Gift Cards: Good for eCommerce

Gift cards are an absolute necessity for retailers–especially in eCommerce.

Customers and retailers alike love gift cards.

Whether it be a family member, a close friend, or even an acquaintance; there’s always that one person (or more) in your circle who’s extremely difficult to shop for when it’s gift-giving time. Second only to gifting straight cash, gift cards are the perfect solution for the uncertain ones on your shopping list. Gift cards remove the worries of traditional gifting (Is it something they’ll actually use? Will it fit? Do they already own it? Etcetera, etcetera.) and allows recipients to treat themselves while reducing the dreaded regifting potential.

This year’s holiday shopping season saw major gift card sales growth. Saumil Mehta, General Manager of Customer Solutions at payment technology vendor Square, Inc. states that gift card sales have increased 114% during November through mid-December 2021 compared to the same period last year. Jay Klauminzer, CEO of gift card retailer and reseller Raise, has similar claims; gift cards sales have increased 25% to 30% year over year and November 2021 was an exceptionally strong month. He reasons that shoppers did their buying early this year as opposed to previous years (we touched upon this shopping trend in our previous article, Black Friday and Cyber Monday 2021). A pre-holiday survey held by Digital Commerce 360 and Bizrate Insights said that out of 938 online shoppers that participated, 34% said that they’d planned on buying physical gift cards and 20% opted to go with digital gift cards.

Clearly, gift cards were a sales winner for this holiday shopping season just as they’ve been in years past. However, a surprising statistic found by Digital Commerce 360 reveals that of their list of the Top 100 Retailers, 58 retailers mentioned gift cards on their homepages but only 37 of them actively promoted and advertised them in direct view on their homepages. The remaining 21 had their gift card information either buried at the bottom of the page or obscured within the navigation; as though they were attempting to discourage shoppers from buying them.

By actively promoting a gift card program on your website in plain view, you can give yourself an advantage over some the top-performing retailers on the Internet.

Now, Christmas has already come and gone but the holiday shopping season isn’t actually over yet. Retailers count on strong post-Christmas/post-New Year’s sales to finish off the fiscal year period (typically, between February 1st to January 31st) on a strong note, as well as to offset the unavoidable and inevitable influx of holiday item returns. It’s also during this period that gift card redemptions will see a sizable uptick along with year-end sales in an attempt to net as many last-minute shoppers before the fiscal year closes.

If your online business, for whatever reason, doesn’t have any gift card program in place, you should probably consider implementing one as soon as possible. To help drive the point home, here are 5 benefits to gift cards that eCommerce businesses (like yours) can enjoy:

#1: Expand Your Customer Reach/Strengthen Customer Loyalty

Shoppers love gift cards; they’re quick, they’re easy, they’re a perfect solution for picky gift recipients. You can also use gift cards in conjunction with a customer loyalty program to incentivize your customers into shopping with you on a regular basis as opposed to making sporadic or even one-time purchases. This is a powerful and relatively simple way to boost sales and conversion rates. Gift cards alone can also introduce brand new customers to your store; upon receiving a gift card, engagement from visitor to shopper has already been done for you. Now, all that’s left to happen is the eventual redemption of the gift card, leading to the conversion from shopper to customer. Some gift card programs also allow you to collect important data from your customers and can help aid in identifying your target demographics and market insights. 

#2: Guaranteed Sales

Retailers love gift cards as much as consumers–maybe, even a bit more. Gift cards are low-cost/high-profit saleable merchandise for retailers; very little cost is involved, which means the gift card’s purchase has the potential to be mostly profit. If you choose to implement digital or electronic gift cards, coupon codes, or promos, the gift card sale will be 100% profit as it is virtual merchandise. Gift cards are also a guaranteed way to keep available cash in your store and out of your competitor’s hands. Essentially, that pretty much ensures a future sale for your business. Funds are already delivered to your store before merchandise has even been sold. Also, if the gift card is used towards an item whose value exceeds that of the gift card, the customer will pay the difference of the order total, resulting in more revenue.

#3: Decrease Returns/Exchanges and Refunds

The most common reasons for such include purchasing the wrong item, purchasing an item that is no longer needed, incorrect or inaccurate product description, damages, incorrect shipments, and the customer just simply being dissatisfied with the item itself. Customer returns, exchanges and refunds are all unavoidable parts of doing business but gift cards help significantly reduce those possibilities by letting the customer choose exactly what it is they want to purchase.

#4: Boost Business During a Lull

Retailers look forward to the holiday shopping season because, traditionally, this is when they make most–if not, all–of their profit after operating through most of the fiscal year at a loss. In the US, retailers hold sales promotions that coincide with major bank holidays such as Memorial Day, Independence Day, Labor Day, and the Thanksgiving/Christmas/New Year’s holiday shopping season with the latter being the most crucial. Gift cards can counterbalance temporary lulls in business by subtly urging recipients to redeem them for purchases at any given time. Also, as previously mentioned, gift cards keep pre-purchase funds in your store so there is always that extra available stored revenue even before the full purchase is made, which often results in higher order totals than the gifted pre-paid amount of the card.

#5: Fraud Prevention

Fraudulent purchases and sensitive data breaches can have devastating negative effects on your business, including the possibility of being forced to shutter all operations permanently. Unlike credit cards, gift cards do not include vital information that can be mined and exploited and cannot be easily reproduced like paper gift certificates. New shoppers to your website, or even those visitors who are new to online shopping in general, might be a little uneasy about using their credit cards to make a purchase. Gift cards eliminate the threat of identity theft and fraudulent purchases made by an outside party.

There really is no good reason not to have a gift card program available for your shoppers. Granting your customers the option to purchase and redeem gift cards not only helps build the relationship between customer and merchant, it can provide some extra security in today’s uncertain economy. Now would be a good time to introduce a gift card program so that your business can enter 2022 on solid footing.

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