In November 2012, Plastic Jungle began its pilot in 7,400 CVS/pharmacy locations in the United States. CVS customers can trade in unspent gift cards in-store for e-certificates that can be used at the drugstore. Plastic Jungle's prepaid card installations display quick response (QR) codes. Customers use their smart phones to scan the codes, which forwards them to a page on the Plastic Jungle website, where they locate gift card retailers and enter account numbers and PINs associated with the unwanted gift cards.
Customers don't dispense with the physical plastic cards at the installations. Once transactions are completed, Plastic Jungle owns the account numbers, and the underlying funds tied to them, rendering the physical cards useless. Customers can sell over 150 different closed-loop, merchant-branded gift cards through Plastic Jungle's network.
In exchange, customers receive e-certificates on their mobile phones for the value of those cards. Currently, customers must have the e-certificates printed out and then present the print-outs at CVS locations as "gift cards." But Plastic Jungle said customers will soon be able to redeem e-certs at checkout via mobile phones, which is expected to increase the impulsivity factor of the service, resulting in more revenue for CVS.
Margaret McKenzie, Chief Executive Officer at Plastic Jungle, called the company's in-store gift card exchange the first of its kind. She said the implementation is designed to provide more convenience for consumers and create incremental revenue growth for CVS/pharmacy.
"What we're trying to do here is make it even easier and create even more benefit for the retailers and for their customers," McKenzie said. In her estimation, the exchange is meant to act as a spending catalyst; the customers are already in store and are likely carrying unused gift cards with them in wallets and purses. "You know they want to spend," McKenzie said. "There they are. Let's give them the opportunity to spend a little bit more."
The exchange is also a way of enrolling consumers as Plastic Jungle customers. The in-store QR code functionality gives consumers a way to connect with Plastic Jungle, often for the first time. "They can open a Plastic Jungle account on the fly," McKenzie said. "We ask them some pretty simple information about who they are… They can fill that out on their mobile. And then they're off and running."
Plastic Jungle chose to partner with CVS for the pilot program because the chain drugstore is a retailer with a loyal customer base. "People go there every day," McKenzie said. "And what they're buying are things that are critical for their daily lives. And so we thought why not engage with consumers where they are everyday."
McKenzie alluded to PayPal Inc. as another online-based company that is intent on expanding into the retail space. "When you look at the payments space overall, you want to work with consumers wherever they are," she said. "I think you want to get as much of the consumer's attention as you can. Wherever you can give them some value, you're going to do that."
Plastic Jungle has therefore continued to expand online. In February 2012, it initiated the MileagePlus Gift Card Exchange program for United Continental Holdings Inc., the holding company for United Airlines and Continental Airlines. The online exchange enables MileagePlus members to convert the balances on gift cards into flight miles.
Then in April 2012, Plastic Jungle rolled out another initiative with U.S. Bank to allow the issuer's cardholders to convert balances on gift cards into credit card reward points. The service enables FlexPerks Travel Rewards Visa Signature cardholders to exchange gift cards for FlexPoints – U.S. Bank's reward points program for such reward goals as airline tickets, car rentals and charitable donations.
"We'll continue to build programs like that," McKenzie said. "We're constantly looking for partners where we can add value to their specific customers by employing their products."
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