Gift cards offer retailers the opportunity to cultivate brand loyalty, influence consumer spending behaviour, and drive customer acquisition. Yet, as people can interact with brands through a variety of channels, relying solely on a first-party distribution strategy might inadvertently stifle the full potential of gift card initiatives. Today, more than ever, retailers can benefit from amplifying the impact of their programs by expanding their distribution channels.
In this blog, we explore the multifaceted advantages of leveraging distributors and resellers, exploring how retailers can expand their gift card solution to elevate their brand presence, and generate new revenue streams by integrating additional sales channels.
The evolution of gift cards
The landscape of gift cards has changed significantly over the recent years, with digital becoming increasingly popular.
Recent data, from the Gift Card and Voucher Association, reveals that 32.2% of UK shoppers opted for a digital gift card in January 2024, marking the highest rate since 2021.
Digital gift card solutions meet consumers’ demand for instant gifting, while eliminating stock issues and downtime for retailers, enhancing the opportunity for increased purchase and redemption.
What’s more, gift cards are emerging as a convenient and versatile payment option that encourages repeat purchases and strengthens loyalty between brands and consumers.
Statistics show that in 2023, 43% of gift card users exceeded the gift card's value by an average of £10, accentuating the potential for retailers to generate additional revenue from the uplift spend with gift cards.
As embedded finance shakes up the retail space, retailers can leverage it strategically to influence customer behaviour. For instance, as customers shop for their day-to-day needs they collect points, with a loyalty program offered by their favourite retailer, which can then be turned into stored value loaded onto a gift card.
By incentivising purchases, with loyalty programs, and rewarding customer engagement, through gift cards, retailers create a two-way relationship between spending and rewards, enriching the overall customer experience, and supercharging their strategy for customer acquisition and retention.
Distribution models for gift card solutions
As the role and application of gift cards have evolved, retailers should also consider how best to use the different distribution channels to increase the overall reach of their gift card solutions.
While many retailers already embrace first-party gift card solutions, exclusively selling their products through their own digital channels or in store, they overlook the opportunities presented by consumers' multiple touchpoints with brands.
Gartner's research indicates that 57% of retailers plan to heavily invest in IT and software in 2024 – As gift card programs are a powerful marketing tool, should the investments be assigned to expanding the program beyond owned channels?
Third-party distribution models, whether B2B/B2B2C or B2C, offer avenues for broader reach and enhanced customer engagement. From employee benefits to loyalty rewards, and malls within supermarkets, third-party distributors play a pivotal role in amplifying brand visibility and driving gift card sales.
By strategically partnering with resellers and online distributors, retailers can not only extend their product reach, but also nurture brand loyalty and customer acquisition beyond in-house channels. Choosing the optimal distribution strategy is becoming increasingly important to provide convenient options to consumers, elevate brand presence, and maximise the efforts of gift card initiatives, ensuring sustained growth and competitiveness.
In essence, the goal is to place the right product, in the right channel, to acquire new customers and build brand loyalty, beyond the traditional first-party model.
What to consider when adopting a distributor model
When adopting a distributor model for your gift card solution, it's crucial to weigh several factors to ensure a smooth and successful integration.
Here are some key points to consider:
Costs and commission strategy: Rigorously calculate the costs involved and arrange a commission strategy beneficial for all parties involved to ensure that the cost of sale doesn’t outweigh or erode your revenue.
Clear terms of use: Define clear terms of use to maintain brand consistency and integrity in how your gift cards are presented and sold.
Technical resources and investment: Adopting new distribution channels creates more work for your staff - finance teams have to manage funds and technical teams need to engineer the integrations with the various distributors. It’s important that you assess the internal resources and capital investment required for integrating with multiple distributors, processors, and resellers to provide a seamless purchasing and redemption experience to consumers.
Processing expertise: Managing gift card transactions when working with third-party distributors, requires configuration, maintenance, and regular testing to guarantee smooth working. Make sure you are comfortable handling the technical complexities associated with multiple API integrations and ensuring the gift card redemption logic is correctly applied.
Data security: As you expand across multiple channels, prioritise platform security to safeguard sensitive card data, and ensure valid checks are in place to prevent fraudulent use.
Design products for the future: Your gift cards serve as mini-billboards, and once distributed to third parties, they can be hard to withdraw or recall. Ideally, you should design gift cards with longevity in mind, considering evergreen terms and brand artwork.
By carefully considering these aspects, retailers can navigate the complexities of adopting a distributor model and optimise the effectiveness of their gift card program in driving brand growth and customer engagement.
How to expand your gift card program with Edenred Payment Solutions
Recognising the growing opportunity of boosting gift card initiatives, Edenred Payment Solutions empowers retailers to expand their programs easily, unlocking avenues for enhanced revenue streams and heightened customer acquisition.
We handle all the technical complexities, with gift card processing that support omni-channel distribution, ensuring a dynamic and integrated approach to driving business growth. Our own in-house processing platform, with high uptime and disaster recovery functionalities, guarantees uninterrupted transaction processing – So, you can have the confidence that everything will work smoothly, from gift card activation to redemption across all channels.
By partnering with Edenred Payment Solutions, you gain direct access to a vast network of third-party distributors, including industry titans like Blackhawk Network and Incomm - leaders in gift card distribution across B2B and B2C channels, Tillo - an agile aggregator of gift card content, servicing 100s of distributors and fintechs, and Hemmingways - an expert in gift card technology, producing transactional websites for gift card sales and fulfilment.
You can also take advantage of the expansive Edenred ecosystem, which includes Reward Gateway for employee benefits schemes and B2B incentives – all without the complexities of managing technical integrations through our API-based solutions for rapid set up.
At Edenred Payment Solutions, we prioritise flexibility and efficiency for our customers, offering additional features that make building, scaling, and enhancing gift card programs easier. From physical and digital gift cards to analytics tools, and on hand Service Managers ready to support you – we have a solution for every step of your journey.
20 years of industry expertise and gift card processing for major brands
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In conclusion
Gift card solutions are a great asset to retailers, offering a potent blend of customer engagement, brand loyalty, and revenue generation. However, while first-party distribution channels provide a solid foundation, relying solely on them limits the reach and impact of these initiatives. In today’s fiercely competitive retail landscape, exploring alternative distributor models becomes imperative to maximise the efficacy of these programs.
Level up your gift card solution
With Edenred Payment Solutions as a trusted partner, retailers can unlock the full potential of their gift card initiatives, by leveraging our expertise and resources, to drive customer engagement and foster lasting brand loyalty.
