Debunking How Extend Reinvents the Outmoded Experience with Extended Warranties
Just a few years ago, extended warranties were only accessible to the top 1% of merchants and often had a poor impression with consumers, which left a huge portion of the market unable or unwilling to offer protection plans.
That’s where Extend jumped in. This San Francisco-based startup, which was founded in 2019, is an API-first company that makes it simple for any merchant to offer extended warranties and protection plans while giving the merchant’s end customers a vastly improved and contemporary support experience that virtually all of the problems they currently encounter with legacy providers.
Any retailer can quickly integrate Extend and provide extended warranties and protection plans that are beneficial to their customers for the products they sell. The company has created, constructed, and launched Shopify and Magento applications as well as onboarded merchants using their own APIs.
Extend is a technology-first company that invests heavily in data and machine learning to analyze its rich datasets. Its analytics system can dynamically optimize merchant offers based on consumer engagement and quickly resolve claims for customers.
Extended Warranties: The $50B “Puzzle” That Remains Unsolved
Extended warranties are a lucrative industry. According to a study by Research and Markets, the market will reach $50.2 billion by 2026. Unsurprisingly, merchants are interested in the potential, but the majority of sellers lack the skills and time necessary to pursue it.
Protection plan or extended warranty appears to work like an insurance contract for the product you buy and is typically sold by the retailer at the point of sale, although it’s often possible to purchase one afterward from third parties.
Along with consumer electronics, appliances, medical equipment, car components, sports and fitness gear, jewelry and watches, furniture, and much more, extended warranties and protection plans are sold.
This additional assurance form has long been a point of contention for consumers: they seem like peace of mind in concept, but they frequently feel like disappointing upsell, with the implied message being that somehow the company accepts that its products won’t last. However, making a claim against them can be time-consuming, if not outright discouraging.
After the point of sale, extended warranties give businesses the option to interact with clients in a variety of ways, giving them the chance to become devoted, repeat customers. The top 1% of retailers all generate meaningful, high-margin bottom line net income from extended warranties.
For instance, in 2017, the sale of extended warranties and protection plans contributed 52% of Best Buy’s net profits. It’s critical for all online retailers to be able to provide extended warranties to their customers in order to level the playing field and compete with global retail behemoths like Amazon, Costco, and Best Buy.
A ‘Spark’ Moment from the Derailed Wager
“Big elephants” usually have big missions for the business that they are operating, but some of the companies were born from a small question, or even a hobby, this company is a typical example.
Serial entrepreneur, Woodrow Levin has built businesses in a variety of sectors, including gaming, sports advertising, online document storage, and cryptocurrency investment. In 2015, he sold one of his businesses to DocuSign.
When he lost $150 in a head-to-head fantasy football game in December to buddy and DraftKings CEO Jason Robins, in part because of a leg injury that kept Pittsburgh Steelers running back James Conner out of the Los Angeles Chargers game, his mind started churning again.
“I really started examining it when I got pissed off enough to try to find a solution to me losing money,” Levin jokes.
Although there are several options that do offer protection plans to fantasy football fans, he quickly came to the conclusion that fantasy football insurance was more of a fun hobby than a realistic, scalable business. However, he broadened his focus when he thought there was untapped potential in e-commerce insurance and launched Extend in 2019.
Extend arrived at the game too late to begin at the top. The largest online merchants, including Amazon, Apple, Walmart, and Costco, according to Levin, already have interfaces in place to offer warranties. These interfaces are often one-off integrations created by a multibillion-dollar fintech company like SquareTrade or Assurant.
Instead, he wanted to guide his startup reach a similar level by opening up the market to smaller businesses, even if he didn’t manage to draw in the most well-known e-commerce brands.
“We want to build a brand that gives you an AppleCare-like, delightful experience with us,” said Levin. “The goal is absolutely to build a multibillion-dollar company too, and retailers outside the top 1% are so underserved that we don’t feel we generally have to compete with the big players to get those deals.”
It wasn’t easy for Extend to grow, and Levin did not reveal its revenue for 2019. Similar services-offering firms like Clyde, Upsie, and Mulberry have emerged in the past few years.
However, Extend began its drive in the arms race to sign up as many merchants as it could, signing agreements with more than ten different stores, including cleaning product vendor SoClean, Cub Cadet, a provider of home security systems, and August Locks.
Chief investment officer of SoClean Keith Brown cited Extend’s relationship with Aon as the deciding reason in its transaction even though his company had never offered extended warranties.
Less than a year after Woodrow Levin’s interest in online insurance was captivated by a fantasy football wager derailed by an injury, his small fintech startup had bought part of Affinity Insurance Service, an affiliate of insurance giant Aon, and administered plans for midsize retailers to offer extended warranties ahead of schedule.
Extend on Re-writing the Bad Reputation of Warranty
By offering a sophisticated end-to-end solution that informs customers and helps them with the warranty purchase, Extend reinvented the broken and outmoded customer experience associated with extended warranties and protection plans.
The startup is a fully licensed administrator, made it possible for clients to submit claims and have them quickly authorized using their helpful chatbot Kaley. This avoided the customarily lengthy and frustrating procedure of filing a claim. This AI-driven claims bot that successfully handles 98% of customer claims in under 60 seconds.
This startup has swiftly established itself as a crucial component of the next-generation commerce stack and as a vital tool for retailers that have never been able to provide extended warranties.
