EcommerceBytes-NewsFlash, Number 3169 - October 08, 2013     2 of 4

eBay Pulls Its Gift Cards from Retail Locations

Email This Story to a Friend

Gift cards have soared in popularity among gift-givers, and you can even find a wide variety for sale on eBay. But don't expect to see eBay gift cards at retail locations. eBay confirmed it has pulled its own gift cards from brick-and-mortar stores.

After a reader said she was no longer able to find the cards, EcommerceBytes reached out to eBay. Spokesperson said Ryan Moore said, "eBay's gift cards are no longer being offered in retail locations, but can still be purchased online at eBay.com." When asked why, Moore told EcommerceBytes it was a business decision.

The reader, who called herself a prolific purchaser of eBay gift cards, had noticed the cards suddenly disappeared from the racks at her local Smith's grocery stores (a division of Kroger). "After getting contradictory answers from the customer service desk at various stores, I emailed the help desk at Kroger headquarters. They told me that eBay has discontinued selling gift cards at brick and mortar stores and is now only selling them on eBay itself."

She was stunned, writing, "This is incomprehensible to me, especially as we're starting to go into the holiday season."

Our own observations revealed that StubHub gift cards were available locally, as were Amazon, Facebook, Google Play and many other cards for retailers, restaurants, phone minutes, iTunes and games. But eBay cards were nowhere to be seen at our local grocery stores, office-supply stores or drugstores.

eBay first launched gift cards in 2007 through a distribution deal with the Blackhawk Network, a subsidiary of Safeway and the largest provider of third-party prepaid cards. The eBay gift cards were available in stores and supermarkets nationwide in denominations of $25 and $50; consumers were required to have a PayPal account linked to their bank account or credit card in order to redeem the cards.

Gift cards aren't just about offering shoppers convenience - it's about acquiring new customers. Since the card partner must share revenue with the distributor, Blackhawk Network, and the distribution partner (i.e., retail store), it can be considered a marketing expense.

Teri Llach, CMO of Blackhawk Network, said gift cards use a shared revenue model - percentages vary depending on the program. Some distribution partners want to be very involved in the cards offered in their stores, while others don't. But because there are such restrictions on available space in a physical retail environment, Blackhawk Network conducts "profit per peg analysis." "It's very important for us to constantly look a the productivity of each card to optimize that rack for our partner," Llach said.

The company is much more than a distributor, and it holds quarterly meetings with distribution partners to find the optimal program. She also noted a blurring of the lines in which distribution partners like Bed Bath & Beyond have become card partners, and vice versa.

Does card popularity vary around the country? "Absolutely," Llach said. The company also sells gift cards online via GiftCardMall.com, eBay and Amazon.com.

Reviewing comments about gift cards on the eBay discussion boards revealed some interesting ways people use them. One eBay buyer wrote, "Whenever I'd go to the grocery store, I'd snag a $25 card here and there, was sort of like a savings account. After a month or two, I'd have $150 or so to buy the thing I wanted. (And my wife was none the wiser!)."

Another wrote, "I use eBay gift cards to manage micro purchases on eBay. It's much easier to track my expenses $50 at a time than $1.26 at a time. I also like to get the gas credit points for buying the gift cards from the grocery store."

eBay gift cards are available now only at giftcard.ebay.com.

Comment on the EcommerceBytes Blog.


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


You may quote up to 50 words of any article on the condition that you attribute the article to EcommerceBytes.com and either link to the original article or to www.EcommerceBytes.com.
All other use is prohibited.