Build it or buy it? How to approach selling gift cards online

It’s taken some time and painful mistakes along the way, but retailers and businesses have now increasingly realised that purchasing a gift card online doesn’t fit very easily within the traditional website checkout process.

A finger on an iPad with an illustration of a shopping trolley alongside

The majority of today’s shoppers are pretty familiar with shopping online. In fact, in 2021, over 2.14 billion people shopped online. That’s 27.6% of the world’s total population! And because we can purchase pretty much anything online and are continuously bombarded with an enormous amount of choices, our tolerance for a bad checkout process is pretty low. The average cart abandonment rate is just under a whopping 70%, meaning that around seven out of 10 shoppers won’t complete their transaction.

For online retailers to stay up to speed with competitors when selling gift cards online and keep their shoppers from clicking the dreaded ‘X’ button, their checkout process needs to be simple, smooth and efficient. And this has been somewhat of an issue in the past when selling gift cards…


The dilemma

Put yourself in an online customer’s shoes. They want to purchase a coat from your clothing website. They add their desired product to the basket, proceed to checkout, enter their card and delivery details and complete the order. Simple.

Let’s say that they also want to purchase a gift card for a friend or family member. They add the gift card to their basket and you now need to take additional details from them before they can proceed to the checkout. Which design of gift card would they like? What value do they want to load onto the gift card? Do they want to add a gift message? Is this being sent to the delivery address or email address associated with the coat purchase or directly to a lucky recipient? Is it to be sent immediately or delayed until a later date?

In short, it quickly becomes clear that a gift card is a very different type of product. Therefore, it should not be approached in the same way as other products and integrated into the normal checkout process. Even if your customer is only purchasing a gift card on your website as a standalone purchase, a gift card requires an entirely different customer journey from the one offered with a normal online checkout.

This dilemma throws up a very important question. When selling gift cards online, do you shoehorn gift card sales into your own website and run the gauntlet of these issues, or do you outsource to a specialist third-party provider instead?


Developing in-house: pros and cons

If you want a job done properly, do it yourself right? Or do the nuances of selling gift cards online require that expert touch? Let’s discuss the pros and cons of choosing to sell gift cards ‘in-house’ via your own website platform.

It costs less

The biggest perceived advantage is lower cost. Theoretically, you absorb an upfront build cost and then it more or less has no real running costs. It’s fixed. The outsourced model on the other hand will have ongoing recurring costs, while in-house is a one-off cost that you won’t have to worry about unless you decide to make changes and improvements over time.

Flexibility and freedom

By taking the development in-house, you can enjoy the flexibility and freedom of doing everything yourself. You can boundlessly customise how the customer journey will look and feel without having to accept an outsourcing platform’s template. You decide how much money to put into the project and set the deadline for completion.

Of course, there are downsides to doing it all yourself. If things go wrong, it’s very much your problem to solve. Even regular maintenance can quickly become a time and money pit. However, if you have a solid brand and feel strongly about being in control of this, developing in-house may be the more attractive option.

Increased exposure to fraud

Unfortunately, developing in-house offers you a lower level of fraud protection against fraudsters using your gift cards as a way to launder stolen credit cards and illegal funds into third-party items. This is a huge advantage of outsourcing as you transfer the risk and sleepless nights to your specialist partner. Luckily they sleep pretty well as they are built to combat this better than almost any retailer can hope to match.

To explain this point better, let’s take Payment Service Providers (PSPs) as an example. At one point in time, it was optional for retailers to use PSPs on their websites. By using a PSP, retailers were outsourcing their credit card acquiring risk to a third-party company that could not only guarantee that they would be Payment Card Industry compliant but also be able to spot any fraudsters and ensure the retailer would stay protected.

This obviously came at a cost to the retailer. Those who didn’t want to pay that cost believed they could protect themselves against fraud. Unfortunately, they soon learnt the hard way that they couldn’t. Fraudsters hunted down those retailers not using PSPs and targeted them with painful hacks where customers’ credit and debit card details were leaked from inadequately protected systems.

Today, no one uses in-house credit card strategies anymore. The very idea is almost laughable! PSPs have proved themselves as the only way to stay safe whilst taking payments online and the same can possibly now be said for the outsourced eGift card providers.


Outsourcing development: pros and cons

So, what about the other side of the coin? Developing in-house comes with its own set of challenges but is outsourcing really the better option? Let’s take a look at the pros and cons.

High security

As previously mentioned, outsourcing your online gift card sales to specialists is by far the safer option. These providers have curated their software to offer the highest level of protection and they are so confident of this, that they take all responsibility for any fraudulent activity. Should anything go wrong, they take the hit and not you. You’re protected.

This level of financial protection as a retailer really is worth its weight in gold. These businesses depend on keeping their systems (and therefore you) airtight and 100% secure.

Fully optimised customer journey

The outsourced providers’ entire R&D budget is focused on their platform to continually drive gift card sales – the in-house approach can’t hope to keep pace with that level of focus. As a retailer, you’ve got 101 things on your radar. Ensuring that your online basket customer journey is continuously optimised and up to date just for gift cards possibly won’t always be high up on that to-do list. However, when you use an outsourcing platform, this is a permanent number one priority.

Think about it – these platforms exist solely to help you sell gift cards. It’s their area of expertise! They do everything they can to add value by giving your customers the best purchasing journey possible and this is always evolving to meet increasingly demanding consumer expectations. New consumer trend on the horizon? Outsourcing platforms are likely to be the first to develop it and embed it into the platform. This means you get access to the latest features and capabilities automatically.

They’ll know exactly the right process to offer when both purchasing and receiving gift cards along with presenting how a gift card is sold and understanding the optimum amount of steps a buyer should go through when purchasing in order for you to secure the highest conversion rate and stay in-line or ahead of your competitors.

Ongoing costs

The only potential downside to opting to outsource is the ongoing costs associated, whether that’s subscription-based costs or performance-based costs where you will have to pay a commission on your gift card sales. You may also find yourself paying for platform upgrades and additional features over time although many outsourcing platforms will automatically add some of these free of charge.

Building the solution in-house can be the cheaper option – but will a potentially subpar digital gift card process cause your cart abandonment rates to rocket and your gift card sales to drop? Will your internal fraud solutions be robust enough to protect you? Will you suffer higher than necessary failure rates from accidentally rejecting genuine cardholder payment details? This is something that must be considered when retailers are weighing up whether outsourcing is worth the investment.


Which option is right for you?

In today’s gift card landscape, outsourcing is now almost always the best option. The pros totally outweigh the cons. You’ll save yourself some potentially enormous mistakes and security breaches by relying on a third-party company that is built to protect you from this risk.

In fact, two out of three of the largest UK retailers are now estimated to follow the outsourcing model. This is evidence enough that as the market has grown and the retailers are selling more cards than ever – particularly online – retailers have embraced the outsource model for the advantages it offers in a continually scaling situation, whilst being highly sensitive to fraud and evolving enhanced customer journeys.

Let’s face it – you can’t always do everything well! Why not focus on your core business of being a retailer and opt for the outsourcing option? By working with us here at Savvy, you can access our connections with the best outsourcing providers. They will work with you to ensure that you are offering the best possible gift card experience for your customers when selling gift cards online, all whilst protecting your business and your customers.

Interested in learning more about working with us and how you can win with Savvy? Get in touch to request a callback and let us put you on the road to success!

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