When you purchase a large electrical item or large purchase such as a sofa or car, you often buy a warranty with it. This protects the product from damages over a set period of time and is a great way to look after your purchases. The problem with the warranty world, is the lack of shared and transparent data on the ownership of the warranties and the associated products. This lack of transparency and shared data makes Blockchain technology a great solution for this industry.
There are a few benefits for using Blockchain solutions:
- Automatic access to purchase history, confirming entitlements
- The ability to transfer the ownership of the warranty with the asset
- Open records across the ecosystem – with retailer, supplier and the organizations who may need to fix or service the products
“You probably don’t think about the warranty on your oven or refrigerator all that often. That is, until something goes wrong. Then you start frantically paging through the warranty to see whether or not you’re covered.
It should be a simple process to determine if your warranty will save you from paying for repairs. But the warranty industry’s supply chain has a number of issues and inefficiencies that roadblock this process for both companies and consumers.
False claims, fake products, and confusion about coverage are some of the most common issues companies face. And these are passed on to consumers in the form of tedious processes and poor customer experiences. But there is a better way for warranty companies to verify claims. Blockchain has the potential to help streamline the industry by securing supply chains and providing track-and-trace capabilities for products under warranty.
Much of the trouble comes from information gaps between manufacturers, distributors, warranty companies, and consumers. A clear reason for these gaps is lack of consumer insight. Most warranties are located somewhere in the back of a thick booklet of product information and directions. They often require the consumer to fill out a form and mail it back to the manufacturer. But the vast majority of people never do, and that creates a major information gap. The manufacturer doesn’t know for certain where their products are ending up. They only know which distributors they sell to.
And because the manufacturer can’t follow the paths their products take, the warranty company has no way of knowing whether the product they’re covering is the real thing.”
Warranty management benefits and outcomes
“Hardware companies lose anywhere from 5-10% of their revenue to warranty fraud to customers with illegitimate products. There is an additional issue of operational revenue lost to support calls and claim issues—estimated at ~$15-20 USD per incident. Companies allocate a fairly large margin of their revenue (ultimately consumers pay this price) to counteract these losses.
Warranty fraud effects companies large and small. Fitbit’s higher priced items have been targeted recently.”