Warranty blues: Is there a solution in sight?

Falling margins and stagnant sales are not the only issues plaguing channel players. They have one more burning issue in the form of warranty to contend with. So important is this issue that it even affects the positioning of a brand. Stanley Glancy and Srikanth R P discuss the key challenges and problems for both resellers and vendors, brought about as a result of warranty hassles

Scenario 1: Vinish Skaria bought a branded computer, which worked well for almost a month before it started acting up. On diagnosis it was discovered that the problem was with the bundled software. Since the PC came with a one-year warranty, Skaria was confident that his troubles would be resolved by the reseller. But to his dismay he discovered that the warranty was valid only on components, and not for the software as it was installed free of cost.

Scenario 2: Vivek Shetty bought a printer from a reputed store as he was sure they would provide him with better service. 11 months later the printer stopped functioning. On showing proof of purchase to validate his warranty he discovered the warranty period actually commenced from the day the machine left the factory. And as Shetty had purchased his printer almost two months after the manufacturing date, his warranty had actually expired a month back.

Both these cases went to consumer courts. While Skaria’s case was dismissed, Shetty did manage to get his printer repaired, thanks to strong support from consumer rights activists. But not all are so lucky. A few years back both the reseller as well as the vendor would have got away with such blatant disregard to post-sales support. But increasing consumer awareness, especially in the last couple of years, had forced vendors and resellers to review their warranty policies. Consumer courts are taking up the issue on a case-by-case basis, but most resellers feel they are the ones at the receiving end of the customer’s wrath, instead of the vendor.

P G Kamath, general manager of India operations for Lexmark International puts forward a very valid point when he says, “Warranty has come a long way from the days when vendors had to deal with only one corporate client, who bought hundreds of PCs and a few printers to meet his office requirements. Now with consumer awareness picking up, the focus has shifted from the corporate to the consumer level. Consumer markets today account for about 35 percent of the total revenues of any company. This has also led to a change in the delivery mechanisms of vendors, who now have to address diverse geographies.” To get around delivery issues, Lexmark gives a door-to-door replacement service and provides onsite warranty by bringing the printer to the customer’s door. But warranty in itself is not just a delivery issue and there are myriad problems, which can alter the positioning of a brand.

Understanding the policy 
The latter half of the 1990s saw consumers becoming more demanding when it came to after-sales services. A few years back they were hardly bothered about whether the policy was comprehensive or not. This led to a lackadaisical attitude among both vendors and resellers, when it came to after-sales service. In case a customer did demand service, the reseller bore the burden, as margins were good. But increasing competition and a more aware consumer segment has led them to change their attitude.

Most vendors do have clear-cut warranty policies in place. But, according to Sandeep Parasrampuria, director at Best IT World India, these policies are more often than not meant to protect the interests of the vendor and are generally not favourable to the other partners in the distribution chain. He says, “Though some vendors do have comprehensive policies it is not made available to the channel partner or the end-customer. Many do talk about warranty and better customer relationship management to promote the brand image, but when it comes down to handling the nitty-gritty, most fail.” And in current times when resellers are struggling for margins, the warranty issue clearly is a double body-blow.

But if you ask vendors about this, most of them say that customers and resellers often fail to read the fine print, which leads to dissatisfaction. Explains Rajesh Goenka, divisional head of Rashi Peripherals, “The problem is basically with the interpretation by the reseller. Understanding of policies varies from person to person. We communicate our policies on a regular basis and take every effort to fulfil our commitments. But we are not in touch with the end-consumer whose understanding of the policy will depend on the resellers’ interpretation of the policy.” Most vendors are trying to get around this problem by continuously educating channel players.

Says Alok Ohrie, vice president of the personal computing division at IBM India, “We have very clear-cut policies in place, which we communicate to our channel partners on a monthly basis along with our updated price list. We also have a detailed explanation of our policies posted on our website. Other than that we also conduct special sessions during our reseller training programme where we explain the warranty policies to them.”

High expectations
So far, vendors and resellers have continued to slug it out with no clear consensus. This is because unlike international trends, where warranty has different levels and attracts different price points—in India, people expect service to be free. This is what creates a mismatch between customer expectations and service delivery. Many a times customers expect a brand new product as replacement in case the product gets damaged during the warranty period. Unlike consumer products where ready replacements are provided, in IT products the scenario is completely different. Consumer products come in a single box and the same company generally manufactures all components. But in IT products there are various components—mouse, keyboard, monitors—which together make up the PC. Also, the various components inside the machine come from different vendors. The processor may be from Intel, the hard disk from Samsung, with the motherboard from a third vendor. The problem may be with any of these components, which can be replaced instantly. Hence, it doesn’t make sense replacing the entire machine.

Turnaround time
Another big problem faced by the end-customer is the turnaround time by the reseller to return a product back to the consumer. Many a times, it turns out that consumers are not given replacements for weeks on end. Says Parasrampuria, “There have been instances when the turnaround time has overshot by more than a month. We are at the receiving end as customers expect an across-the-counter replacement.” But according to most vendors that Express Computer spoke to, the problem is not very widespread. There are instances where a vendor might not have a service centre in a particular city, as it is not always economically viable to have one. Also, depending on the season there is a concentration of such problems in certain areas, especially the coastal regions. This puts further pressure on the centres. But such cases are few and far between.

