Understanding the Evolving Secondary Gift Card Market

Moderator: Loraine DeBonis, Editor-in-Chief, Paybefore Panelists: Scott Rodning, Senior Manager, Marketing Operations – Gifting Solutions, Best Buy Shaun Krusmark, former Director of Gift Card Sales, Claim Jumper Restaurants Marc Gendron, VP of Business Development, Plastic Jungle

Fact: The Secondary Market is Here to Stay Dozens of exchange Websites enable consumers to buy gift cards at a discount and/or exchange their unwanted gift cards for other gift cards, purchases at other online stores, a check or even bill payment. Goal: To tap into the estimated 10 percent of gift cards, roughly $9 billion 1, that go unused each year. 1 Plastic Jungle statistic.

Common Retailer Concerns Fraud - Will consumers get a card already drained of value or a card purchased fraudulently? Cannibalization – Won’t the secondary market decrease my gift card sales? Brand - How will my brand be presented/protected? Discounting - Will I have to sell discount cards in bulk? Customer Experience - Will customers have a bad experience that could negatively affect my brand?

How Secondary Market Can Benefit You Boosts gift card redemptions (increased foot traffic and lift 25-75% 2 ) Reduces breakage Plastic Jungle survey results show that consumers have a more positive impression of retail brands when they are given the flexibility to either sell a brand’s gift card for cash or use it at another online retail store. 2 Plastic Jungle statistic.

Self-Use vs. Gifting 70+% of Plastic Jungle users are exchanging or buying gift cards for themselves 80% redeem card within two weeks Average lift of 30% Rich data about a motivated consumer Ability to deliver marketing messages that affect redemption behavior

Leveraging a New Channel Attract Motivated Customers – Pull cards out of the hands of people who won’t use them and into the hands of those who will Gain Insight into the Secondary Market – Obtain visibility into the cards that pass through the marketplace Drive Sales – Generate unique store visits, sales and corresponding lift Create a New Channel – Leverage exchange for new card sales

Picking the Right Partners Talk to your processor. Are they already integrated with an exchange site? Due Diligence. How does the site work? How does the site prevent fraud? Are consumers satisfied? Multiple partners. Consider working with more than one trusted exchange site to maximize secondary market benefits.

Selling the Secondary Market Internally Obtain ROI figures on gift cards that pass through exchange Leverage interest/concerns with LP department Demonstrate ability to gain greater control/visibility

Final Thoughts Secondary gift card market will continue to grow. Retailers can leverage this new channel but must perform due diligence on potential partners. Q&A