Report: The UK Merchants With the Best Digital Gift Card Programs

Like so many other e-commerce categories in the last year-plus, the gift card market in the United Kingdom is seeing significant growth. According to recent research from the Gift Card and Voucher Association (GCVA) supported by Blackhawk Network, the market is now worth £6.9 billion, up almost £1 billion from its previous evaluation in 2019. Furthermore, GlobalData research forecasts that by 2025, the market will have grown to £8.71 billion, and Persistence Market Research analysis states that the global gift card market is expected to increase at a compound annual growth rate (CAGR) of above 12 percent over the coming decade.

This data speaks to the opportunity at hand. Merchants with optimised, agile and targeted gift card programmes are well positioned to capture their share of this growing market, including increased customer engagement and revenue. In order to do so, it's crucial for merchants to stay up-to-date with the state of the industry as well as the performance of their own gift card programmes.

NAPCO Research, in conjunction with Blackhawk Network, conducted a comprehensive evaluation of the state of merchants’ gift card e-commerce offerings to help U.K. merchants gain accurate insights into their performance. This assessment provides benchmark data for merchants within their own verticals as well as the larger industry, enabling them to recognise and build on their strengths and improve upon their weaknesses, as well as identify areas for development and differentiation.

The assessment evaluated 50 brands across more than 100 unique criteria. Key components evaluated included the online consumer purchase and recipient experience of both digital and physical cards (e.g., payment and delivery options, ease of discoverability); business-to-business (B2B) e-commerce offerings; personalisation options; the use of gift cards for marketing initiatives; innovation; and the post-purchase experience.

The research was conducted from January 2021 through March 2021. All steps possible were taken to ensure gift card purchases typified actual consumer transactions. Our analysts went through the research and buying experience, purchasing both physical and digital gift cards when possible from each of the 50 merchants evaluated. The purchase experience was examined every step of the way in order to experience it through the eyes of both the buyer and recipient, including the use of real email and physical addresses. This was done to replicate the actual purchase experience and minimise the risk of transactions being declined as potentially fraudulent.

What the Assessment Revealed

Perhaps not surprisingly given its standing as an e-commerce leader, Amazon.com took the top spot in the rankings — and by a significant margin. Earning 85 percent of the available points, Amazon is 13 percentage points clear of its closest challenger, TK Maxx. It's worth noting that in the recent US Merchant Gift Card Omnichannel Evaluation, Amazon also topped the e-commerce rankings, demonstrating a consistently strong performance across geographic locations, a key quality in a global brand. Amazon scored above average in seven of the nine criteria categories, often significantly higher.

In addition to TK Maxx, the top five was rounded out by ODEON, the only entertainment brand in the top 10, earning 66 percent of the total available points, as well as H&M and Apple which earned total scores of 65 percent and 64 percent, respectively.

When looking at the results of all 50 merchants on an aggregate basis, the average total score was 44 percent, indicating plenty of room for improvement. As one might expect, the merchants performed best in the desktop channel, earning an average score of 48 percent. However, this was just slightly better than their average score of 47 percent for the gift card purchase and recipient experience on their mobile websites.

The channel in which the merchants struggled the most was their mobile apps. Apps earned an average score of 25 percent. Merchants routinely provided a weaker gift card purchase and recipient experience within their mobile apps than the other channels evaluated. Of the 39 merchants evaluated with apps, 20 scored 0 percent in all app criteria, with many not offering gift cards within their apps at all.

Perhaps the most significant takeaway of this report is that merchants must improve performance when it comes to the ease and experience of purchasing gift cards within their apps. Consumers that have downloaded a merchant’s app are more likely to be loyal and regular customers. By failing to populate their apps with gift card options, many brands are missing out on potential sales opportunities with people already engaging with their brands.

In a follow-up article on the 2021 UK Merchant Gift Card E-Commerce Evaluation, I will address two emerging trends revealed in the data: one, the B-to-B gift card opportunity (which not enough merchants are capitalizing on) and, two, the use (or lack thereof) of gift cards as a promotional tool. In the meantime, you can download the full report, which includes the rankings of all 50 merchants (including broken down by product category) as well as more valuable trends and tips gleaned from the data, here.