SquareTrade CarePlus

Holiday Deals: Black Friday to Cyber Monday.

So once again, the holiday shopping season is upon us. It almost feels like Black Friday comes sooner every year. Like everyone, I got up early just to see if I can get any great deals, but unlike the die hard folks out there, I did not choose to camp out over night. Unfortunately, that also meant I was out of the running for most of the doorbuster deals and was reduced to the leftover scraps of assorted DVD’s and an 8 inch digital photo frame.

In fact, as many of you may already know, Best Buy handed out special tickets on a first-come, first-serve basis that entitled shoppers to purchase special doorbuster deals like the $229 Toshiba laptop and printer package. Judging from my personal shopping experience, laptops were the holiday shopping favorite this year. Other notables included the now outrageously affordable GPS devices and the PlayStation 2.Flat screen LCD TVs, which were all the rage last year didn’t fare quite as well. There were plenty left in stock and didn’t garner too much attention from shoppers. I can’t wait to see what next year’s hot item will be. My prediction? Blu Ray players.

From a national standpoint sales were up 8.3% from last year according to the research group ShopperTrak RCT. If you’re interested in more nitty gritty details on the economics of this year’s Black Friday sales, there’s a decent write up by BBC news.

Of course, there’s Cyber Monday as well, which has seen steady growth year over year as more and more people are starting to become aware of it. This is further evidenced by the 28% YOY increase in sales on shopping.com during Cyber Monday, _as reported by eBay. Personally, I’m too shopped out from Black Friday to participate in Cyber Monday, but was curious enough to sneak a peak at some websites.

SquareTrade also had a big week as well, thanks to all the added sales spurred on by Black Friday and Cyber Monday. People out there are really starting to see value in SquareTrade warranties – and not just on eBay. People are really getting the fact that SquareTrade warranties are all about quality and being consumer friendly. This is all the more reason for eBay sellers and e-merchants to make sure they’re offering SquareTrade warranties to their customers through SquareTrade’s seller co-marketing program, SquareTrade CarePlus. For those who are already CarePlus members, I’m sure you’ll be very happy with your CarePlus Earnings this holiday season. I bet you can’t wait to withdraw all that money generated by our warranty sales.

On a completely different note, I dropped my iPhone this morning as I was walking to the train station. Fortunately, it still works and nothing was broken. The iPhone came away from the accident like a champion, sporting just a few ugly looking scratches. All I could think of at that moment was thank goodness I have the SquareTrade iPhone warranty. It totally beats having iPhone insurance, and the peace of mind was worth every penny.

- Jimmy Lau,   guest writer

Even with iPhone price cuts, prices on eBay still at premium

So it looks like Apple has hit their milestone ahead of schedule. Originally forecasted to sell 1 million iPhones by the end of September, Apple announced today in a small press release that they have already hit the 1 million mark in iPhone sales. Subsequently, Apple’s stock also rose 2.8 percent after a slight dip following the iPhone’s price cut last week.

Even so, the buzz these days is still all about the price slashing of the iPhone, and the subsequent open letter apology (coupled with the promise of a $100 credit) to early adopters of the iPhone. For obvious reasons, iPhone news even overshadowed the launch of a new generation of iPod’s and the iPod touch. Chances are, the iPods won’t be going through a similar price slash given that Apple clearly understands the Mp3 player market. They have dominated the Mp3 industry since the birth of the iPod in 2001 after all. We suspect that Apple is only now starting to understand the competitive nature of the cell phone industry, and what price points it takes to not only compete, but to eventually dominate the cell phone industry.

There is good news in all of this of course; especially for the folks that have held out to get an iPhone. Not only will you be able to get an affordable 8GB iPhone, now wonderfully priced at $399, it also means that your SquareTrade warranty with added accidental protection will now be cheaper as well! That of course goes for the new generation of iPods, including the iPod Touch as well. Where else are you going to be able to protect your brand new iPod Touch or spiffy new iPod Nano from the occasional accidents? Not even AppleCare does that for you.

A quick note on eBay iPhone sales. It appears that the iPhone price cut has only affected eBay’s iPhone sales minimally. The average sold price of the 4GB iPhone on eBay dipped a mere $17 since news of the price cut. Many 4GB iPhones are still being sold above the listed price of $299. We can attribute most of this to buyers who committed to higher price points before the news of the price cut. We may even see a spike in cases where winning buyers simply will refuse to pay the final value  knowing they could simply head to a local AT&T store and save $200. We also expect the average sold price to dipped dramatically over the next few weeks.

So keep a close eye on your conversion rates sellers. You'll have to do a Steve Jobs like price cut on your iPhone inventory in the very near future if you want to rid your inventory, even if it will be for a loss.

