As Holiday Season Nears, System Hiccups Trip Up Virtual Gift Card Offerings

By John Stewart

When Nikki Baird and Steve Rowen evaluated retailers’ digital gift cards this year, the thing that surprised them the most was how disjointed the shopper experience is. Card sales that worked just fine at a merchant’s desktop site just didn’t translate well to a mobile device, for example. That could be bad news as the holiday-shopping season, the time when consumers are most inclined to buy electronic gift cards, approaches.

In fact, in at least one case, the same gift card transaction that worked smoothly on a PC returned a so-called 404 error—product not found—when Baird and Rowen tried it on the merchant’s app. “You could see where retailers were cobbling things together and not taking that step back” to see the process from the consumer’s point of view, Baird tells Digital Transactions News.

Overall, the two managing partners with Retail Systems Research LLC, which has scored and ranked retailers’ gift cards every year for five of the past six years, have concluded that the products have become a barometer for how well merchants have integrated their various desktop, mobile, and social commerce channels.

“[W]e are simply stunned to find that even though the past five years have seen an increase in the number of retailers offering digital gift cards online, that does not mean the process has genuinely improved…Based on the results of this year’s assessment, retailers are not making as much progress down that road as we expected,” the authors say in the introductory remarks to their latest ranking, released Tuesday.

In at least some cases, the disconnect between the desktop and other channels may result from merchants’ efforts at being a bit too efficient. “They’re trying to leverage,” Baird tells Digital Transactions News. “They spent all this money on the desktop experience, and they don’t want to recreate the wheel when you go to the mobile app.”

Nor are technical problems confined to the mobile channel. Out of 100 retailers evaluated, 82 offered digital cards. Of these, Baird and Rowen found that 13 could not deliver a card on the first try, more than ever before. Four were still unable to deliver even after three efforts to contact or work with customer service.

“This year, the complexity that retailers are building into mobile apps, mobile [W]eb, and even some of their desktop experiences is starting to strain their underlying technologies to the breaking point,” Baird and Rowen note in their report.

Mobile aside, it turns out most merchants also fall down on social media. Only two retailers that aren’t restaurants—Cabela’s and Neiman Marcus—were found to allow customers to buy gift cards directly on their Facebook page, for example.

“As a retailer, why wouldn’t you make it as easy as possible to buy [a digital gift card]?” says Baird. “It’s such an easy way to sell. As a gift giver, [the sender] is trying to make someone happy.”

Still, merchants are clearly embracing digital gift cards. The 82 that now offer the product is up from 80 last year, an incremental increase. But the number was 68 in 2013 and only 40 as recently as 2010.

RSR evaluated gift card offerings on a 75-point scale, with points awarded on 24 criteria ranging from how easy the cards are to find on various channels to how many clicks it takes to buy to timeliness of delivery. The top performer, at 51.5 points, is Home Depot. Rounding out the top performers are: Sephora (50.5); Dunkin Donuts, Starbucks, and Ulta Cosmetics (49 each); and Amazon.com and Best Buy (48 each).

Two merchants, Lowe’s and Sony, recently offered digital gift cards but have discontinued them, the report notes.