Retail Growth

How to Increase Profitability With Product and Shipping Protection Plans

Aaron Sullivan
September 27, 2023

Imagine you’re a bicycle merchant, and you make a $150 profit by selling a bike for $500. Now, picture the $350 worth of costs that got you to that profit. 

You’re probably imagining expenses you’d incur before the purchase, like raw materials and marketing campaign fees. But what about post-purchase expenses? Product replacements, support team member salaries, customer churn — all of these factors lower your profits, too. 

To strengthen your bottom line, you can’t assume profitability based on gross profit margins alone. You also need to minimize post-purchase operational expenses and encourage repeat purchases by offering an excellent customer experience after shoppers click the checkout button.

Extend’s product protection and shipping protection solutions work together to increase the profitability of your business. Shoppers can feel confident in their orders, and you don't have to worry about unexpected shipping and product damage losses.

How product protection increases profitability

Product protection plans from Extend give your customers peace of mind knowing their product is covered, so they’re more ready to click “buy now” and boost your revenue. At the same time, you won’t face overhead with handling claims since Extend supports customers both online and over the phone.

Encourages customers to make a purchase

Extend Product Protection instills trust in customers by covering accidental damage and electrical or mechanical failure that can occur after a manufacturer warranty expires. This protection helps boost customers’ confidence in their order, regardless of whether or not they buy the plan.  

Consider the portable blender company BlendJet. When the brand added Extend, BlendJet saw their product protection plan attach rate and sitewide sales conversion rate increase to 11.4% and 11%, respectively. 

“The rate of attachment we have is almost exactly proportional to the increase in conversion rate, which indicates that customers were on the edge of buying and wouldn’t have made a purchase if it wasn’t for the protection plan being available,” said BlendJet Co-Founder and CEO Ryan Pamplin. 

Product protection plan sales bring in revenue and repeat purchases

Extend Product Protection plans don’t just increase your net profits by boosting your sales volume. Merchants also receive a portion of revenue from every plan their shoppers buy. 

Plus, when a customer’s claim is approved and they’re sent back to your store to buy a replacement product, your repeat purchase rate is given a boost and overall customer satisfaction tends to increase.

Keeps customers in your brand’s ecosystem

Say a customer orders a product from your brand, and it doesn’t function properly. They contact your support team to report the issue, and your company issues them a refund. 

This outcome isn’t terrible. But it may lead to a lost customer since they’ve had a negative experience and didn’t get a replacement product. 

Extend’s product protection support team and AI chatbot Kaley encourage shoppers to stick with your brand, even when there are problems. 

Extend’s priority is to deliver an exceptional support experience that makes the customer feel heard and shows respect for their time. That’s why Kaley resolves 98% of product protection claims in 90 seconds and directs customers back to your store to find replacements. 

Beyond encouraging replacements, our support team’s positive customer experience helps increase shopper retention. Customers know they’ll be treated well if there are any product issues. In our internal research, we’ve found that repeat purchase rates increase by 4% for customers that buy product protection plans. 

How shipping protection increases profitability

Late and missed deliveries don’t just make customers unhappy — they’re a hit to your bottom line. You may face expensive chargeback claims from shoppers, need to replace and re-ship their items, or even lose their business. Protect your business from these costs by offering shipping protection plans. 

Customers receive assistance the moment there’s an issue

Shoppers today expect ecommerce orders to arrive on schedule, and they may not continue buying from brands with poor delivery experiences. That’s where communication matters: 60% of shoppers surveyed in 2022 by Pollfish said they expect a brand to reach out to them if a delivery is delayed by just one or two days. 

Customers with poor delivery experiences may consider disputing the charge for the product. In a 2022 PYMNTS survey, nearly one-quarter (24%) of online shoppers reported that they contested or disputed at least one charge with their bank in the past 12 months. If the bank grants the customer’s request for a chargeback, you’ll have to refund the customer and pay a penalty fee — both of which bring down your profits. 