Says Jayesh Pathak, national manager of the technical services division for SES Technologies, “The turnaround time basically depends on the vendor. Sometimes, it also depends on the product.” Realising the importance of faster turnaround time, most vendors and resellers have agreed on a two-week period for either providing a replacement or repairing the product.

Commencement date 
There has also been a lot of debate on the actual date on which the warranty comes into effect. Most vendors offer a 12 month warranty from the date of manufacturing, or from the day the product leaves the vendor’s factory. The reseller is expected to sell the product within 15 days of it hitting the shelves. Very few vendors offer warranty from the date the end-user buys the product from the reseller. This cheats the customer of a month’s warranty. But vendors can’t afford to provide open warranty on a product as some channel partners have demanded.

Explains Goenka, “Offering open warranty on a product is not feasible. The product may lie unsold with the reseller for months. In that period many new technologies may be introduced. The reseller might then try to exchange the old product for a new one. Also, it is possible that the product gets damaged due to rough handling while it remains with the reseller.” Most vendors now provide a 13-month warranty, adding an extra month for the time it takes the channel partner to sell the product. If the reseller is not able to sell the product in this time then he is expected to take the hit. TAIT has suggested having a standard warranty period for all products.

Dead on arrival
Dead on Arrival (DoA) is another grey area faced by most resellers. Says Parasrampuria, “Vendors might have clear-cut policies on this issue. But it is not made available to the channel for their own internal reasons. This makes it difficult for us as it leads to a lot of confusion.”

The DoA warranty usually starts from the day the product leaves the factory. So usually the warranty period is over by the time the product reaches the reseller. Till date, there is no clear way to identify DoA products as most products come in boxes and identification is done only at the reseller level or at the customer end. In some cases, where printers bear even a small scratch mark, vendors refuse to accept the product citing mishandling.

But in some cases, the channel players too are to be blamed for mishandling of products. Also, a product may get burnt due to faulty power supply lines at the customers’ end. But the user may not accept this and may claim that the fault lies with the product. Says Goenka, “We do provide replacement for DoA products. But we have to be careful as customers can claim replacement for products damaged due to rough handling during transportation.” Some vendors also insist on repairing the product. But end-users are not ready to accept a repaired product when they are paying for a new one.

Lifetime warranty 
Many vendors offer lifetime warranty on certain products. For example, HP offers lifetime warranty on DLT tapes. But what most vendors mean by lifetime warranty is that the user will get a replacement as long as the product is sold in the market or is being manufactured by the vendor. Most users tend to think that the warranty is on for as long as the product is functioning. But as soon as the old product is phased out the warranty is withdrawn, in case lifetime warranty had been offered.

Bundled products
Increasing competition has forced many vendors to provide freebies as part of their marketing strategy. Says Ohrie, “It has now become a norm to provide customers with add-ons. With PCs we generally provide some software, which are from other vendors. What customers don’t realise is that preloaded software and applications are not supported by warranty. This creates a problem as we can’t provide warranty for a product, which is not ours.” TAIT has suggested that vendors enter into agreements with those companies whose software they are bundling with their product and offer warranty for both their own products as well as those bundled with it.

Service centresTechnology obsolescence
Typically new products are introduced by the vendor even while the warranty on the old product is valid. What usually happens is that neither the vendor nor the distributors have any spare stock to replace the defective old ones. But usually the customers are not ready to pay the extra amount required for replacing it with the new one. From the vendor point of view, if they don’t charge a marginal rate for the upgrade—most people would bring in their old products for free upgrades.

Though service centres help establish better customer loyalty, the cost of setting up a service centre doesn’t always justify the returns. This prompts many companies to partner with third-party centres, which usually do not match standards. Also, due to lack of proper supervision the quality of service deteriorates over a period of time. Additionally, many service centres do not have the technical personnel needed to solve a user’s problems. But TAIT’s efforts have proved beneficial to resellers in this end.

Says Kadwadkar, “Vendors have been more than accommodative in solving consumer problems. Ultimately, vendor companies have realised that having well-defined warranty policies helps them in the long run. For instance, Creative is now thinking of opening a service centre. Also, Samsung has agreed to open up two more service centres. From the user point of view, he should ask for a warranty card like he does for other consumer goods and preserve it.”

And finally
While the tug of war will continue between vendors and channel players, this beginning has been made. For instance, TAIT has asked for streamlining of warranty policies. The organisation is holding discussions and has provided a common platform for channel partners and vendors to meet and discuss their problem in an effort to find a solution, which will be beneficial to all. Channels and customers should understand the product scenario.

Ideally, all vendors should provide replacement for DoA and offer warranty starting from the date of purchase by the customer. Channels on the other hand should ensure that the vendor is not made to pay for products damaged due to rough handling by the partner. And till a clear consensus is arrived at, warranty issues will continue to vex both resellers and consumers in a big way.

This article first appeared in Express Computer.