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Extended Service Providers Establishing Internet Beachhead

As consumer electronics retailers increasingly embrace the Internet as a significant adjunct to their brick & mortar sales, and as e-tail-only dealers gain greater credibility with shoppers and vendors, third-party service administrators have been forced to take a long, hard look at their online options.

While some warranty providers continue to develop their Internet strategies, others have succeeded in launching robust, full-service extensions of their traditional extended service businesses.

Among those at the forefront is N.E.W., which developed a separate operation — — to address the needs of the Internet able. Created in 1998 with $8 million in seed capital and opened for business last fall, the unit, under the direction of chairman Fred Schaufeld, has evolved into a one-stop shop for the repair, maintenance and extended servicing of products.

“We view it as something that would create a paradigm shift in the industry,” Schaufeld said of the site, which he describes as a “service infomediary.” Indeed, can provide consumers with a vast amount of proprietary service information culled from N.E.W.’s 12,000 daily service calls. Consumers can make an appointment online with one of 12,000 N.E.W.-contracted service providers, which are ranked on consumers’ feedback. The site also lists some 800,000 service providers outside of the N.E.W. system to provide shoppers with the widest possible selection of repair centers.

The site can be linked and tailored to a customer’s website, where it becomes a transparent extension of the retailer or vendor. The enhanced and focused content of the private-label version allows businesses “to present themselves as a credible service provider and to present proprietary service information,” Schaufeld said.

Joining N.E.W. in the e-commerce space is Federal Warranty Service, which launched its Internet arm, revbox, at January’s CES. According to Federal’s recently promoted president Kevin Rupkey, revbox is a “customized solution to get clients into the e-commerce arena.”

The site, which can be customized for each respective retailer, provides an online forum for selling discounted service contracts, offers access to a 55,000-item product reference library, and alerts clients when consumers’ manufacturer warranties expire. A PC help desk will be added shortly.

Also on the cutting edge of web-based service is GE Warranty Management, which rolled out its CustomerNet program last fall. Described by general manager Dave McCalpin as a “web-based sales tool,” the dealer service provides for online data submission and review, offers online edit and cancel capabilities, allows access to training and point-of-purchase materials, and, beginning next month, will provide completely electronic invoicing.

“It’s been very well received,” said McCalpin. “We’ve converted a lot of folks over from traditional paper services, and it has proven to be a great productivity tool for our customers.”

McCalpin said the company has also “spent a lot of time to get a better understanding of online retailers’ unique needs in the marketplace. We’ll be doing a number of deals, and will be making our product available on the web.”

One of the first fruits of that effort is a recent business-to-business collaboration with, a subsidiary of Citadel Technology that allows businesses to outsource post-purchase customer care functions such as rebate processing and warranty offers.

Warrantech, too, has hitched its wagon to electronic commerce. Despite a tumultuous 1999 in which it lost major CE client CompUSA, managed the changes in service contract accounting that were recently mandated by the Securities and Exchange Commission, and introduced a new XChange Card product replacement program for goods under $500, the company is continuing its efforts to service online merchants.

In a prepared statement, president Sean Hicks reported, “We have developed Internet-only sales applications that will be customized to the needs of our clients. We have signed a letter of intent with Palm Computing and expect to announce additional alliances in the near future.

“As our existing clients begin to move their business to the Internet, we will be assisting them with their contract sales,” he said. Meanwhile, “our home warranty division is set to sell warranties directly to the public through our website,”

Major third-party administrators AIG Warranty Group and VAC Service say they are about to announce major initiatives. “We’re not in e-commerce yet, but we’re actively pursuing it,” said AIG sales VP Matt Frankel. “We have some major accounts that will be getting into e-commerce within the next few months, and we will be partnering with Internet resources that have no extended service contract representation.”

Similarly, VAC spokesman Ed Hamowy cited “very strong plans for the Internet that we are in the process of putting together now. The Internet is a looming presence, and everyone has to be there to be considered a full-service provider. So we’re working very diligently in that direction and will be announcing something very shortly.”

Actually, both third-party providers are already playing a role in the online evolution, albeit indirectly, by acting as administrators for WarrantyNow, a pure-play warranty provider. Founded in 1998 in CEO Ron Goedendorp’s garage, the company now boasts some 36 e-tail partners, including Mercata, BuyitNow, Computers4Sure and CNET, which is also taking an investment position in the company.

“Of all the business models we saw, no one was doing anything in the warranty space,” Goedendorp recalled. “We created an enabling technology that mimics the in-store sales process. Purchasing a service plan is part of the overall buying experiencing, and with our technology you can do the same thing online. The user can get more information about a particular plan without leaving the host site, and can add it to his shopping cart.”