September 30, 2013, 2:13 PM

Home Depot offers the best online gift card program, a study says

Sephora and Starbucks also score high in the RSR report.

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The Home Depot Inc. operates the best e-gift card program among the 99 retailers and restaurant chains analyzed by research and advisory firm Retail Systems Research LLC for a new report that is set to be released tomorrow at Shop.org’s Annual Summit in Chicago. RSR provided the report exclusively to Internet Retailer.

The study, which digital gift card provider CashStar sponsored, analyzed digital gift card purchases made in July and August. It evaluated the programs offered by retailers and restaurants using 21 criteria, including whether consumers can easily find the gift cards on the merchant’s web site and how easy it is for recipients to redeem the cards.

RSR used a 3-point scale to rate merchants on each of its 21 criteria, which meant the best possible score was 63 points. Here are the top three merchants, along with their rankings in the 2013 Top 500 Guide, and point totals:

• Home Depot, No. 46, 54 points

• Sephora USA Inc., No. 144, 48 points

• Starbucks Corp., No. 454, 48 points

The Home Depot scored well because the retailer makes its e-gift card easy to find—it features a Gift Cards button at the top of its e-commerce site, near its shopping cart—it offers multiple gift options, including the ability for multiple consumers to send a friend one gift card, and because its e-gift cards are easy to personalize, RSR says.

The report also praised Sephora and other retailers that can deliver an e-gift card quickly. The report says that when RSR sent a Sephora e-gift card it arrived in the recipient’s inbox in “near real time.”

While many retailers can still improve, the report finds that merchants’ digital gifting programs are improving. Retailers such as Home Depot and Sephora have recognized that digital gifting differs from traditional online product sales, the report says, and have taken steps to make electronic gift cards more convenient to buy and use. For instance, many merchants have streamlined the checkout process to include fewer screens, added personalization capabilities and made it easy for shoppers to redeem the e-gift cards when using tablets or smartphones.

However, while e-gift cards are becoming more common, many retailers and restaurants still do not sell them. The study found that 69 out of the 99 merchants studied sell e-gift cards, up from 59 in 2011, the last time RSR did a similar analysis.

Retailers that don’t sell digital gift cards miss potential sales, according to the report. For instance, neither American Girl nor Lego Brand Retail Inc. sells e-gift cards. That is “almost inexcusable,” RSR says in the report, because widely dispersed family members might want to send gift cards to each other and e-gift cards are “probably more secure and convenient” than sending a physical gift card in the mail.

Lego is No. 141 in the Top 500 Guide. Neither Lego nor American Girl offered immediate comment.

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