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Gift Cards, Vouchers & DigitalUK & USA Trendsetters
Andrew JohnsonCEONational Gift Card Corp Europe
Who am I and what qualifies me to be here?
• Over 15 years’ experience
• Started ‘voucher’ career at Virgin Group
• Former Director General, UK Gift Card & Voucher Association
• Worked on gift card, voucher and digital programmes for the likes of Starbucks, Primark, TK Maxx, National Trust, Argos
Andrew has been a judge on various
awards including the Paybefore Awards
USA & Europe
For 10 years Andrew owned his own gift card consultancy
practice
Andrew’s ‘worst’ gift card moment was a live interview on the
BBC consumer programme, ‘Watchdog’
In 2015 Andrew was awarded the
UKGCVA ‘Hall of Fame’ Award
Why me?
• National Gift Card Corporation (NGC) originated in Chicago in 2004
• One of the leading US agencies providing gift card solutions
• Branches in Canada and Europe
• NGC created ngcEurope in September 2014
• NGC offers products and services to clients across the world
In November 2014 ngc USA loaded its one billionth dollar
onto a gift card
ngcEurope launched its first end to end digital gift card in
November 2014 for The National Trust
ngc USA currently offers over 130
Digital Gifts, with more added every
month
Over 60 European incentive agents
work with ngcEurope
White-Label Gift Card, Voucher
& Digital Solutions for Brands
Providing one or more of these services• Sales & marketing of your branded gift cards
& digital to businesses on your behalf -
representation
• Creation and management of the branded
gift card website for B2B and / or B2C sales
• B2B fulfilment of gift cards & digital
• B2C fulfilment of gift cards & digital
• Customised, detailed finance and sales
reporting
A One-Stop Shop for a Range of Gift Cards & Digital
Codes
Products
• Gift Vouchers and Gift Cards• Retailers / issuers own gift cards or vouchers.
• Tender Types (pre paid cards)• Many of the incentive agencies now offer their own card and gift voucher, examples include the
p&mm Spree card and the Grass Roots Pure card along with the Grass Roots Bonus Bond (voucher) and the Edenred Capital Bond (voucher). These are redeemable at a number retailers and are accepted by retailers as a tender type and are recorded as such through EPOS systems. A number of new opportunities are emerging in this prepaid card sector. This type of prepaid card are likely to be utilised by loyalty scheme providers (particularly in the finance sector) over the coming years. Cards will use ‘ride the rails’ of Visa or MasterCard.
• E-vouchers & M-vouchers• Emerging as the next big innovation in the industry, e-vouchers available to download from
websites and m-vouchers which are delivered via mobile phones either through SMS, MMS or applications for iPhones and Android handsets. In the USA the surge in mobile vouchers has been driven via consumers, in the UK it is the B2B sector that is the catalyst for growth.
7
Closed loop gift cards, vouchers & digital
2015Approx. revenues:
USA $313bnUK £5.4bn
Web Sales15% increase in
sales of plastic gift cards or vouchers via a website first
half 2015Online gift card
sales remain strong but real divergence into digital means online becomes
essential
Gift Card Malls
22% increase in sales of plastic gift cards via gift card
malls first half 2015
Mall sales starting to plateau with ‘near
saturation’ of market
£2.2bn B2B opportunity
According to the UK Gift Card & Voucher Association (UKGCVA) in 2014 the UK market for gift cards and gift vouchers was worth £5.4bn. 50% of this revenue was gift cards and vouchers sold to companies for business use including staff motivation, employee benefits, consumer loyalty reward programmes, insurance replacement and Christmas savings clubs.
The chart shows the industry percentage breakdowns by sector of the business to business sales.
