“Uh Facebook Gift Card?”, the Jamba Juice cashier said with a twang. “I don’t even know what that is.” But that didn’t stop her from ringing up my purchase with Facebook’s invasion of brick-and-mortar commerce. Facebook announced the card last month, and today I was one of the first to try it out. Here’s how it felt to swipe Facebook’s hopeful disruptor of the $100 billion US gift card market.
With what I’d call a “material hangover” from a Saturday night of stuffy wine bars and loose dance floors, my body awoke with a forceful request for something healthy. Luckily, I’d just received a Facebook Gift Card with a $10 balance for Jamba Juice from the Director of Facebook Gifts, Lee Linden. The co-founder and CEO of mobile gifting app Karma that Facebook acquired the day of its IPO, Linden wanted me to give the card a shot.
The Facebook Gift Card is designed to be a single slice of plastic that holds credits to multiple retail stores. Friends (who’ve already received the Gift Card slow roll-out) can go to your wall or the ‘Birthdays and Celebrations’ sidebar and select to send you $3 to $100 at one of the initial partners Target, Sephora, Olive Garden, or Jamba Juice. Rather than one big balance to spend at any of the stores, your balances at each business are kept separate.
Facebook is looking to earn a revenue share by making brick-and-mortar stores’ products and services easily giftable between friends. You might not think to go to OliveGarden.com and buy someone a gift card, and getting their address would be a pain. Facebook makes discovery and delivery of gifts easier through suggestions of what to buy people. Facebook is where people spend time online, it recommends you buy Gift Card credits for friends on birthdays and other occasions, and collect their addresses for you.
A few weeks ago I got a Facebook notification informing me of the present Lee sent me. A tap on my mobile phone opened a virtual greeting card with a personal message from Lee, a glossy photo of a Jamba Juice smoothie, and mailing address entry form for where Facebook should send my card. Soon my sparkly blue, graph diagram-covered pre-paid Discover card arrived in the mail, wrapped within some surprising fine print I’ll get to later.
Now back to this morning and my aching desire for nutrition. I went to Facebook.com/fbcard to check my balance and assure the $10 Jamba Juice credit was ready. Google Maps pegged the nearest location at a whopping 0.7 sunny San Francisco miles away, so I figured I’d forgo the Lyft and feel the whiskey seep out of my pores with a short run.
Once at the front of the line I asked “Do you accept Facebook Gift Cards?” and produced the sky blue sliver. Neither cashier recognized it, but once they saw the Discover card logo on the back, they realized it was just like any other gift card, swiped it, and that was it. No need to sign or show ID. Stawberries Wild® Smoothie acquired.
I got a Facebook notification that my card had been used (good for security), and what my remaining balance was. After swigging the sugar-liquid, I tried throwing the employees a bit of a curveball. I went to pay for $3.50 in snacks with just $2.98 left on my Facebook Gift Card Jamba Juice balance. Rather than decline me, they just asked for the additional $0.52 in cash. Solid.
I asked if gift cards were easier or harder to deal with than credit cards or cash. The kindly server said they actually preferred cards because there’s no change or signature to deal with. Nice to know they weren’t secretly pissed at me for paying with my newfangled commerce contraption.
Overall, the Facebook Gift Card worked without hassle, but the omni-card structure is certainly a bit foreign. People spend $100 billion a year in the U.S. on Gift Cards, and 60 percent of those are for specific stores. That means when they open their wallets and see a Target gift card, they know they have money to spend at Target. In contrast, nothing about the physical appearance of your Facebook Gift Card tells you where to spend it. You have to look up your balance online to see where you’ve got dollars to dole out. That might lead people to forget to use theirs.
From a customer happiness perspective, that’s not great. If I buy someone a Facebook Gift Card, I want them to spend and get enjoyment out it. From Facebook’s perspective, it’s a little gray. It would keep the balance, banking on what’s called “breakage” — gift cards that are bought but never redeemed, though they never expire. If you never spend your card, you probably wouldn’t buy one for anyone else or ask to continue receiving them.
The Facebook Gift Card does have a few things going for it, though. A sizable chunk of gift cards aren’t bought online or at the actual retailer. They’re bought at the gift card stands of grocers and convenience stores. There’s not enough rack space for every business, so Facebook offers them a recommendation engine-assisted way to sell their cards. If a friend Likes the Olive Garden, credit there is what Facebook will suggest you buy them for their birthday, you classy cat.
Businesses have an incentive to sign up, and Facebook has big plans for partnerships. Buried in the fine-print that came in the mail with my card was legalese priming Facebook Gifts Cards for use at gas stations, hotels, and for car rentals along with retail stores and restaurants. It’s already got around 200 partners signed up to sell through Facebook Gifts.
There’s some convenience for customers, too. If enough merchants signed on, a single Facebook Gift Card could replace cards from multiple stores and help you avoid a George Costanza exploding wallet situation. If you lose your card, you can also have it instantly replaced for free with all your balances intact. I was actually a bit annoyed that you’re currently not allowed to give yourself Facebook Gifts. I might have topped off the Josh of next week with another hangover recovery juice voucher to guilt him out bed. Some kind of added discount would have greased the wheels and is something Facebook might consider.
Facebook needs lots of people buying Gifts and Cards frequently to turn e-commerce into a serious money-maker. My hunch right now is that Facebook Gift Cards will be a muted success in the U.S., unless Facebook.com somehow becomes a top-of-mind place to buy gift cards. Getting pre-loaded cards sold at super markets and 7-Elevens could help. There’s also a big opportunity abroad where physically shipping goods gets costly really quickly, but sending cards is cheap and people are familiar with them for buying mobile phone minutes.
If Facebook Gifts and its card blow up, it will be because the real magic is the potential to take shopping out of gifting. It might not come off quite as genuine, but it eliminates the need to remember birthdays and special occasions, rack your brain for what a friend wants, browse endless e-commerce sites, and spoil the surprise by asking for their shipping address. Facebook provides the who, what, and how so you can focus on the joy of giving.