Inside The Retail eGift Card Fail

In retailing, as a Nobel laureate once wrote (and sort of sang!), “the times they are a-changin” — a sentiment that extends handily to gift cards. No longer confined to being silly (or maybe saccharine) cards tucked into envelopes, gifting can be a quick and painless digital pursuit.

Unless retailers make it hard.

And surprisingly, a number of retailers are missing the boat when it comes to digital gifting. In a recent study by RSR Research, some merchants proved to have a long way to go when it comes to satisfying consumers looking for a seamless gifting experience. As part of the latest Data Drivers installment, Gerry Gilbert, vice president of product at prepaid solutions firm CashStar, weighed in with Karen Webster on some of the most significant stats from the research.

The First Number — 10

And far from a perfect 10. In this case, 10 represents the percentage of retailers that were unable to fulfill their gift card orders — as in getting them to the end users — up double from a year ago. “It really is a shocking number,” said Gilbert, “and people who live and breathe the [prepaid] space, much like ourselves, find it fascinating because our system is designed from an eCommerce perspective to make sure that all sales are fulfilled.”

“But there is a difference between sending a physical good out of a fulfillment house versus many other goods, where you have really two experiences,” which he termed as the “purchase experience and the recipient experience.”

And in the prepaid arena, he said, there is the risk for “incredible amounts of fraud.” In the best-case scenario, he continued, it is hard for retailers to “rapidly spool these orders up and get them out the door … It’s not easy.”

Then, There’s 51

Pointing to another stat, Webster noted that only slightly more than half — that is, 51 percent — of retailers allow customers to set a custom denomination to be sent.

Picture the scenario where you want to send $150 to someone, but you have to break that order into a $100 card and then a $50 card. The genesis of that, answered Gilbert, stems from the in-store experience with physical cards and SKU numbers that did not have a variable cost structure. “On the hooks inside of those stores,” said Gilbert, “there were just a whole bunch of pre-denominated cards printed up and sold” — a model that transferred easily online. But that’s not an optimal customer experience, said Gilbert, who contended that “you should be able to send the amount that you want to send.”

Retailers have a choice here, though, and can have UI manifestations that can drive a better denomination for the shopping experience. Retailers have defaulted to a mindset that says, “This is the way it works with my inventory, or this is the way it works in my store.” Such reasoning can stand in the way of moving to a really gratifying digital experience. (Gilbert also noted that the processor relationship itself can limit the denominations allowed.)

Then, There’s 82

That’s the number of retailers in the study (out of 100) that scored below a 33, which is half of the top benchmark if retailers had done everything right. That, as Webster said, means that a lot of retailers are doing a lot wrong — for something that seems a natural thing for them to want to do well.

The technology itself is a consideration, said Gilbert. Firms need strategies about digital wallets, he said, and moving toward money being kept in phones, so to speak, “some retailers have been dragging their feet on a variety of fronts.” Others have been leading the way, said Gilbert, pointing to Starbucks and Sephora, who have built wallets into their platforms for payments for ease of use and redemptions.

“These things take time,” said Gilbert, and significant investment, and yet, many firms may be stretching their staffs thin. And in the transaction itself, at the end of the sale, it is finding what you want and need that is key. “We see conversion rates tank if discoverability is bad,” said Gilbert. “There’s an intent that is different … Discoverability is critical in getting people to the fastest point to get to that card.”

Some retailers link to gift cards at the bottom panel of their site, near customer service language, said Gilbert, and make such discoverability “really hard … As a parable, you don’t go into a store and say, ‘Are the gift cards behind the pair of jeans somewhere?’ No, they are front and center” — at checkout. “It’s the same thing” with digital gifting, he added.

One huge laggard as a group: Airlines do terribly, with one getting a zero. Some brands, said Gilbert, are more “giftable” than others, and travel plans might not always be evident, said Gilbert.

Gifting is low on the totem pole for airlines to consider or build themselves (beyond their already widespread archaic technology), but really, there’s nowhere to go but up.