Shoppers are often confused about choosing an item to gift to their loved ones. With plenty of options to choose from, shoppers often struggle to find the perfect gift for their loved ones. They are always worried about whether the recipient loves it or not. This is the reason why many of the popular eCommerce websites have digital gift cards on their store site.

Digital gift cards are virtual gift vouchers that contain a unique coupon code that can be redeemed either to add to the store credit or to use while making a purchase. Customers have the option to purchase gift cards and send them directly to their loved ones, enabling the recipients to buy whatever they desire.

In this article, I will explain the key benefits of having digital gift cards in your eCommerce store. Additionally, I will provide some effective gift card strategies that can help increase sales on your platform. So, be sure to read till the end.

As said earlier, digital gift cards are basically coupons that are used to add to the store credits or redeemed at the time of purchase. Let’s see how gift cards work in an eCommerce store.

• When a shopper purchases a gift card, they can choose different templates like Birthday, Anniversary, Christmas, etc., for the gift card.
• Once the template is selected, the shopper will then select an amount for the gift card. Some online retailers offer gift cards with fixed amounts like $5, $10, $100, etc., whereas some allow customers to choose custom gift card amounts.
• Then, the shopper can add a message to the gift card to be sent to the recipient. Let’s say, for example, a Birthday wish message like “Happy birthday! Have a great day!”
• Then, they enter the recipient details and set the gift card to be sent to the recipient via email. Some online retailers also allow shoppers to schedule gift cards so they don’t miss special days of their loved ones, like Birthdays, Anniversaries, etc.
• Once the recipient receives the gift card, they redeem the gift card coupon either to the store credit or to purchase a product/s from the store.

Many studies have found that digital gift cards are becoming more popular among Millennials and Gen Z shoppers. The transformation of plastic or paper gift cards to digital gift vouchers is noticeable, even in brick-and-mortar stores.

It is expected that the global digital gift card market size will reach $724 billion by 2028, with a projected growth rate of 14.2 percent compounded annually.
Source: Research and Markets

The post covid transformation has contributed to the growth of contactless payments and digital vouchers, but that isn’t all. There are other reasons that exist to explain why digital gift cards are preferred by Millennials and Gen Z shoppers.

As we all know, Millennials were the early adopters of gift cards, but with Gen Z shoppers, things have gone a little further, as nowadays, gift vouchers and digital wallets have become more of a payment method.

Now we have open loop and closed-loop digital gift cards for physical stores as well. If you aren’t familiar with both, let me explain them with examples.

• Open loop gift cards are gift cards usually issued by financial institutions like VISA, which can be used at a wide range of merchants that accept the payment network associated with the card.

Example: American Express Gift Cards.

• Closed loop gift cards are gift cards issued by retailers and can only be used at specific retailer chains.

Example: Starbucks gift card you received on your Birthday.

So Gen Z shoppers have taken advantage of these gift cards for physical stores and online stores. Gift cards add to the convenience of not carrying a paper gift card and not having to worry about losing them.

Younger generations are more receptive to innovative payment methods as they feel it more convenient and easy to use. They can add gift cards to their digital wallets and use them anytime they want. eCommerce giants like Amazon and Walmart have introduced their own digital wallet system, specifically targeting Gen Z shoppers and Millennials.

So when combined altogether, the convenience, the large network of digital wallets, better connectivity, and technology have led Gen Z shoppers and Millennials to prefer digital gift cards as an alternative payment method.

Why are Gift Cards Important to eCommerce?

Since you have read this far, I hope you already know the answer. But let me take this a little further. The eCommerce industry has significantly enhanced the shopping experience for consumers. It has now become a necessity to have an eCommerce website, even for traditional brick-and-mortar stores.

That’s what business is all about. You keep all the doors open to add to your revenue. Gift cards are exactly just made for that. It boosts your revenue by increasing sales and shopping experience on your store site.

Having a gift card option will welcome new customers to your store without any marketing effort. Wondering how? I’ll explain. When an existing customer sends a gift card from your store to a friend, that recipient (who may not have an account in your store) will sign up to redeem the gift card amount.

Congratulations! New customer acquired! ✅

Apart from these, you can send free gift cards to your customers on special days. This will increase customer loyalty and satisfaction in your store. Over the years, many studies have shown that customers prefer to spend more than the gift card value. That’s why many eCommerce businesses use gift cards for their loyalty programs.

These are some valid reasons why gift cards are important to your business.

Here are the five gift card marketing strategies you can try on your eCommerce store.

1. Advertise Gift Cards on Your Store

It doesn’t matter having a gift card option on your store if your customers can’t actually see them. Advertise your gift cards through email campaigns, newsletters, and banners on your site.

Let your customers know that you have gift cards on your website. To get the most out of your gift cards, you need your customers to buy them. Also, show the “Buy with Store credits” option at checkout pages to make purchases using gift cards.

2. Use Gift Cards for Loyalty Programs

You can reward your loyal customers with free gift cards for participating in a survey or dropping a review on your product page. Gift cards can also be used for discount campaigns like scratch cards, spin-a-wheel, etc., to incentivize customers. You can also provide gift cards for sponsored events and other loyalty programs.

3. Celebrate Special Occasions with Gift Cards

You can send gift cards can be given for various occasions such as festivals, commemorating your business’s 5th anniversary, and more. Additionally, sending personalized gift cards to your clients on their special days is a thoughtful gesture that can help you nurture a positive relationship with them.

4. Offer Discounts for Gift Cards

As explained above, you need your customers to buy gift cards from your store. You can promote gift cards by giving small discounts. For example, you can offer a $100 worth gift card for $90. This will promote gift card sales in your store. We have already explained that shoppers usually spend more than the gift card amount. So that will significantly increase your average order value.

5. Offer Refunds as Gift Cards

Refunds are really headaches for eCommerce store owners. But with gift cards, you can convert them into sales. You may now wonder whether a customer who asks for a refund will appreciate a gift card instead. Yes, they would if you processed instant refunds with gift cards.

As you know, after processing a refund, it may take 5-10 business days, at least for the amount to reach your customer’s bank account. It can be really frustrating to wait for such a long period. Instead, you can ask your customer whether to process instant refunds as gift cards.

A point of advice: To ensure customer satisfaction, it’s best to avoid using gift cards as the sole refund option. Let your customers choose a preferred refund method.

These are some essential strategies you can implement to maximize the effectiveness of gift cards on your eCommerce store.

Also Read: How to Configure the ‘Gift This Product’ Option in WooCommerce?

Having gift cards in your store will help you increase sales and engagement on your store site. Gift cards help your customers give the perfect gift to their loved ones. It also increases the shopping experience in your store. So gift cards offer a win-win situation for both store owners and shoppers. If you want to have gift cards on your WooCommerce store, try our WooCommerce gift card plugin.

This article was intended to help you better understand digital gift cards and how they can benefit your eCommerce business. Hopefully, we have covered everything you need to know about digital gift cards in eCommerce. We will happily answer any questions you might have in the comments section.

Thanks for reading!