Report: Merchants' Investments in Digital Gift Card Programs Paying Off

As part of the 2019 Merchant Gift Card E-Commerce Evaluation, a comprehensive report produced by Blackhawk Network, a company that delivers branded payment solutions through the prepaid products, technologies and network that connect brands and people, in partnership with NAPCO Research (NAPCO Research and Total Retail both are brands of parent company NAPCO Media), a cross-platform evaluation was done to assess 150 leading brands across 108 unique criteria. For this third annual report, the number of brands evaluated was increased from 100 in previous years to its current 150.

Furthermore, the number of criteria for which each brand was evaluated was also increased, from 100 to its current 108. In addition to the 100 criteria included in last year’s evaluation, new criteria in the 2019 research included an expanded assessment of the use of gift cards as a promotional tool as well as customer service response time on social media and email.

This study is particularly relevant given the increasing consumer demand for gift cards — both physical and digital. Surpassing the 5.1 percent increase in overall holiday retail sales, consumers spent 7 percent more on gift cards during the 2019 holiday season than they did in 2018. The growth was supported by double-digit increases in e-commerce and new gift card formats.

This data confirms that consumers are in the market for gift cards, and they're increasingly looking to purchase them online, whether it be a merchant's desktop website, mobile website or, in some cases, mobile app. However, just like across any other product category, in order to capture their share of that demand, retailers must provide a seamless purchase journey for its gift card customers, particularly online.

How are they doing in that regard? In 2019, the average score for the 150 retailers evaluated was 41 percent (of the total possible points across all criteria), down from an average score of 44 percent in 2018. However, there’s an important distinction to be made here: there were 55 new brands evaluated in this year’s report. The average score for those 55 brands was 36 percent, which dragged down the overall score for all merchants evaluated. In fact, for the 95 brands that were also in the 2018 study, the average score was 44 percent, the same as the overall average in 2018. Therefore, there’s not as much slippage in performance as the overall average would suggest.

Amazon Wins Again

As for the performance of individual merchants, Amazon.com is at the top of the overall rankings. Amazon took the top spot (for the third consecutive year) by earning 76 percent of the total possible points across all criteria. Rounding out the top five were Williams-Sonoma (74 percent), Cinemark (73 percent), AMC (72 percent), and a two-way tie for fifth place between L.L.Bean and Sephora (both 71 percent). Amazon and Sephora racked up their third straight appearance in the top five, while Williams-Sonoma appears in the top five for the second consecutive year.

The merchants that recorded the biggest improvements year-over-year include:

• L.L.Bean, which posted a 23 percent increase in percentage of total points captured;
• The Honest Co. (15 percent);
• Bass Pro Shops (13 percent);
• Target (12 percent); and
• Outback Steakhouse (11 percent).

However, those gains are offset by the fact that more merchants saw their overall score decrease year-over-year (43 in total) than those that increased their score year-over-year (41 in total). (Eleven brands’ scores stayed the same year-over-year, while 55 new companies were added to the assessment for the first time in 2019.)

Areas of Improvement

When comparing the 2019 data vs. the 2018 data, there were several areas of evaluation in which merchants showed improved performance. These included the following:

• Discoverability: Overall, the average score for discoverability was 57 percent of the total available points earned, up from 55 percent in 2018. Improved performance in discoverability on merchants’ websites, both desktop and mobile, is helping to compensate for their struggles in this area within their mobile apps.
• Self-Use: An increasing number of consumers are purchasing gift cards for their own use. Furthermore, consumers are spending more, on average, for purchases of self-use gift cards ($51.93) than they are for gifting ($47.91). Therefore, it’s important that merchants promote this offering to consumers. Thirty-one percent of the merchants evaluated provide a simplified purchase flow for people buying gift cards for themselves, up from 25 percent in 2018.
• ADA Accessibility: While merchants are beginning to show improvement in making their e-commerce gift card programs compliant with the U.S. Department of Justice’s Americans with Disabilities Act (ADA) Standards for Accessible Design, there’s a lot more work that still needs to be done. Twenty-five percent of the merchants evaluated had zero ADA violations, a marked improvement from 2018, when only three brands could make that claim. However, the largest segment of merchants, 36 percent, had between six to 10 ADA violations on the gift card checkout page we assessed.

Conversely, there were criteria categories in which the merchants evaluated saw performance decline year-over-year. For example, brands did less to capitalize on the B-to-B gift card opportunity in 2019. The overall average score in this category, 39 percent, represented a 10 percent drop from the 2018 overall average score. However, this number is lower due to the performance of the 55 new merchants evaluated in the 2019 report, which earned just 22 percent of the total points available for the B-to-B category.

In addition, merchants’ performance for gift card flexibility offering ticked slightly down in 2019 (34 percent of total available points captured vs. 35 percent in 2018). It’s important to make the e-commerce gift card buying experience as convenient as possible for consumers across channels and throughout the purchase journey. For example, enabling self-use purchasing; giving the option to designate delivery timelines; among other convenience offerings.

You can access the full report, 2019 Merchant Gift Card E-Commerce Evaluation, which includes the rankings of all 150 merchants (including broken down by product category) as well as more valuable trends and tips gleaned from the data. In addition, you can learn the full study methodology, including all the details on when and how the data was captured, in the full report.