Retail marketer Brenda Gilpatrick thinks so highly of gift cards — ubiquitous in today´s retailing environment — that she named her company for them. Your Fantastic Plastic helps retailers choose the most efficient, effective way to launch a gift card program. It helps them put financial controls in place and think about "all the back-end things," Gilpatrick says, such as whether or not it makes sense to charge a service fee on their cards. Your Fantastic Plastic runs pro formas to find out which program makes the most sense, economically.
In the early days of the gift-card craze, she says, there were only a handful of companies available to administer the programs. And those few companies capitalized on having cornered on the market.
"You had to buy your cards through them. You couldn´t buy your own," Gilpatrick explains, so the few providers could mark up the price. A card that might have cost the provider a few cents could have been marked up to 75 cents. "Then they were charging a per-transaction processing fee," and so on. "They were nickel and diming everybody."
The big retailers grew tired of that, so they began building their own systems for gift-card programs. As a result, the providers had to unbundle their services, she says, "and that opened the door for a lot more companies who offered processing only and who let retailers put their own programs together."
Gift cards, Gilpatrick says, "are absolutely cost effective for smaller retailers."
Next in Retail Strategies: Gilpatrick offers up tips for smaller retailers who would like to begin a gift-card program.