Plastic Jungle Inc. likes the idea of letting other companies help promote its gift card exchange service.
The San Mateo, Calif.-based firm is in talks with an undisclosed number of merchants about plans to offer its gift card exchange services directly through their stores and websites, Bruce Bower, the firm's CEO, tells PaymentsSource.
The firm in March ventured into its first foray into third-party marketing with a partnership that enables certain U.S. Bancorp credit card customers to convert unwanted or unused merchant gift card balances into the issuer’s FlexPoints rewards points (see story). So far, results from that effort are generating "good consumer interest" and illustrate the power of promoting Plastic Jungle's gift card exchange service to new audiences through other companies' marketing channels, Bower says.
"We want to do more of this, pushing our ability to convert gift cards into other currencies out to where other partners can host these services directly and more consumers will learn about it," he says.
At least one marketer in the travel industry already is testing offering Plastic Jungle's gift card exchange service on its website to enable consumers to convert unused gift card value from all types of merchants to its own travel points, Bower says. He declines to identify the company.
"We're in talks with a variety of companies that may want to offer the service under our name or under their own names," Bower says.
Consumers with unused gift cards visit a prospective partner's website and click on an icon to exchange a gift card, then supply the name of the merchant gift card and the gift card number.
Plastic Jungle validates the card and the value remaining, and uses a proprietary algorithm to determine the number of points or dollars the balance is worth, minus a share for Plastic Jungle. In such cases, the consumer typically receives 80 cents on the dollar of a gift card’s face value, Bower says.
If the consumer accepts the offer, Plastic Jungle immediately converts the equivalent amount of value for merchandise or services at that company's website or store, Bower explains.
Merchants appreciate that the gift cards exchanged brings customers to their stores more quickly to make purchases above and beyond the gift card amount, he says.
Analysts see positives in Plastic Jungle's strategy, if executed properly.
Because shoppers often earn rewards points through various programs for buying gift cards, it figures they may want to trade in unused gift card value for a particular merchant's rewards points, Ben Jackson, a senior analyst at Mercator Advisory Service, tells PaymentsSource.
"If a gift cardholder is close to a redemption level with a particular program, he or she might trade that card in to get to the finish line," Jackson suggests.
To succeed at this, Plastic Jungle must gather enough rewards-program partners so the exchange appeals to a broad base of potential users, he says. The exchange rate also must be attractive enough to lure participants with relatively small balances, Jackson adds.
And Plastic Jungle must find a way to "educate consumers that this option is available and teach them how to make use of it," he says.
The key is in the value proposition merchants offer consumers, contends Madeline Aufseeser, an Aite Group analyst.
"I think there is opportunity here" as long as Plastic Jungle and third-party marketers offer consumers a good deal, she says. "The consumer would need to see a higher value for a noncash type transaction in order for it to be worthwhile over and above just taking the money of the card."
U.S. consumers have an estimated $40 billion in combined unused gift card value available in their wallets and desk drawers, Bower says.
"A lot of consumers holding a gift card that doesn't quite work for them would like to convert it into something they can use, and we want to push awareness of that option," he says.
What do you think about this? Send us your feedback. Click Here.