The next best thing to iPhone insurance

UPDATE:  9/25/08  -- SquareTrade for iPhone 3G

 Alright, so you got an iPhone 3G.  And you probably love it.  Either that, or you're still working on getting used to it and you'll love it in a couple of days.  But love it or kinda love it, the fact is, you just parted with a huge chunk of change for the little device. 

Take a look at it.  It's flawless and sleek and wonderful.... and fragile.  That's probably why AT&T has excluded it from insurance availability and AppleCare won't cover accidental damage.  And if you bought yours from Best Buy, they'll charge you a whopping $360 for two years of phone insurance.  That's probably more than you paid for the phone in the first place!!  So, we started thinking:  iPhone insurance, hmmmm....

We've put our heads together here at SquareTrade to come up with a plan that makes sense.  One that won't rip you off.  One that you can count on to be there in case that slippery sucker winds up face down on the sidewalk or in a puddle of coffee on your desk.  No $360 iPhone insurance for our customers, that's for sure! 

Here's what we put together:

Price:

$77 for two years of coverage -- that's only $3.20 a month!  Best Buy is charging nearly FIVE TIMES as much!  Woah.

What's Included:

-  Manufacturer defects and device failures are covered for two years.

-  Accidental damage from handling -- damage caused from dropping, cracked screen, spilling on the phone etc. -- all covered.

-  5-day Service Guarantee.  If we can't fix it by then, we'll pay you CASH for the full replacement value of your phone (which would amount to even more cash than you shelled out for your phone in the first place).

- Top-notch customer service and a hassle free claims process.  Check out our reviews on epinions, NexTag, and ResellerRatings for proof.  (Note:  We know most people despise the whole claims process and think it's a huge pain, so we've committed to never giving SquareTraders the run-around.  We work hard at giving the best customer service and that's why we're so proud of how much our customers love us.  Like, beaming, my-kid-made-the-honor-roll proud.)

-  Online warranty management.  You don't have to deal with a bunch of paperwork.  Just enroll online and you're done.  You can view your contract, make a claim, view history, etc. right from the SquareTrade Warranty Management Tool.  Nobody else offers that convenience. 

 

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And for those of you deciding on iPhone insurance or considering AppleCare vs. us, here are your options:

Option A: A SquareTrade CarePlan.

 

SquareTrade has been in business since 1999. Our warranties are financially backed by an A rated insurer and we’re the leading provider of extended warranties on eBay. We’ve even got an online management system for you to manage your warranty. Long story short, we know what we’re doing, and we’re good at it.

Updated 9/21/08:  Our new iPhone warranty with ADH plan is a great deal, starting at $77.  For a little more than AppleCare, you get two years of protection against drops, spills and other accidents from handling.  Our data shows that 80% of iPhone failures come from these types of accidents - they're slippery suckers, if you haven't noticed!  In addition, you get hardware coverage equivalent to that of the AppleCare warranty. If something does happen, we’ll either fix it, or pay you the full replacement price of the iPhone – All within 5 days. Guaranteed.

 

Option B: An AppleCare Warranty.

 

Apple offers an AppleCare Extended warranty. It basically extends their 1-year warranty for an additional year for $69. Simple, safe, but it won’t cover your accidental damages – and it is expensive.

Unfortunately, there aren’t any good solutions to protecting yourself from losing the iPhone. The best advice is to hang on to the phone, and be conscious of where it is at all times.

Walmart's strategy in TV's: Price slashing and up-selling warranties

A recent article by BusinessWeek did a great job highlighting what so many unhappy flat-panel TV sellers have experienced, a downturn in sales and margins as a result of Walmart’s price slashing. Walmart is clearly doing what they do best; taking competitive verticals with high margins and discounting the items, in effect, beating out competitors through pricing and scale.

SquareTrade thoughts on Winners and losers.

It seems there are 2 clear winners with this approach. The consumer (lucky me, I’m looking forward to an affordable HD flat screen TV), and those who have the luxury of scale, in this case it’s Walmart. The losers? Everyone else.

The winning formula - Up-selling value add-ons like SquareTrade warranties.

A crucial part of this winning formula will be Walmart’s ability to up-sell to their flat-panel TV buyers both tangible and non-tangible things. Some tangible items that are easy for Walmart to up-sell probably include TV stands, DVD movies, expensive sound equipment, and perhaps new living room furniture to match the new TV. Non-tangible up-sells like extended warranty plans (similar to our own SquareTrade warranty plans) with in home servicing will be equally, if not more important.

What will happen to the competition?

It’s hard for us to imagine the likes of the downsizing Circuit city, or other specialty electronics stores competing with this model simply because they don’t have the type of scale that Walmart has, nor the tremendous focus on up-selling warranties or the diversity in merchandise to up-sell.

A bleak future for flat-panel TV’s on eBay.

