Winning out in the warranty wars

Winning out in the warranty wars

In Australia, the channel claims that vendors are tightening up the rules on returns and warranty conditions as a way of driving down costs.

But as vendors increasingly source stock from China and neighbouring countries, Australian Reseller News recently reported alleged declining product quality as exacerbating these issues.

It may well be good news for resellers that New Zealand legislation makes the manufacturer or importer responsible for dealing with statutory warranties, but often it is the reseller left facing the disrupted customer and left bearing many of the costs.

New Zealand-based distributors admit there is much "crap" out there, but they deny China is to blame, or that quality standards are falling, with Tech Pacific saying returns are the lowest in 20 years.

Nonetheless, local disties speak of "battles" with vendors, particularly over the date from which a warranty begins. The manufacturer often takes the view it is from when the product is made, while the consumer (and New Zealand law) argues it is from when the end user made the purchase.

Kiwi disties say this leaves them responsible for part of a warranty period — and consequently out of pocket.

“We have to provide replacement and credit customers. Vendors expect that as part of the relationship but it’s a highly costly exercise,” says Renaissance Brands general manager Mark Dasent.

“We had lot of issues with Fujitsu and we no longer distribute Fujitsu. It’s why we don’t take as many brands as we could. Many Asian brands don’t have a good [returns] policy.

“The cost of doing business, administration and handling of warranties are real issues. Handling Asustek was [also] too costly for us but the more international brands are responsible, such as Sony, Philips, PalmOne and SonicWall,” Dasent says.

Tech Pacific recently parted ways with 3Com over the issue of support.

“It wanted us to supply parts and processes without suitable reward. Return support and replacement costs can exceed profit,” says Tech Pac managing director Tony Butler.

For Butler, whose company is among the world’s largest distributors, the many differing vendors adds to the complexities of warranties.

Tech Pacific often “fights” these vendors over their differences in terms and conditions and says having 75 vendors to deal with means 75 different processes.

“We publish a matrix of warranties on our website for our resellers. It would be nice to have a common standard but New Zealand is not large enough for vendors to create one,” Butler says.

Butler says what a warranty needs is clarification of issues such as returns or refunds. He believes, for example, that Seagate’s new five-year warranty is midleading because it only gives distributors partial refunds after three years.

He doubts vendors are toughening their returns polices, despite what is claimed in Australia, believing it is a matter of manufacturers trying to speed up processes to avoid having stock lying around.

Some resellers, he says, will take 14 days to open boxes to see if they want something, when they should take much less time.

Declining margins, rising freight costs, and tighter post-Enron financial regulations in the US have also led to a shift towards “certified destruction”. Items like mice are sent to a place to be destroyed, with the distributor receiving certificates to say the faulty stock has been destroyed and can be refunded. This policy also avoids stock lying around and with increasing vendor focus on quarterly profits the supply process is quickened, Butler adds.

While claiming its network products have a less than a 1% failure rate, Lan 1 sees issues in vendors having “very poor administration systems” compared to their distributors which it says has slowed down the shipment of replacement stocks.

“It amazes us that manufacturers many times our size have very cumbersome, haphazard and consequently frustrating administration procedures compared to companies such as us,” says Lan 1 general manager Liam Venter.

Consequently, Lan 1 offers special contracts guaranteeing replacement parts within hours.

Tech Pacific also sells extended warranties with its Cisco products.

But are there other solutions? As Ingram Micro’s John Dunbar argues elsewhere, quality is a paramount issue; and all distributors will add that buying from reputable organisations will also save resellers hassle.

But warranty and support matters show no sign of ceasing to be an issue.

Tony Butler adds: “The industry struggles and will continue to struggle with warranties, given the short lifecycle of products and consumer expectations."

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