Versatile, high-tech digital gift card sales are going strong for this year’s holiday season, but in the latest sign that plastic cards many never die, eBay has partnered with gift card giant InComm to sell traditional gift cards online that will take up to 10 days to arrive by mail.
Through a new eBay storefront online dubbed “Cardency,” InComm is selling gift cards from diverse merchants that include Darden Restaurants’ Olive Garden, Bass Pro Shops, Kmart and AMC Theatres, in denominations ranging from $25 to $100. InComm and eBay are sharing revenues from the venture, but did not disclose further details.
The move marks the first time InComm is marketing gift cards on eBay, and the first time InComm has sold gift cards directly to consumers, said Mike Fletcher, InComm’s general manager of digital solutions. Atlanta-based InComm has a broad presence in the gift card industry, both in plastic and digital, or virtual, gift cards. InComm also markets loyalty, rewards and incentive cards, consumer bill-payment and other business-to-business payments.
Though gift cards can be found at thousands of U.S. supermarkets, mass merchandise outlets and convenience stores, gift cards also are among the top 10 search items on eBay, according to Fletcher. That data presented a tempting business opportunity for the Atlanta-based company. “There’s a whole lot of demand for digital gift cards, but plastic, physical gift cards are far from dead. And people look for them through every delivery channel,” he said.
About 60% of Americans said they want to receive a gift card this holiday season, according to data from the National Retail Federation, which conducted a survey in October among 7,276 U.S. consumers. And while sales of digital gift cards are growing about29% annually, digital versions still account for less than 10% of all gift cards sold, according to the Retail Gift Card Association. InComm’s own data suggest younger consumers increasingly prefer digital gift cards, which are quicker to send and easy to redeem with smartphones.
The eBay data could reflect research showing that a growing proportion of the population prefers to do most, or all, of their shopping online. But another reason eBay may be seeing heavy searching for gift cards online isthe lure of the secondary market for unwanted or partially used gift cards, according to Ben Jackson, a director at Mercatory Advisory Service. “People often sell gift cards on eBay and Craigslist, and it’s a buyer-beware kind of situation where a certain amount of fraud thrives,” said Jackson. “It makes sense for eBay to direct consumers looking for gift cards to legitimate sources.”
InComm recognizes that people come to eBay looking for deals on gift cards, so it’s seeding its gift card offers on Cardency with promotional offers not necessarily available elsewhere, Fletcher said. Examples include 10% off the face value of a gift card, or two for one, he said.
InComm’s eBay deal also underscores the conundrum is that while much shopping is going digital, many consumers still prefer the tangible form factor of a plastic card when giving someone a gift. “A lot of people giving a gift still want it to be a tactile thing, and the plastic card works for that,” Fletcher said.
Finding a solid deal on an InComm gift card online may be easier now through eBay, but payment and delivery through that channel are clunky. PayPal is the only payment option Cardency offers, and there is a $1 delivery fee for each card, which is sent to recipients via first class mail. Cardency warns buyers it may take eight to 10 business days after the order for the shipment to arrive, and it offers a tracking service to determine the delivery date.
InComm execs declined to share their sales forecasts are for the new eBay venture. But Mercator’s Jackson said InComm’s willingness to explore direct-to-consumer gift card sales is wise during a time when online commerce technology and consumer behavior are shifting. “InComm is a very diversified company, and their willingness to try new things and innovate is a positive,” he said.