CashStar Inc., an online gift card program provider exclusively affiliated with Coupons Inc., recently launched its e-gifting, marketing and promotions platform. The platform allows e-commerce sites to provide interactive, virtual gift cards to its customers.
David Stone, Chief Executive Officer at CashStar, said its e-cards differ from competing products because consumers can customize virtual cards with images and messages of up to 160 characters and e-mail them to recipients. The virtual cards can be redeemed online or in-store. The e-mailed cards are given bar codes, so when recipients print them out and go to physical stores to redeem them, store clerks scan the bar codes like other purchases - a feature Stone said retailers "really like."
According to Stone, several top-tier, brand-identifiable retailers have already signed up for the program, including Gorham Bike & Ski of Portland, Maine., Pizzeria Uno Corp's Uno Chicago Grill and Altour Incentive Management's Travelocity Incentives.
Uno Chicago Grill reported its gift card sales more than doubled in the last two weeks of December 2008.
That supports Stone's contention that 85 percent of gift cards are redeemed three to six months after they are received. And when recipients use their gift cards online, they spend on average 60 percent more than the gift cards' face value.
In research conducted by its subsidiary, NCH Marketing Services Inc., Valassis Communications Inc. reported that couponing is back in vogue due to the flagging economy. It found consumer packaged goods (CPG) coupon redemption in the fourth quarter of 2008 increased by 16.7 percent compared to the same quarter in 2007.
As consumers save money by taking advantage of ad inserts and hoarding their receipts for two-for-one deals at the grocery store, Valassis predicts online purchasing will increase in 2009. Online CPG coupon distribution was up more than 80 percent in 2008, according to the report. Additionally, redemption volume of online coupons increased nearly 130 percent to 4.8 percent of all CPG coupons redeemed in 2008.
Stone believes CashStar's affiliation with Coupons holds the year-old company in good stead. Coupons - said by Stone to be the largest coupon management company in the world - "incubated" CashStar. Coupons.com gets "15 million unique visitors a month," Stone said. "They're a top 50 Web site and it's growing 30 percent a month because of this economy."
Therefore, CashStar markets its service through Coupons.com. The combination of the couponing function with virtual gift cards, "creates a lot of opportunity for lift management, marketing," Stone said. "And because it's in a digital format, [retailers] can also use it for rewards or incentives."
In conducting research, CashStar realized the majority of gift cards were purchased from brick-and-mortar stores. But CashStar also discovered a high percentage of those gift cards were purchased as last-minute gifts, and 34 percent of the time those gift cards were given to people who lived more than 50 miles away from the purchasers.
"It seemed to us that the online channel made a lot of sense for innovation in this market," Stone said.
Another factor at play is the amount of waste associated with plastic cards. According to Stone, 80 percent of them are thrown away after use - accounting for 100 million pounds of landfill nationwide.
So the virtual gift card solution saves on the petroleum used to produce cards and to power automobiles to get consumers to stores to purchase them, he added.
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