WARRANTY POLICY - Channels In The Dock

"The existing policies do not have a standard base, and they are not favorable to any one" — Vinod Bhimjyani, CEO, Rapple Infotech Pvt Ltd.

"The channels should be supported by vendors in terms of finance and warranty" — Anees Khalfay, Secretary, TAIT, and MD, Radiant Technologies.

"If vendors in the West can do it, why can’t they do the same here? We need a powerful body like the NASSCOM to enforce warranty guidelines"—

Hitesh Modi Secretary, SCALE and MD, Jaydee Electronics.

"No vendor is ready to define what his lifetime warranty generally means" — Umang Mehta, VP, TAIT, and CEO, Roop Technology.

"Unfortunately, not all partners stand up to fight warranty issues as a common cause unless they themselves are the sufferers" — Saurin Shah, founding member of TAIT and MD, Ashtech.

WARRANTY POLICY

Channels In The Dock

Channels are in the dock today because of ill-defined warranty policies of vendors. TAIT and SCALE, the channel organizations in Mumbai, have taken up the issue on behalf of partners and have asked vendors to lay down their policies in

black and white. The response so far has been lukewarm.

 

Warranty was not a major issue a couple of years ago. Customers then perhaps were not as demanding. They did not care much about whether a warranty was a comprehensive or a limited one. Also, channels were financially better off with reasonable margins coming in to resolve the grievances at their own end. Thus,

manufacturers gave very little importance to warranty.

But, today the scene is different. End-users have become extremely demanding. At the same time, vendors' concerns have become different. They are more worried about selling their products rather than bother about warranty and service.

It would be wrong to say that all vendors follow this route. They do talk about warranty and customer relations management (CRM). But, when it comes to implementation, very few are up to the mark. Also, many of them may have well-defined policies. But, they rarely make them public.

Some channel partners believe that there are no warranty policies at all.

Says Vinod Bhimjyani, CEO, Rapple Infotech Pvt Ltd, "The existing policies do not have a standard base, and they are not favorable to any one."

TAIT and SCALE efforts

TAIT has been taking up the issue of warranty with vendors and principals since last year. The organization has already sent a questionnaire thrice to all vendors asking them to put down their respective warranty policies in black and white. Unfortunately, so far it has received only a lukewarm response.

TAIT sent its questionnaire for the first time to 31 vendors on February 28,

1999. The second time they contacted around the same number of people on Feb 26, 2000. Only a few responded on both occasions.

Again, for the third time in September this year TAIT sent questionnaires to 34 vendors out of which only 14 responded. The respondents include Ashtech, Samsung, Savex Computers, Neoteric Infomatique, Roop Electronics, D-Link, Compuage Infocom, Wipro, Epson, Krupa Electronics, Aditya, Intel, Thakral Computers and Acer.

The non-respondents include Tech Pacific, Redington, Electronics Resources, TVSE, Lipi Data, Microtek, HP, Philips India, Sumeet, Vintron, Digital Systems, APC, Essar Enterprises, AK Computers, Apcom, Jupiter, NDS, SES Computers and Technologies, Samtel and ACI.

Umang Mehta, VP, TAIT, and CEO, Roop Technology, says, "I don’t know why all vendors are not responding to the queries. It seems that they are not ready to commit their warranties in black and white. Their full concentration is

on sales and promotion. The association wants to treat everyone alike

irrespective of anyone's clout or volume of purchase."

TAIT wants to put together all warranty documents as sent by vendors and then share and discuss them among members. Once several policies are put together, TAIT would be in a position to put down guidelines on warranty that are acceptable to all.

When SCALE was formed, one of the primary objectives was to get defined warranty policies from various vendors. The organization regularly publishes

guidelines in its circulars and trade publications on how its members should implement warranty.

SCALE has organized seminars and brought principals and distributors on a common platform to discuss warranty issues. Says Hitesh Mody, Secretary, SCALE and MD, Jaydee Electronics, "We not only ask vendors to define their warranty policy, but also our own members. We want them to publish and implement their policies."

Channel indifference

In spite of the efforts taken by TAIT and SCALE, there seems to be no unanimity among channel partners in pursuing warranty initiatives. "Unfortunately, not all partners stand up to fight warranty issues as a common cause unless they themselves are the sufferers. Since one has to do business on a regular basis, most channels do not like to come in the open and raise an issue," says Saurin Shah, a founding member of TAIT and MD, Ashtech.

The majority of the problems that channels face with respect to warranty are related to replacements. In today's scenario, neither the channel nor the end-users know when the replacement can take place. No one also is certain whether the replaced product is a brand new one or a second-hand one.

