New Gift Certificate Industry Data

2010-01-28T18:58:00.000-05:00

We're into the January post-holiday business doldrums, so I thought I'd scratch around and see if there's some "early returns" yet on how the gift business did in this past year. Most info comes from First Data, the nation's largest gift card processor, or Tower Group, a well know and highly respected research organization.

According to First Data's Holiday Gift Card Performance Report comparing 2009 gift card sales for the typically monster post-Thanksgiving week with 2008, the total dollar value of gift cards activated grew 17.8% and the number of cards activated grew 9.8%.

Overall sales and redemption rates for the combined categories of grocery, specialty retail, casual dining and quick-service restaurants held steady in 2009 (using data through September), which isn’t bad, considering in March 2008 they had fallen 20 percent.

About 6 percent of the total value of gift cards bought this year will go unused, according to TowerGroup, down from a record high of 10 percent in 2007. That drop makes sense in light of a recession that has turned formerly apathetic gift-card recipients into value-hungry consumers anxious to wring every last cent from a Target card.

Even with the drop, however, an estimated $5 billion worth of gift cards will be lost to fees and expiration dates or misplaced, shoved in a drawer or otherwise neglected this year.
According to TowerGroup, practical gift cards, such as those for fast-food chains and discount retailers, are used faster than cards to fine dining establishments and pricey department stores. That's because with a McDonald's and a Target on practically every corner, they're simply easier to use.

Specialty retail showed the biggest increase in both reloads and redemptions so far, going from negative 26 percent in March to a positive 6.2 percent in September for redemptions.

Another great tidbit - only one in six adults had “re-gifted” a gift card they received. Beats fruitcakes!

On my next submission, I'll talk about emerging new trends in the business.

Cheers!

Chuck

Selling Gift Certificates Online

2010-01-20T16:54:00.001-05:00

The big question merchants face when thinking of selling their gift certificates (or gift cards) online is - what physical gift form are you selling? Do you want to sell printed gift certificates as you may already do in-store or on-site? Do you want to sell physical magstripe gift cards as you may already do in-store or on-site? Or do you want to sell "virtual", "instant", "emailed" or "eCertificates", as the newest forms of certificates are variously called? Let's look briefly at each of the 3 options:

Selling printed certificates online is easy - there are a number of firms (like GiftLinx!) that do it for you, and it costs next to nothing. In general, a simple link is added to your website that directs your customers to a (hosted) shopping cart page, where the amount, number, and buyer & recipient information is collected. From there, the commercial services differ somewhat. Most will just shoot you an email with all the details, and your are responsible for printing or filling out an actual certificate, as well as stuffing and mailing or shipping the certificate. There are downsides. First, you MUST pay attention to your email traffic daily so that you don't miss an order and anger a consumer. Second, you don't provide alternative "fast" shipping options (such as next-day air) to your customers. And third, you are responsible for shipping or mailing in the event that the recipient claims to have never received it. GiftLinx eliminates these pitfalls because we do all the printing and shipping for you, and it's free. And we take responsibility for receipt.

Selling magstripe gift cards online is more challenging, because they are typically "integrated" to your POS system or a stand-alone card-swiping terminal. But the first step is the same as above - a simple link is added to your website that directs your customers to a (hosted) shopping cart page, where the amount, number, and buyer & recipient information is collected. In the case of POS-integrated magstripe gift cards, you have little alternative but to receive orders via email because you need to run each card through your POS physically to "charge" it. And you are solely responsible for staying on top of, and executing, order fulfillment. There may be companies out there that will physically stockpile pre-charged cards and handle shipping for you, but it doesn't appear to be a business anyone is touting enough to be easily found. However, if you are using a service that provides a stand-alone card-swipe terminal (such as Swipe-It), these companies commonly will offer an online ordering and/or fulfillment service to match, since they can properly "charge" the card from their own offices and ship directly from there.

Offering "eCertificates" is perhaps the ideal solution, but it's more expensive. GiftLinx (which partners with GifTango on this service) provides an instant (emailed) online gift certificate that is already integrated with all the major magstripe-based gift card systems. As with both the printed and magstripe-only options above, a simple link is placed on your website that directs your customers to a (hosted) shopping cart page, where the amount, number, and buyer & recipient information is collected. Then, a gift certificate is instantly emailed to the recipient. The certificate is printed at home or in the office by the recipient, and it is customized with your business' logo and other info. More important, a special 16-digit tracking code and barcode are on the certificate. These are "live" - the current unspent value of the certificate is stored on the provider's central computer system and updates in real time when redeemed or partially redeemed. Even if copied or duplicated, only the value actually remaining on the certificate is available. To redeem these in-store, either the barcode is scanned at checkout, or the 16-digit code is typed into the POS system manually.

Data show that offering gift certificates online will increase overall gift certificate sales and satisfaction. And the same data shows that offering BOTH physical and virtual certificates will garner more overall sales than just offering one or the other. Consumers like choice. And merchants like sales. So get online and make everyone happier!

The Gift Certificate Business

New Gift Certificate Industry Data

Selling Gift Certificates Online