Also, the new growing company provides a simple way for retailers to connect an extended warranty program into eCommerce platforms such as Shopify, Magento, Big Commerce, Salesforce Commerce Cloud, Hybris, 3DCart, and supports custom solutions through their easy-to-use APIs.
When a protection plan is sold, Extend deducts a service fee from the revenue share for sold-through protection plans. The premium, fee, and merchant margin are all included in the price of the warranty that the merchants collect at the time of sale.
This company collaborates with retailers in a variety of industries, including consumer electronics, furnishings, jewelry, musical instruments, auto parts, appliances, sports and fitness, and furniture.
Extend reported that the total yearly gross sales of its customer base were above $11.5 billion in 2019. August Locks, 1More, Club Cadet, Wynd, Zebit, Coinmine, Polycade, Outcast Garage, and New Air are a few of the brands it reached.
“Product protection plans can be a huge lifesaver for consumers and a powerful revenue generator for retailers,” said Woodrow Levin, CEO and Co-Founder of Extend. “Extend is serving both of these groups by dramatically reducing integration overhead for merchants, and making extended warranties something that consumers can trust and rely on.
Unicorn Status Solidified in 3-Year Inception
In May 2021, Extend announced a $260M Series C funding round led by SoftBank Vision Fund 2. The funding round also included participation from investors Meritech Capital Partners, PayPal Ventures and GreatPoint Ventures, and welcomed new investors Nationwide, Tomales Bay Capital, Launchpad Capital, 10X Capital and 40 North.
With a $1.6B+ valuation, the oversubscribed round raised Extend’s total fundraising to more than $315M and solidifies the company’s unicorn status.
This new round of funding is used to continue to scale the Extend team, accelerate its technology footprint, and expand its suite of services that improve customer loyalty and drive revenue for merchants.
Since its 2019 start, the startup has risen rapidly as it has concentrated on upgrading the outmoded extended warranty business with its AI technology and unique insurance stack.
High demand for Extend’s modern protection plan offering led to a 40x rise in revenue in the company’s first full year (2020).
In 2020, 300,000 protection plans are sold, and it expects to sell over three million protection plans in 2021 alone. Throughout this enormous development, Extend has continued to increase its prominent merchant partners, which number hundreds of additional well-known companies like Peloton, iRobot, Harman/JBL, Backcountry, Balsam Hill, BlendJet, RealTruck, and Traeger Grills among others.
“With this new injection of capital and vote of confidence from our investors, Extend is in a strong position to continue to invest in building best-in-class product protection that serves our merchant partners and their customers,” said Woodrow Levin, CEO and Co-founder of Extend.
He added, “We started Extend to provide a product protection solution that eliminated the frustration and ‘gotchas’ associated with the legacy offerings in the market today. SoftBank equally shares in our long-term vision and we are thrilled to welcome them, and our other new investors, to the company.”
Unwavering Efforts to Amplify Customers’ Confidence
In August 2022, Extend announced the launch of Shipping Protection which provides protection for replacement when customers’ packages are lost, damaged, or stolen in transit.
Customers can now confidently place their significant online orders knowing that Extend will protect them even if something were to happen to their goods during shipping.
This warranty platform with a modern interface design for end users has been trusted by more than five million customers and 800 leading merchants. Rapid, customer-focused problem solving and the capacity to increase profit and enhance margins with each transaction are the causes of this extraordinary market momentum.
“Extend Shipping Protection is a crucial part of our efforts to deliver a best-in-class digital experience that drives customer lifetime value and increases brand loyalty. We’ve seen increased shipping issues over the past few years, and being able to offer our customers the opportunity to protect their purchases while enroute to their homes is a tremendous value add,” said Ali Oner, CEO at Boutique Rugs.
He added “With Extend Shipping Protection, our customers are protected and we save millions of dollars in product replacement costs. Shipping Protection complements our Product Protection offering from Extend, allowing us to further drive incremental profit and defray costs.”
Giving customers the belief that their goods to arrive safe and sound, this is why up to 50% of customers add Shipping Protection to their order. This new solution is boosting AOV, decreasing customer support costs, and eliminating product replacement costs in order to increase profitability. Also, it is enhancing loyalty by removing shipment problems that could lead to haters and harm a retailer’s brand connection.
“Over the last three years, we’ve built our customer-focused, industry-leading product protection technology to boost average order value and increase purchase conversion rates for our merchant partners. I am energized to provide even more opportunity to delight customers and drive meaningful incremental revenue by now offering both Product Protection and Shipping Protection through one simple integration with Extend,” said Woodrow Levin, Extend’s CEO and co-founder.
This new launch follows the company’s January 2022 announcement that it is now able to design and manage its own protection plans through its fully licensed in-house obligors.
The solution fits seamlessly into any retail infrastructure, so merchants can go live in just weeks — empowering them to cultivate meaningful, trusted customer relationships beginning at checkout.
This new update’s offering expands their addressable market so Extend can deliver value to every merchant who sells products online. Now, This San Fransisco based company enables merchants to deliver peace of mind and value-added services to all of their customers.
It’s not easy to be the pioneer to invest heavily in data and machine learning to analyze its rich datasets. Having been going through so many challenges since the date of launching, Extend is disintermediating the antiquated extended warranty and protection plan industry by putting customers first, and delivering a digitally native and elegant customer experience from offer presentation to claim resolution. By continuously enhance their distribution, customer experience, data and analytics, Extend is step by step better and transform the $100B product protection landscape.