When it comes to warranty, half-truths seem to be the norm. For instance, a three-years warranty on computers could mean three-years limited or complete, or one-year onsite and two-years carry-in. Some warranties cover only parts and some include labor too. Says Saurin, "What no one clarifies is that there is no software support." But warranties tend to make customers believe that software support is a part of the deal putting channel partners in the dock.

For some products warranty, period starts from the date of the end-user purchase, while for some others it is the date of sale from the vendor. The selling time of a product is usually between 15-30 days. This deprives the end-user of one month’s warranty and in the bargain channel faces the music.

In Dead on Arrival (DoA) cases, standby units are often given instead of new units. Points out Umang, "Today, a customer does not know whether he will get his product replaced in 24 hours or 24 days and whether he will get a repaired product or a brand new product."

The impact of the current uncertainties in warranty policies of vendors is far-reaching on channel partners. Simply put, warranty denied is business denied. A customer deprived of warranty will delay or stop payment. Consequently, he would stop buying any more products. Remarks Umang, "Often the end-user does not know who is the service provider and what kind of service he should expect. In the process the channel suffers."

The favoritism game

At times the approach taken by some vendors is very detrimental to channels. They tend to favor those who contribute to their sales volumes. Only some important customers and big corporates seem to be eligible for their prompt

service. "Our initiatives are against this nepotism and inequality. This will never happen when there is a comprehensive policy," says Umang.

The warranty policies of some of the brand owners are not up to the international standards. Perhaps vendors do face lot of customs and bureaucratic hassles while importing and re-exporting the goods. But channels point out that vendors should not use this as an excuse to neglect their responsibilities. "If they have problems", comments Umang, "let the user also know about it so that he will understand why they cannot provide warranties with international standards."

Channel hierarchy and warranty

Channel partners are of the opinion that if a vendor formulates a well-defined warranty policy, the channel hierarchy will have no choice, but pursue it. In such a situation, the policy of vendors would be identical to that of the channels.

Partners say that it is impossible for them to take the entire responsibility of warranty, especially when the margins are shrinking. Anees Khalfay, Secretary, TAIT, and MD, Radiant Technologies says, "Therefore, the channels should be supported by vendors in terms of finance and warranty." He suggests that all products should be insured, and distributors and vendors should be held responsible for damaged products.

Though channels differ in their opinions on warranty period, generally their requirements fall between 12 + 1 months or 15 months + 7 days down time. They suggest that not more than one month should be taken for replacements. Again, the repaired products should be returned within 30 days.

Skepticism from within

Most partners think that it is well nigh impossible to implement a universal warranty policy. Of course, the lukewarm response from vendors on warranty has led to this skepticism from within. But, Hitesh is optimistic when he says, "If vendors in the West can do it, why can’t they do the same here? We need a powerful body like the NASSCOM to enforce warranty guidelines."

According to Umang, if vendors want to be long-time players in the industry, they should disclose their warranty policy. They should also have their own service centers. He agrees to the fact that it is not feasible to have a common warranty policy for all the products. Nevertheless, what Umang wants is that common minimum guidelines on warranty are laid out and turnaround time is fixed.

Some suggest that partners should boycott the products of those vendors who do not define and make public their warranty policy. However, there are not many takers for this suggestion. "It is not a workable solution especially in the absence of a national association for channels," says Umang.

High customer expectations

Often the channel faces problems because of wrong and high expectations of customers on warranty. There are customers who want a brand new product for replacement of a damaged product bought six months earlier. Problems like these can be resolved only when vendors define their warranty policy and make it known to the channels who in turn share it with end-users.

For many customers, lifetime warranty means lifetime of a product. It is a mistake on the part of partners that they do not inform end-users that lifetime warranty means warranty as long as the product is in production or is sold in the market. On the other hand, what the customer thinks is that the warranty is valid as long as the product works. But, says Umang, "No vendor is ready to define what his lifetime warranty generally means."

Warranty scenario elsewhere

The warranty policies elsewhere are absolutely favoring customers. This is mainly attributed to two things - high consumer awareness and strong consumer movements. Unfortunately, both these are not very strong in the country.

Most of the products sold in the US have three-years warranty. The same products have a warranty of one or two years in India. This discrepancy can be solved only when consumer movements become stronger in the country.

There is clearly a gulf in the thought processes of vendors on how they treat warranty, for instance, in the US and in the subcontinent. Vendors can allow the channel frustrations on warranty to build up at their own peril. It is not too late to formulate clear-cut warranty policies and implement them for their own benefit.

Saji MP

in Mumbai