How to set up a distribution network for your gift card?

by | 7 Dec, 2021 | INSIGHTS

The gift card has already proven itself in many brands and retailers’ strategies. Its benefits are numerous if solid bases are implemented and if we have a long-term vision. One of the strong points is, without any doubt, to be able to build a wider distribution network.

A large number of distributors or resellers interested in branded gift cards exists. Those can therefore rely on numerous partners to multiply their cards’ sales, increase their turnover and gain visibility. This sales network will also be a new source of customer acquisition.

Of course, in order for a network to generate added value, it is necessary to succeed in the development stage, without neglecting any action. So how to do concretely?

Analyse the potential of a partners network

Before building a distribution network, it is important to know its potential. It is true that setting up a distribution strategy on external channels is very advantageous in normal times, but it is not adapted to all brands. Everything depends on the brand, its awareness, its activity, its specificities…

Then, the first step is its market analysis.

End customers

Identify the gift card’s end customers will allow to better understand their habits, their buying journey and to choose the right distributors. If a gift card solution is already set up, the retailer can study consumers using this service.

However, care must be taken as customers are usually different from the brand’s initial target. Why? Because the card is a product that will be offered. The buyer is not the user. Let’s take the example of a women’s ready-to-wear brand. The cards’ buyers can be men who are looking for a birthday present for their wives. It can also be professionals: work councils, managers, HR etc. who want to order cards to reward their employees as part of an incentive program.

Second source of information: contacts. If the brand already had a gift card service for some time, it is possible that external distributors have made contact following a request from their customers. This is an excellent way to identify end customers.

There are also intermediary actors, offering brands a connected network of distributors. Brands can therefore greatly accelerate their development process and be supported in their research.

Competitors

It’s worth taking a look at the competitors. Do they also offer gift cards? Do they have a distribution network set up? If so, which distributors are selected? This will help the brand to position itself easily, to find which partners are already “saturated”, and to favour resellers for whom competitive pressure is weaker.

Analysing competitors also means putting the brand and its gift card solution in perspective, and determining strengths and weaknesses to develop the partners network better.

Other criteria

Other criteria come into play and are decisive for the proper development of the distribution network: socio-cultural, environmental, technological, demographic… For example, if a brand wants to set up its network of distributors at the international level, it is essential to know the maturity level and specificities of each country. Some countries will have already widely adopted the gift card, while others will only be at the very beginning. It is easier to find interested actors for the first case than for the second one. The same goes for business customers: it is important to study how they work. Do work councils exist?… Therefore, the several partners will be different from one country to another.

Set the boundaries of the distribution network

For a single brand, there may be multiple possible distributors. But does that mean we have to include them all? No. Selection is therefore essential at this stage of development. Brands and retailers will have to establish a list of criteria to choose the right partners and build their network: technical compatibility, end customers, sales and marketing efforts, visibility…

One of the most important is obviously the brand image. The gift card is the “currency” of the brand. Money that can only be spent in the brand’s stores. It is therefore unthinkable to select retailers who do not share or contradict the strong values and positioning of a brand.

The network members selection will also depend on the direction taken by the brand. Some may decide to stay broad, but others may want to target employees only, while others may go for loyalty and reward programs for individual customers or even target distribution platforms.

It all depends on the brand’s objectives.

Define a business strategy

Create a project with each network partner

A brand will necessarily have different players in its distribution network. Each distributor has its own specificities and, therefore, the potential will not be the same for the retailer. In a network, there will always be more important members than others. Even the end customers may differ. For example, if a brand chooses to go broad, it can have a part for professionals, through incentive programs, and a part for private individuals, through loyalty programs or via resellers.

This is why a brand must work on different objectives with its multiple partners, and set up an adapted action plan. The goal here is for both the brand and the distributor to find common ground and business objectives. The distributor must understand which targets are priorities for the brand and the brand must know how the distributor operates and which is its business model.

In the action plan, it is also necessary to address sales and marketing operations. For the gift card, there are important times: Christmas, Mother’s Day, etc., when it is relevant to work on communication campaigns to promote the card, or even promotional campaigns.

Technical set up

The gift card is a product, but also a means of payment. In this respect, the technical part is important. It is necessary to ensure that the financial flows arrive at the right place, that the gift cards’ codes are secured on the brand’s side as well as on distributor’s side. To work efficiently with your distribution network, it is better to automate the flows. It saves a lot of time and is safer for both parties involved.

Regarding the management of the network, it is essential to implement KPIs according to the objectives set up with the distributors. Each part must have access to them in order to measure performance. Regular interactions are also necessary to optimize the pre-established strategy.

A distribution network must be thought through in order to know if it is relevant or not for the brand. If it is, the development strategy and the long-term vision must be clearly established, before anything else. In this respect, the implementation of a distribution network is crucial to success. But this is not the only work to be done. It will be necessary, of course, to animate it.

Suggestions for further reading

How to boost your gift card distribution network?

Digital gift card white paper

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