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Virtual
Gifting Becomes a Reality
Promotes Loyalty, Shows Appreciation
The Prepaid Press - July 15th, 2010
By Arlene Hauben
Giving is an important part of life, but aside from cash,
people are always in a quandary about what to give. Gift
cards, in the last decade, have far surpassed expectations
in popularity and sales, most likely because they have
solved the problem of basic gift giving.
First in paper format, and later in plastic, gift cards
promote loyalty to a brand. The quick serve restaurant brand
is a perfect example, since the basic gift of food is a
mainstay of the gift card business. While not a new idea, a
gift of food is one of the most heartfelt and cost-effective
ways to acknowledge an occasion or show gratitude.
For example, at Value Hearing Care in Boca Raton, FL, the
customer service employees wanted to thank a fulfillment
employee in New Jersey for handling their product orders, so
they sent her three $10 gift cards for Wendy's.
Beyond that basic trend, the versatility and popularity of
the gift card continues to amaze even the marketers and
distributors in the industry. They can't get over the growth
and popularity of the gift card.
The gift card space just keeps getting bigger, said Steve
Adler, CEO of Biddees, an online gift card auction site. We
are seeing more and more small retailers offering branded
gift cards to satisfy consumer demand and boost loyalty.
Although the profit margins are not big, the return on
investment (ROI) per square foot makes it worth a retailer's
investment. Adler predicts that major retailers, such as
national department stores, will be installing gift card
racks featuring non-competitive brands like iTunes and
Amazon.
So what's really new for gift cards that will sustain the
incredible growth?
eGift Cards or Virtual Cards What€„¢s in a Name?
Consumers are really excited about eCertificates, according
to Adam Van Witzenburg, president, National Gift Card
Corp.
The company is taking on more online retailers because of
the e-serve capability, like the popular website,
Zappos.com.
Gift cards delivered in electronic format provide rapid
turnaround, safety and security, and a customer loyalty
component. Various terms are applied to cards sent over the
Internet -- virtual card, eGift card, and eCertificate,
among others.
Gift cards via email in an electronic format are a slant off
plastic cards, said Van Witzenburg.
We are also seeing dramatic growth in Gift vouchers instant
emailable gift cards, said Keith Brand, director,
TheGiftCardCentre.co.uk. They are perfect as last minute, or
last second gifts, easy to redeem, and more and more
retailers in the UK are now offering them €€œ but still
not enough. €œ
Brand expects dramatic growth in this arena, not only sent
via email but also by text. The consumers are there,
they want this offer, but it is retailers that are slow to
the game, he added.
Virtual cards, or eGift cards, gained considerable momentum
in 2009, and growth is expected to accelerate in 2010,
according to Walter Paulsen, senior vice president of
business development and retail for Giiv.com, a mobile and
social gifting company. Virtual cards offer great benefits
around give one, get one promotions, Paulsen wrote on
greensheet.com.
Blackhawk Network has added the eGift category to its
giftcardmall.com. So far, there are eight cards that can be
bought and sent over the Internet to friends or family
members. The branded cards include Kmart, Sears, Build A
Bear, and Bass Pro Shops.
Teri Llach, chief marketing officer at Blackhawk, said that
consumers were looking for eGift cards last year, but now
they really like them. Before we started the program, we did
a lot of testing to make sure the consumer had flexibility
and that retailers would be able to accept the eGift card at
the point of sale, said Llach. The cards have a dual
purpose, allowing consumers to redeem or send the eGift
online or print it and use it physically in the store.
Mobile Media
Mobile is another medium being used to make payments and
redeem prepaid products through cell phones. Giiv.com is
betting that people will want to receive gifts via text
message.
Adler likes the virtual gift card that can be downloaded
from an app on your cell phone.
