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Retailers lag on new opportunities with mobile gift cards

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November 18, 2013

Starbucks is leveraging Twitter for commerce

While retailers such as Dunkin’ Donuts and Starbucks are on the cutting edge when it comes to mobile gift cards, most merchants are still lagging in the space even as the opportunities take off thanks to Bluetooth LE, growing availability of NFC, social gift cards and Apple’s AirDrop.

According to a September report from RSR Research, most retailers do not offer any mobile integration for gift cards.  One exception is Starbucks, which is offering mobile gift cards through both Facebook and Twitter, pointing to the growing opportunity to leverage mobile social for gift cards.

“Facebook’s gifting strategy is moving towards gift cards and other digital forms of giving, they are pulling the plug on physical gift offerings altogether,” said Guillaume Lelait, vice president of Fetch North America, San Francisco. “Facebook plans to add more merchants to its Facebook Card, a reusable gift card on which users can keep monetary balances from different retailers.

“As this part of Facebook’s business grows, we can expect to see digital gift cards right on the Facebook application,” he said. “Social and digital transactions will be even more closely tied together, increasing the social commerce trend.”

Geo-locating cards
As retailers’ point-of-sale systems become more advanced, mobile gift cards are growing in adoption both from the merchant and consumer standpoint.

Technology such as Bluetooth and NFC are making mobile coupons gain traction in the retail space this year. These advancements make it easier for merchants to not only accept mobile gift cards, but also push messages and reminders to consumers when they are nearby.

“The adoption rates and proliferation of technologies like Bluetooth Low Energy or NFC that allow users to tap and pay at the POS terminal is certainly a new development,” said Anthony Iacovone, founder/CEO of AdTheorent, New York.

“In the past there have been issues with different scanners not reading a coupon on a phone, but as new technologies emerge and become more widely used, this is less of a pitfall,” he said. “I think the trend of higher technology POS systems, and the evolution of the redemption process is a new trend.”

Building on tradition
As mobile gift cards become more widespread, retailers are beginning to look at how mobile gift cards act differently than physical cards. They are looking beyond the traditional functions of a gift card to specifically cater to mobile users.

“A lot of companies that already issue gift cards are creating mobile versions of the cards,” said Alex Campbell, chief innovation officer of Vibes, Chicago. “The more advanced trends start to look at what makes mobile gift cards different than physical gift cards or how card issuers can use mobile phones to update what’s on the cards.

“Mobile totally changes the game for gift cards,” he said. “Since mobile is interactive, cardholders now have access to real-time information. When gift cards are mobile, card issuers can change the content that’s on the card.

“Brands should think differently about mobile gift cards and focus on the new functionality that comes with having gift cards on mobile devices.”

One of the newer trends with mobile gift cards is that merchants can remind a consumer of a gift card when he or she is nearby a store.

This is a win-win situation for both merchants and consumers.

Physical gift cards can somehow end up at the bottom of a drawer, forgotten by the consumer. If consumers add a mobile gift card to their phone, a push notification can make sure that they do not forget about the card.

This is obviously beneficial for consumers who do not want to lose out on the money on the card, but it is also beneficial for merchants by bringing consumers in-store, with the possibility of spending more than the amount on the card.

Mr. Campbell thinks that another feature that would make sense for mobile gift cards is AirDrop integration so that consumers could send gift cards to friends and family via the new iOS feature.

Last year, integrating gift cards with Passbook and Google Wallet was a big push for marketers (see story).


Dunkin’ Donuts’ mobile gift card

Lagging behind
According to the RSR report, many retailers do not offer any mobile integration for gift cards. Many did not even offer bar codes for in-store use, a feature that could very easily be adopted.

Only 15 of the 86 retailers in the report offered digital gift cards enable mobile integration. On top of that, many of them were simple save-to-homepage links from a mobile Web site.

Merchants such as Starbucks and Dunkin’ Donuts, who scored highest in terms of digital gift cards, let consumers save a gift card to an account that can be accessed on a mobile phone to be used for payment.

“Common household names like Target, American Eagle, Best Buy and Starbucks have come out with mobile gift cards,” Fetch’s Mr. Lelait said. “The pressure is definitely on for retailers to not only mobilize their gift cards, but also perfect the user experience behind them.”

Final Take
Rebecca Borison is editorial assistant on Mobile Commerce Daily, New York

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Rebecca Borison is editorial assistant on Mobile Commerce Daily and Mobile Marketer. Reach her at rebecca@mobilemarketer.com.

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