The deal-a-day phenomenon pioneered by Groupon has spawned direct attacks on the model from a wide variety of companies. Newspapers, social sites and others are all going at it. But how about gift card providers?
Adility founder Thomas Cornelius, a longtime veteran of the gift card industry, thinks the synergies are huge. His 20-person operation, with offices in Atlanta and Mountain View, California, is providing a deal-a-day platform to publishers, with early adopters including Center’d and Coupons.com. These publishers, in turn, are taking the gift card industry into new business models, and using online promotion to drive higher conversion rates — and more dollars.
Initially Cornelius distributed his “Value Cards” (discount cards from local businesses) only through a partnership with Incomm, a third-party prepaid card distributor with 150,000 retail locations and more than $8 billion in sales for retailers ranging from Starbucks to Bed, Bath & Beyond. But Cornelius branched out in 2009 to focus on local merchants.
The initial concept was to boost their revenues by getting their prepaid card content online and offline promoting it. Cornelius says he’d have regular conversations with SMBs who’d say: “Why can’t I get into retail stores like Vons or Target and have my prepaid cards sold right next to the Starbucks gift card?”
Cornelius worked to create a “local” slot on the gift card racks — Planograms — which typically have 200 different prepaid cards featured. What he did was activate 10 slots per location where local merchants would be displayed on an equivalent basis of a major national company. He then focused on putting together a network of 300 independent resellers with 7,000 feet on the street around the U.S. The resellers would sell gift cards within a 25-mile radius of a merchant.
The results have been promising, he says, as many local customers are more eager to support the local stores they know than buying from national merchants. “The local cards have become the best seller at locations such as H-E-B groceries in Texas.”
But Cornelius’ initial experience integrating local merchants taught him that locally relevant content from local businesses really drives sales in gift card malls. But it was especially important “to get something new on the shelf every three months.” Hence the inspiration for Groupon-like online daily deals that would be available to publishers and developers on a white-label basis.
Cornelius says that building a deal-a-day platform isn’t especially difficult. But Adility’s value proposition is that it provides a turnkey solution for merchants seeking the online/offline solution, and delivers widespread distribution via publishers, such as Center’d and Coupons.com, he says.
“We’d provide the technology, supply the local deal content, customer service and order processing. It is a combination of a data feed and processing. Our core competency is the relationship with the SMB owners,” he says. “We have thousands of them.”
To develop stronger relationships with publishers and developers Adility has launched “Dealwerk.com,” a new site that provides its clients with RSS deal feeds, a white-label daily deal platform, and an API for developers who want to use local prepaid deal content and develop their own mobile and social media applications.