Prepaid Card Mall Pioneer Blackhawk Moves into Online, B2B

Less than a decade after launching its first gift card mall, the Blackhawk Network Inc. is looking for new frontiers of prepaid card growth in the online world and the business-to-business market. “I think we've learned a few things on how to serve the customer better,” Teri Llach, chief marketing officer, tells Digital Transactions News. Pleasanton, Calif.-based Blackhawk Network, a majority-owned subsidiary of Safeway Inc., started out in 2001 with a mission to seek new revenue streams for its grocery-store parent by offering prepaid cards from non-Safeway retailers. Its first so-called Gift Card Mall, or rack of cards on display near checkout counters, featured plastic from all of seven retailers. Blackhawk has come a long way since then, with gift card malls in 93% of the nation's top 50 grocery chains, Wal-Mart Stores Inc. and Target Corp. excluded, according to Llach. The malls carry more than 350 retail-branded, or closed-loop, prepaid gift cards. A recent Mercator Advisory Group Inc. research report pegs the closed-loop gift card market at about $68 billion annually, with just over $6 billion sold through all gift card display providers. Blackhawk has 80,000 stores in its network and has an international business, with offices in Canada, the United Kingdom, Australia, France, Japan, and Mexico. And now it's in the virtual world. This week, in conjunction with the Prepaid Expo USA trade show in Las Vegas, the company announced that it has expanded its digital-content category. That means shoppers can buy cards for online gaming and other digital venues at more than 10,000 of Blackhawk's Gift Card Malls. In related efforts, Blackhawk has the almost obligatory presence on social networks such as Facebook and Twitter, but its most important Web-based venture is the GiftCardMall.com site it launched within the past year. Shoppers can look for a gift card by retailer name, or category. They select a dollar amount, add a personal message for the recipient, and in some cases upload photos or images to be included on the card for $1.00. At the checkout page, the sender provides the recipient's name and address, and shipping information, with GiftCardMall.com sending the card to the recipient. One card shipped in three to five business days costs $1.99, with rates higher for faster delivery. Shoppers also can send electronic gift cards by e-mail in which the recipient will receive a bar code enabling redemptions. The first retailers to offer electronic gift cards on the site are Bass Pro Shops, Build A Bear, JCPenney, Justice, Kmart, Lands' End, Sears, and Uno's. They currently offer a total of 15 different cards. GiftCardMall.com plugs Blackhawk into a customer base that's accustomed to online shopping, and enables shoppers to buy gift cards faster than they could by going to a grocery store. That's especially true for digital content. “It's seconds, immediate,” says Llach. “Virtual allows us to give them the ability for a fast turnaround.” Blackhawk Network also has just launched its first foray into the business-to-business market, a prepaid card niche that researchers say has lots of growth opportunities as companies turn to prepaid cards as check replacements for paying incentives, employee travel reimbursements, and other expenses. Llach won't give many details yet about the specifics of the B2B program, other than to say Blackhawk is working with fulfillment companies Carlson Marketing and Maritz Inc. to generate retail purchases. “Every dollar is meaningful in retail now,” she says.