We feel that the affect may be even harder on eBay flat-panel TV sellers, where buyers traditionally go to find better prices on flat-panel TV’s. Already an item that is both delicate and costly to store and ship for eBay sellers, cutting prices further will only take away from the thin margins, leaving sellers with very little in return on their investment. This time, Walmart’s low price commitment to their customers seems unbeatable. Just imagine. Black Friday prices across more types of flat-panel TV’s, every single day. It will be interesting to see which market Walmart taps into next.

2007 Resolutions: Laptops - Going Strong and Looking Even Better

The most surprising trend of the Holiday Sales period was the strength of Laptop Sales.

Of course, everyone expected TVs to do great (we're going through one of those rare analog - digital transformation moments in TVs, when price points have dropped enough for consumers to transition from one technology to another - e.g., cassettes to CDs).

But everyone expected Laptops to suck.   Vista was delayed.  Everyone already had a laptop.  There was no good reason to buy one.  People were going to wait it out till 2007. 

Well, clearly that didn't happen. 

Again, according to the NPD group - laptops sold exceedingly well during the week of Black Friday - coming in at the 2nd most sold electronics category (LCD TVs was #1 of course).   In fact, laptop sales for 2006 .vs. 2005 were higher than 2005 .vs. 2004. 

It's hard to see 2007 slowing down.  Vista is a huge step forward and it's getting strong reviews (and actually for a Microsoft product - it looks really well engineered and put together; think of it as the Windows equivalent of Excel - a product that does work well).  There's a good New York Times review of Vista if you're interested (free registration required).

You'll need a pretty good set of hardware to take full advantage of Vista, and that'll drive a big buying cycle for laptops - especially towards the latter part of the year.  Most importantly, it may even reverse (or at least stabilize) the free fall in laptops pricing, and inch the average laptop price back to closer to $1,000 (the average laptop price is now approaching $700).

So, if you're selling laptops - we think that you'll find 2007 even better than 2006.   Happy Selling.

2007 Resolutions: Selling TVs is going to get tougher

The NPD Group puts out some great general market data on consumer electronics sales.  It is good recommended reading to know what people are buying.

If you haven't been following the biggest sellers this holiday season, it was about TVs.  Two of the top 5 selling items were TVs (LCD TVs at the top of the list, and Plasma TVs coming in third).   

However, just because a lot of TVs were sold, it doesn't mean that any of the big retailers made money selling them.  As Best Buy's CEO said:  "We will match or beat any pricing in the marketplace"  and they did.  They out-discounted Walmart - which does take some doing.

So, how are people going to make money selling TVs?  Best Buy believes that it will be through services - such as installation and transportation.  There's a really interesting interview that their CEO gave to Reuters, that is mostly about TVs.

So - our view is that making money selling TVs as a stand-alone business is going to be hard in 2007.   Prices are falling tremendously, and everyone's selling them (last time I walked into Home Depot, they were selling TVs!).   And the retailers have decided that they are going to make no money selling the product, they are just going to make money on the backend selling services.

This is going to be hard for the small seller to compete.  They don't have access to the services revenue.  We don't see this as a great opportunity in 2007 for the small seller - even though the market is exploding.

2007 Resolutions: GPS Devices - Poised to breakthrough

As we mentioned in one of our earlier posts, we are great believers in GPS Devices, and especially their suitability for sales by eBay sellers or by mid-size sellers on their websites.   (Read earlier December post).

Well, the NPD group just released their numbers. GPS unit sales in the US were 437% higher in 2006 compared to 2005.   

Prices are falling as rapidly - down by 50% with an average selling price of $388, according to the NPD group.

We still continue to believe that this is an extremely interesting category - which is only going to grow rapidly.   Manufacturers are rapidly rolling out new models, and with very rapid price drops, are desperate to get rid of old inventory.

Three things are coming together.  (1) Manufacturers are desperate to get rid of old inventory;  (2) Contract manufacturers are ramping up production of generic devices and (3) There are no dominant consumer brands where consumers are extremely brand-loyal.   

This creates some really good money-making opportunities for the savvy seller.

GPS Devices: Becoming the new “must-have”

GPS devices are rapidly transitioning from a nice to have, expensive, car accessory to a must have, reasonably cheap device.    We think this is a great area for sellers to explore

The key is to drop below the $300 price point and start heading towards the $200 price point. Garmin’s cheapest c330 was available at Walmart’s website for below $300, according to TWICE.  While it’s not the newest technology, it’s a pretty compelling buy. 

These price points ($150-300) are going to blow the market right open. The value of a GPS device is pretty darn compelling, as we can all imagine when we’d need or use it. At $600, it’s hard to justify – at $200, it’s pretty easy to.

We think that this is going to be an increasingly big area and one very suited for selling off a website or on eBay. These are simple to use devices, there is no complex installation, they are very shippable. The margins are going to be OK for a while as the market is now going to expand very rapidly.  

We also think that this is a market where commodity manufacturers and brands are going to do well. These aren’t fashion items, they are practical items.

It might be time to start looking at sourcing GPS devices and testing the market.