IM – Incentive & Motivation (staff)
SP – Sales Promotion (consumers)
SD – Staff Discounts & Affinity Groups
Flex – Flexible Benefits
IR – Insurance Replacement
Save – Christmas Savings Club
LV – Legislative Vouchers
Industry %
IMSPSDFlexIRSaveLV
Source: UKGCVA
Retailers(Issuers) Distributers
Processors
Printers
Networks
Stakeholders
B2B Incentive Agents
Fulfilment Agents
Gift Card Malls
Gift CardDigital
Voucher
Method of Payment
Marketing Tool
Retailers(Issuers)
or
Gift CardDigital
Voucher
Method of Payment
Marketing Tool
Manged by Finance
Managed by Marketing
“In the USA and UK the retailers who are most successful in gift cards are those who assign gift cards to their marketing team”
Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Summary Offer range of incentive and motivational services for
employees and consumers
Dedicated fulfilment services for gift cards, vouchers &
digital
Range of gift cards sold in store and on line on
retailers
Key Benefits to clients
• Manage the whole end to end programme from design to
execution• Gift cards only small part of
their offering
• Hold stock of cards and codes so no need for client to hold stock
• Systems and processes for easy distribution
• Dedicated services• API to API services for
greater efficiencies
• Gives great choice to customers
• Revenue generation for host retailer
• Usually managed by third party who take care of end to end
process
Examples GrassrootsEdenred
BI Worldwide
NGC SVM
Voucher Express
BlackhawkInComm
ePay
Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Commercial Model
• Make money from the full range of services they offer
• Gift cards are almost a ‘sell through’ – if they can make
margin they will but generally commercial model is based on management fees from clients
• Make money from charging delivery and management
fees• Buying from retailers at a
discount or commission and reselling at high price is essential part of model
• Make money from charging commissions to those cards sold on
the malls• Additional revenues from marketing fees etc
Opportunities & Risks
• Potential to drive significant volumes
• May offer their own multi-choice product either as an
exchange model or full open or restricted loop programme
• In this service orientated world easy way for retailers,
agents and corporates to take advantage of dedicated systems and processes
• Need to drive volume to make money as low margins
• Diversification into new sectors such as B2B
offering fulfilment services from their
range of gift card stocks• Too greater range of
services offered• Saturation of the GCM
sector in some countries
Personal Future Predictions
• Will continue to grow, globalisation of employee based schemes potential
opportunity for international expansion
• Real scope for world wide distribution, particularly digital
• Greater diversification and consolidation in this
sector• Greatest scope for
offering worldwide services from one
supplier
Key Trends
Distributers
B2B Incentive Agents Fulfilment Agents Gift Card Malls
Commercial Model
• Make money from the full range of services they offer
• Gift cards are almost a ‘sell through’ – if they can make
margin they will but generally commercial model is based on management fees from clients
• Make money from charging delivery and management
fees• Buying from retailers at a
discount or commission and reselling at high price is essential part of model
• Make money from charging commissions to those cards sold on
the malls• Additional revenues from marketing fees etc
Opportunities & Risks
• Potential to drive significant volumes
• May offer their own multi-choice product either as an
exchange model or full open or restricted loop programme
• In this service orientated world easy way for retailers,
agents and corporates to take advantage of dedicated systems and processes
• Need to drive volume to make money as low margins
• Diversification into new sectors such as B2B
offering fulfilment services from their
range of gift card stocks• Too greater range of
services offered• Saturation of the GCM
sector in some countries
Personal Future Predictions
• Will continue to grow, globalisation of employee based schemes potential
opportunity for international expansion
• Real scope for world wide distribution, particularly digital
• Greater diversification and consolidation in this
sector• Greatest scope for
offering worldwide services from one
supplier
Key Trends
European Trend Difference!Cost plus models, very
little discounting or commission
Diversification
The paper voucher becomes the gift card, becomes the digital code and opens up opportunities for non-traditional high street retailers
A One-Stop Shop for a Range of Gift Cards & Digital
Codes
Restaurants
Entertainment
Online only
stores
Experiences/Days Out
Holidays & Travel
Gift Cards are no longer exclusive to high street
retailers
Inhibitors – negative trends!
Lots of opportunities in the gift card market – life is good then?
Inhibitors – negative trends!
Regulation
• VAT• Payment
Services & Emoney Directive
• Local regulation
• Escheatment• Frank Dobson• State Regulation
Inhibitors – negative trends!
Culture
• Diverse gift giving trends
• Slow progress of digital
• Awareness of environmental issues re plastic
• Much more open to cash based gifts
• Digital adoption high
• Little regard for environmental issues
Inhibitors – negative trends!
Gift Card Exchange
• Several entrants to the UK market but, to date, most have failed
• Retailers see exchange sites as negative to their brand
• Exchange sites accepted as part of overall offering
• Some retailers embracing the trend and supply additional stock – just another sales channel
Inhibitors – negative trends!
Mobile• 96% of digital
vouchers printed to take to store
• Feel the trophy value of a printed piece of paper
• Retailers’ tills cannot accept mobile redemption
• Mobile more readily available
• Retailers’ tills still inhibitor
• More open to hand keying numbers
Innovation
• New technology brings new opportunities
• Innovation in service and delivery
• Payment innovation create grey lines between open & closed loop, gifting & payments
• No longer just for the high street retailer
• Be innovative in commercial models – margins are tight!
Consolidation
• The world is shrinking, great opportunities for global services and offers
• Making money is a challenge in gift cards, margins are tight, need volume sales
• Third parties moving in to capture gift card mall, B2B and exchange opportunities
• Regulation cannot be ignored, EU or US wide
Thank You
Andrew JohnsonCEONGC Corp Group Europe Limited(NGC Europe)
Tel: 01344 987907Mob: 07904 994104Email: [email protected]
NGC Corp Group Europe Ltd, 2 The Braccans, London Road, Bracknell, Berkshire, RG12 2XH
