
Then expand the partnership with underwriters like AIG to provide the insurance guarantee for the guarantees. Those making claims can make claims by speaking to an agent. However, it also offers an automatic chatbot that can be edited around the clock. Levin said they handled 98% of the claims. (Her name is Kayley.)
These claims, in turn, are processed with the least possible effort: Since they are tied to online transactions, buyers do not need to have any receipts on hand in order to be able to assert claims, as Extend tracks this for them. Typically, credits are returned so that a buyer can re-purchase either the same product or something else of the same value at the same point of sale.
“Meritech is always committed to working with companies that want to define the future of an industry, and that is exactly what Extend is doing with its platform,” said Alex Clayton, general partner at Meritech Capital, in a statement. “Extend bridges a huge gap in the e-commerce infrastructure market by streamlining the process for merchants to offer extended warranties and protection plans for their products, and by providing consumers with a seamless customer experience from start to finish. We’re excited to see what’s next. “
Extend isn’t the only one who saw this opportunity. Earlier this year, Clyde raised $ 14 million to take on extended warranty plans, and True-Backed Upsie is also building a platform to offer warranties directly to consumers and bypassing retailers altogether.