October 6, 2010, 1:40 PM

Home Depot, CVS and Amazon are tops for online gift cards

A study ranks digital gift card programs from Internet Retailer’s Top 100 web merchants.

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A study of the gift card programs of the Top 100 online retailers in the Internet Retailer Top 500 Guide finds only 50 offer digital gift cards.

Among those, the five digital gift card programs rated as best by research and advisory firm RSR Research were: The Home Depot Inc., No. 39 in the Internet Retailer Top 500 Guide, CVS Caremark Corp. (No. 73), Amazon.com Inc., (No. 1), American Eagle Outfitters Inc. (No. 51) and Sears Holdings Corp. (No. 8).

The study, conducted by RSR Research and sponsored by digital gift card company CashStar, analyzed digital gift card purchases made in July. It evaluated the retailers’ programs using 20 criteria including comprehensiveness of the offering, selection, the purchase process and the recipient experience.

Because only 50 of the Top 100 web retailers offered digital gift cards, many missed prime sales opportunities, according to the study.

For example, Sony Style.com (No. 13) which has a tech-savvy demographic, does not offer digital gift cards, the study finds. Apple Inc. (No. 4), another retailer known for technology, had limited offerings, with cards only in set denominations and only as plastic cards, not cards that could be sent via e-mail. Urban Outfitters Inc. (No. 53), which targets teens and young adults well-versed in digital offerings, also has no digital card offering.

Victoria’s Secret (No. 18) meanwhile could be turning off its gift card purchasers by sending as many as two e-mail offers to gift card purchasers each day, which could be perceived as spam, the study says.

Gift cards are an important tool during the holiday season, separate research from Internet measurement firm Experian Hitwise finds. It recently reported that gift card promotions in holiday e-mail marketing messages more than tripled conversion rates for multichannel retailers last year.

Despite their importance, many retailers in the RSR Research study made gift cards extremely difficult to find. For example, gift cards at Shutterfly Inc. (No. 67) and The Neiman Marcus Group Inc. (No. 41) could only be found on the site after researchers typed “gift card” into site search. And 10 retailers only offered online redemption, even though they also operate bricks-and-mortar stores.

Additionally, most retailers did not enable easy multiple purchases and only five actively pursued bulk purchases of gift cards—even though giving gift cards during the holidays as employee rewards and to business clients is a fairly common practice for corporations. Amazon, Recreational Equipment Inc. (No. 62), Home Depot, CVS Caremark and Nike Inc. (No. 48) actively marketed bulk purchases, RSR Research found.

In the RSR Research study, 32 of the 50 retailers with digital card programs did not offer flexibility or control over gift card delivery, and many did not tell shoppers when a gift card would be delivered until after it was purchased. Such policies could divert gift givers who want to get a gift purchase out of the way early. Amazon did best with delivery, enabling shoppers to choose a date and approximate time of delivery.

“Gift cards are such an important retail staple, yet many retailers’ offerings have not evolved to keep up with the changing needs of today’s consumer. We were surprised that gift card offerings were often hard to find, difficult to navigate, and lacked follow-through for both the sender and the recipient,” says Nikki Baird, managing partner at RSR Research. “This is an enormous missed opportunity for retailers, especially as we enter the most critical gifting season of the year.”

Baird adds she did not expect to see that many retailers offering gift cards on their web sites fail to extend the offer to their mobile sites and apps.

“We were really surprised that even retailers who have mobile commerce and who have gift cards available for online purchase did not tend to make gift cards available for sale via mobile,” she says. “There were only a few exceptions to this.” Target is a good example, she says, in that the retailer lets shoppers check a gift card balance and redeem a card through Target’s iPhone app, but do not let mobile shoppers buy a gift card through the app.

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