A shipping protection plan can’t guarantee that an order will be on-time — that’s in the hands of the carrier and a host of external factors, like weather conditions and shipping routes. But a shipping protection provider like Extend does soften the blow if issues do arise.

Extend protects customers if their order is lost, damaged, or stolen. Extend’s virtual assistant Kaley solves 98% of claims in 90 seconds, so you can rest easy knowing your shoppers won’t be waiting. 

After receiving easy, reliable support from Extend, your existing customers are more likely to stay with your brand and less likely to dispute a charge. 

Reduces costs from shipping problems

According to’s 2022 Package Theft Annual Report, approximately 49 million Americans fell victim to package theft within the previous year. These incidents resulted in a staggering total of over $2.4 billion worth of stolen goods.

Brands face many costs when shipments are stolen, lost, or damaged. The company often has to ship another item free of charge, and their support team has to spend time resolving the issue. By the end of it all, the customer may also decide to stop shopping from the brand if they aren’t happy with how the situation was handled. 

Extend Shipping Protection gives both you and your customers financial peace of mind. Extend covers product replacement and shipping expenses, as well as issue resolution. It’s a win-win for shoppers and your brand. 

By offering Extend Shipping Protection, Boutique Rugs saved $1.5 million in shipping losses. The company diverted more than 100 claims from their customer service team to Extend in three months. And rather than absorbing the cost of replacing products, Boutique Rugs counts product replacements as net-new sales. 

Product + shipping protection: Why the two are better together

To understand the benefits of both types of Extend protection plans, consider what happens when a brand doesn’t provide customers this protection. 

Scenario one: Your customers can’t buy either form of protection

Imagine you’re the business owner of an ecommerce startup that sells framed art prints. You and your team handle all shipping and product issues in-house. 

Some items in your product lines are fragile, so it’s not uncommon if they arrive damaged now and again. Every year, you pay millions to handle shipping-related issues, like sending your customer base new product replacements for free. 

At the same time, your support team is overwhelmed. They handle all customer claims about shipping problems and accidental product damage, from separated frame corners to broken glass.

With so many problems to resolve, it’s hard for your support team to build smooth workflows and give each customer the attention they deserve. Shoppers face long wait times, and your team struggles to provide them accurate time frames for replacement deliveries. Thanks to these inefficiencies, customers might not return to your brand after experiencing a shipping or product issue

Scenario two: You offer both Extend Product and Shipping Protection to your customers

Instead of handling shipping and product issues in-house, your team brings in Extend to help empower your team to: 

  • Save time. Extend fully handles the claim resolution process for product and shipping protection issues. When your team wants to monitor your program performance, all they need to do is open their Extend web-based portal. Extend also offers suggestions for optimization, like working with Blendjet to focus on replacing parts rather than their entire product, which boosted incremental revenue. 
  • Save millions of dollars. Remember the shipping expenses from scenario one? Extend covers these overhead costs and product protection expenses, like offering replacements. 
  • Boost your attach and conversion rates. Before, shoppers were unsure about whether they should buy your brand’s art because your brand didn’t offer protection. Now, more customers are making purchases because they know they’re covered. 
  • Offer a stellar customer experience that leads to repeat purchases. When shipping issues and product accidents happen, Extend turns these problems into positive support moments. Extend resolves most of your claims in 90 seconds, and we encourage customers to check out your store for replacements. 

Increase profitability today with Extend Product and Shipping Protection

Stop bringing down your bottom line with product replacements, extra shipping support staff, and chargeback fees. Future-proof your brand by adding Extend Product Protection and Shipping Protection to your ecommerce stack. Extend handles the claims resolution process and overhead costs, so your team has more time and resources to build on your business’ success.

More than 900 brands are already offering Extend Product Protection and Shipping Protection. Schedule a demo today to learn how you can add these plans to your ecommerce store and boost your profits. 

Aaron Sullivan
Aaron Sullivan is senior content marketing manager at Extend. He specializes in writing about e-commerce, finance, entertainment, and beer.

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