October 30, 2007

GiftCardLab.com: New Twist on an Old Strategy

Back in September, we began to hear buzz around GiftCardLab.com through RSS feeds and blogs. We initially thought the buzz was part of a coordinated viral campaign to increase brand awareness. Today BusinessWeek, a major weekly business publication, picked up on the buzz and published an informative piece about them. The article is definitely worth reading as it provides insight into what GiftCardLab.com is about. It also reiterates a lot of the same things we’ve been warning about, pitfalls with prepaid bank gift cards. What GiftCardLab.com is offering is basically an old strategy with a new twist.

GiftCardLab.com

The old strategy is to offer personalization and customization as a differentiator from competitors. Hopefully, this strategy translates to higher user adoption and greater revenue. The new twist is simply that it is Visa gift cards without the requirement of having to purchase in bulk. Consumers can buy just one or many, but GiftCardLab.com is hoping people will purchase more than one prepaid gift card per order.

One good point worth mentioning is that the user interface to upload images and design custom gift cards is user friendly. Even people who are technologically challenged should not have trouble designing and making purchases. Furthermore, GiftCardLab.com is running a design competition with a grand prize up to $5,000 for the best holiday design. It seems a lot of the participants miss the point that the theme of the competition is “Holiday”. Instead there are submissions ranging from pictures of the space shuttle to individuals in swimsuits.

Unfortunately, GiftCardLab.com does a poor good job of disclosing all the fees associated with their product and service. The only fees that is publicly disclosed is a processing fee of $5.95 per card. There is no mention of shipping or handling charges or the typical fees associated with Visa gift cards, such as a monthly maintenance fee, replacement fee, etc. The only reference to fees in their FAQ refers to a “Cardholder Agreement” that is provided with the Visa Gift Card, issued by Marshall BankFirst. But we could not locate an actual link to the “Cardholder Agreement” on their website.

Another important consideration to make before using this service is that the gift cards will expire one year from the print date and be charged an “account closure fee” before the balance is refunded in about three months. If this upsets you, don’t be. Sadly, this is a common policy practiced by banks that issue Visa gift cards. Instead, consider getting a customized Walmart gift card for only $0.88 per card. The best thing about it is that Walmart gift cards are “fee free”.

Gift Cards with a Personal Touch [BusinessWeek]

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