The Best Gift Card Sellers Really Shine, But Below That Level the Picture Grows Dimmer

By Kevin Woodward
@DTPaymentNews

Retailers considering or starting a digital gift card program may do well to study the programs offered by Sephora USA Inc., Starbucks Corp., The Home Depot Inc., Dunkin’ Donuts, and Amazon.com Inc.

Their digital gift card programs ranked at the top of a roster of 100 retailers analyzed by Retail Systems Research LLC on such criteria as how easy their digital cards are to find, the speediness of delivery, and whether a mobile-wallet integration is offered.

Aside from the showing of these top performers, however, the problem of retailers unable to deliver on digital gift card offerings is getting worse, with the number of laggards increasing from four last year to 10.

“Five of these had a purchase process so broken that we could not complete a purchase,” noted report authors Nikki Baird and Steve Rowen, managing partners at the firm. “RSR returned to each of these retailers several weeks later for a second attempt, only to find the breaks were not flukes: all still remained broken.”

The results were even worse with some retailers. In five instances, the buyer purchased the digital gift card and received confirmation of the sale only for the product not to be delivered. RSR contacted each of the retailers three days later via phone, but the cards still failed to show up.

“In the ‘real world,’ if a purchaser were to buy from one of these brands, receive confirmation of their order, and no further communication from the person they sent a gift to, they might be well-inclined to think the recipient simply did not acknowledge their thoughtfulness,” the report said.

Notable in the current study, Baird tells Digital Transactions News, is that a “plateau of sorts seems to have been reached, in terms of the number of retailers offering digital gift cards, the challenges we had, and retailers being able to deliver. We expected an upward trend.”

But there were some positives with certain merchants, such as making digital card cards easy to find on the Web site, supporting bulk purchasing, offering a mobile-optimized experience, providing multiple payment options, and fulfilling delivery quickly and on time.

For the first time, the report evaluated each program on its support for omnichannel payment options and bulk purchases. That meant more points for supporting at least one payment alternative and being able to make digital gift card purchases with that payment method across all digital channels.

RSR added the omnichannel payment aspect because of the rising importance of mobile commerce, Rowen tells Digital Transactions News, and how retailers are trying to fit digital gift cards into their mobile strategies.

Alternative payment options are part of this current survey because of growth in mobile commerce, he says. This year, RSR looked at how retailers treat the alternative payment experience. The availabilty of alternative payment options also indicates if the retailer is shopping its own digital gift card buying experience, Rowen says.

The study also examined the ease of buying a digital gift card with loyalty points accumulated from using credit cards.

In their recommendations, Baird and Rowen say retailers need to be mindful that there are two customer experiences with each gift card purchase, one for the purchaser and one for the recipient. They also urged special attention to mobile.

But their universal recommendation is to offer a digital gift card program that works. “This year, we learned something critical,” the report said. “It is more important to have a technically inferior digital gift card offering that works than it is to have a feature-rich program that breaks.”

Baird projects that digital gift cards will take on a greater role in retailer promotions, too. Instead of offering a coupon good toward a future purchase, a retailer might offer a digital incentive that is immediately available and costs less to offer, she says. “As shopping shifts online, if a retailer wants to offer these promotions, it will have to find ways to offer them digitally,” Baird says.

Of the 100 merchants RSR looked at, 81 offered digital gift cards, one less than last year. Amazon is the sole new entrant in the top five in this year’s report.