To get a virtual card, you enter your gift card number into
a smart phone and the phone becomes the card. The coolest
feature yet is the way you can pay for your frappuccino, by
using the Starbucks Card Mobile app. iPhone users can enter
their Starbucks Card number and the iPhone displays a
barcode to make purchases. The smart phone becomes a
Starbucks Card that keeps track of the balance and tracks
the Stars a person earns toward free beverages through
Starbucks Card Rewards. This is a model for the convergence
of gift cards with loyalty.
Michael Hursta, vice president of gift card products at
First Data, believes that the convergence of smart phone and
virtual gift card technology will fundamentally shift the
behavior of when and how many people will give gifts. Rather
than relying only on traditional occasions to give a gift of
significant value, we believe that this convergence will
create new opportunities for quicker, lower monetary value
gifts that celebrate the smaller victories in life. For
example, $5 to say I hope you're having a good day, or $10
to say, Good luck on the interview.
Starbucks merged the features and benefits of its rewards
card with its gold card loyalty program. It is likely that
more companies will be doing the same, and reorienting
toward general spend cards. You receive the card as a gift,
but it becomes a spend card when you reload.
Social and Group Gifting
GroupCard, a developer of social gifting applications on
Facebook, enables companies to add social gifting to their
websites. Retailers are viewing this capability as a means
to establishing customer loyalty. They want to turn Facebook
or Twitter fans into loyal customers and drive new prepaid
business.
InComm recently acquired GroupCard to extend its leadership
in online gift card and social payments services. This
acquisition will allow InComm merchants and product partners
to capitalize on social platforms, especially Facebook, to
sell and distribute gift cards online, stated Brian
Parlotto, InComm senior vice president of consumer products,
in a press release.
An easy-to-use system enables people to contribute to a
group gift card online and across social platforms. Using
the system, any retailer with a prepaid gift card program
can acquire social gifting functionality simply by adding
the GroupCard application to their existing websites and
Facebook pages.
Rixty Online Entertainment Certificates are being marketed
to players of social games from OMGPOP or Zynga games on
Facebook like Farmville, Cafe World, and YoVille. Kids that
love the excitement of Adventure Quest Worlds, Dragon Fable,
and Roblox, and teenagers and fathers can't get enough of
the action games from Perfect World, gPotato, and Aeria
Games. Rixty offers an online game gift certificate that
works at many top kids games and has been certified kid-safe
by TRUSTe. More prepaid payment options like Rixty may be in
the works.
Supporting Retailers
In the burgeoning gift card industry, gift card distributors
have to stay competitive in the B2B market by offering
innovative support services to their retail partners.
Companies in the incentive industry understand what it takes
to keep retailers successful in a way that can boost orders.
For that reason they have designed services to make business
operations easier.
For example, National Gift Card is offering a new
service to its retail partners. NGCvault
provides real-time gift card inventory tracking. Developed
for those retail partners that have de-activated gift cards
warehoused with National Gift Card, NGCvault
provides comprehensive reporting that allows real-time
monitoring and managing of de-activated gift card
inventory.
This brings to our retail partners a fast, secure, and
convenient way to have real-time visibility into
de-activated gift card inventory housed at the NGC
facility, said Rick Rubin, NGC vice president of
strategic partnerships.
NGCvault will be rolled out in phases to
retail partners over the next several weeks. Additional
reporting options will also be available in the short term.
In-Store Products
In the UK, Keith Brand is seeing a strong consumer move to
buy gift cards as verbs instead of nouns. People want
to give an experience, something interesting, something fun
and unique or maybe a splurge, said Brand. Music,
restaurants, video games, hotels, travel all of these types
of gift cards are performing very nicely for us.
Consumers have also shown interest in multi-pack cards,
introduced by Blackhawk as an in-store purchase. Through
market research, the company found that consumers wanted
five gift cards in one package, in smaller denominations for
occasions that called for less expensive gifts.
New ideas keep coming through the pipeline. Look for more
environmentally friendly cards that are biodegradable, and
novel features, such as holograms, different shapes, and
scented versions as gift cards become more and more
sophisticated.
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