One of the fastest growing areas of online white goods firm AO.com is sales of the company’s extended warranty agreements, according to the prospectus published this week following its successful flotation.
Documents reveal that the company took £17.9m last year, compared with just £10.1m in 2012 – a rise of 77 per cent – suggesting the policies is a key growth area for the business which shocked the city with a staggering £1.2bn valuation. By comparison, total sales for the business grew 32 per cent last year.
The company said it offers the warranties to every customer twice; immediately prior to delivery and one month before the manufacturer’s warranty is due to expire.
However, AO admitted it runs the risk of any future investigations by the Office of Fair Trading, which has been looking into extended warranties in the past after complaints that customers were not given enough information or realise they could take out warranties elsewhere.
Nearly all electrical items have a 12 month manufacturers’ warranty, which covers any faults. However, AO claim its additional offer covers accidental damage and wear and tear.
Also buried in the 188-page document, the company admitted: “the basis upon which the group offers and sells product protection plans could change due to a change in law or regulation or the interpretation of existing law or regulation.”