Why Product Protection is a Valuable Differentiator for E-Commerce Businesses in 2022
Introduction: As e-commerce sales have skyrocketed the past two years, so too has competition.
Since the start of COVID-19, more and more consumers have turned to e-commerce. In fact, according to Digital Commerce 360 and the U.S. Department of Commerce, consumers spent $871 billion online in 2021, an increase of 14% YOY – even after 2020’s banner year. Online sales as a percent of total retail sales remained flat at 19% in 2021, as total spending grew to over $4.5 trillion.
According to McKinsey, digitally native brands (DNBs) are growing at 3X the rate of overall e-commerce and given their origins, have two distinct advantages: 1) deep knowledge of their customer base, and 2) complete control over their customers’ data.
“What sets them (DNBs) apart is the fact that brand owners know exactly who their customers are, what online behavior led them to their initial contact with the brand, and what they’re likely to buy next. This insight creates opportunities to build deep and lasting relationships with customers.” (Source: McKinsey.com)
These DNBs have spurred increased competition as well as increased buyer expectations for a seamless customer experience.
When asked their top reasons for purchasing from one e-tailer vs. another, consumers in a recent survey said their top ten reasons were:
Given these expectations, it’s no surprise then that many merchants and manufacturers have already incorporated free shipping and discounts into their sales processes. Many have also optimized their online stores to deliver a quick and easy checkout process, to collect and share customer reviews, and to provide no-hassle refunds and returns.
Product Protection plans build trust and loyalty.
In a highly competitive environment, e-tailers must constantly think of new ways to engage customers and differentiate themselves.
Enter product protection.
Offering protection plans can tip the scales in your favor – but the process must be seamless. It must be a one-click “add to cart” during the checkout process or a one-click “enhance my product experience” during the registration process. Filing a claim must also be simple and easy, with clear communication throughout the process.