How Digital Gift Cards Can Enhance Your eCommerce Business: Key Benefits and Strategies

This article will explore how eCommerce digital gift cards can benefit your store and key strategies to maximize their effectiveness.

Shoppers are often confused about choosing an item to gift their loved ones. With plenty of options to choose from, shoppers often struggle to find the perfect gift. They are always worried about whether the recipient will love it or not. That’s why popular eCommerce sites often turn to digital gift cards as a versatile solution.

Let’s explore this further. But first, here are the key takeaways.

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 can purchase gift cards and send them directly to their loved ones, enabling recipients to buy whatever they desire. There are two main types of digital gift cards: open loop and closed loop gift cards.

Open Loop vs. Closed Loop Digital Gift Cards

Open loop gift cards are gift cards usually issued by financial institutions like VISA, which can be used by 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 receive on your Birthday.

Now that we’ve reviewed the two types of digital gift cards, let’s explore how digital gift cards function within an eCommerce store.

• When customers purchase a digital gift card, they can choose from different gift card templates like birthdays, anniversaries, Christmas, etc.
• After selecting a template, they choose the gift card value. Some online retailers offer gift cards with fixed amounts like $5, $10, $100, etc., whereas some allow customers to choose from a custom range.
• Customers can also add a message to the gift card. Let’s say, for example, a birthday greeting like “Happy birthday! Have a great day!”
• Next, they enter the recipient details and set the gift card to be sent to the recipient by email. Some stores allow shoppers to schedule gift cards to plan ahead or miss any special occasions.
• Once the recipient receives the gift card, they can 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. This shift from traditional plastic or paper gift cards to digital vouchers is evident, even in physical stores.

While the post-COVID shift to contactless payments and digital vouchers has driven this trend, it’s not the only factor. Here are some key reasons why digital gift cards are preferred by Millennials and Gen Z shoppers.

The convenience of digital gift cards. Millennials were the early adopters of gift cards, but Gen Z has taken it further, viewing gift vouchers as a payment method for physical stores and online stores. The convenience of digital cards means no more carrying physical cards and no risk of losing them.

Allows flexible spending. Digital gift cards allow shoppers to redeem credit at their convenience. They can choose to spend their balance on multiple purchases or save it for later, instead of making an instant decision.

Personalized gifting experience. Gift cards today are also becoming synonymous with gifting. A personalized digital gift card loaded with credit is the easiest way when you’re unsure of what to gift your friend, colleague, or family member.

Functions as digital wallets. Younger generations are more receptive to innovative payment methods such as digital wallets and QR codes as they feel it more convenient and easy to use. 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 network of digital wallets, better connectivity, and technology have led Gen Z shoppers and Millennials to prefer digital gift cards as an alternative payment and gifting method.

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.

Digital Gift Card Benefits For an eCommerce Store

• Gift cards can enhance sales and improving the shopping experience

When recipients receive gift cards, they’re likely to visit your store to redeem them and often end up spending more than the card’s value. In short, gift cards boost sales by generating revenue when sold and encourage additional purchases when redeemed.

• Adding a gift card option can attract new customers without additional marketing

When an existing customer sends a gift card to a friend, the recipient, who may not yet have an account, will need to sign up to redeem the gift card value. This simple process introduces new shoppers to your store. This is especially effective during the holiday season where you can bring in plenty of new users and expand the business.

• Digital gift cards help extend your brand’s reach

eCommerce digital gift cards allow your brand value to travel far and reaches wider audiences that traditional marketing may not. Gift cards can even be resold, further expanding their visibility and impact. Plus, offering gift cards during promotional events can help generate excitement for your brand.

• Digital gift card codes offer the convenience of being sold anytime, anywhere

Beyond your store, digital gift cards can also be promoted on platforms like social media where you can reach a broader audience. Plus, these gift cards allow for instant delivery which makes them an ideal last-minute gifting option for busy or late shoppers.

• eCommerce digital gift cards can boost retention and customer loyalty

When customers have store credits or a gift card to redeem, they are likely to return, increasing the chances of repeat purchases. Additionally, sending free gift cards on special occasions enhances customer loyalty and satisfaction. 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.

• Promotes seasonal sales effectively

The holiday season is a peak period for sales across all eCommerce stores. With digital gift cards, you can schedule availability for specific dates, ensuring customers can conveniently shop for special occasions and shopping seasons.

Here are the five digital 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. Encourage them to purchase by offering personalized options for special occasions, such as Halloween, Black Friday, Cyber Monday, and Christmas. 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 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 seen studies showing that shoppers usually spend more than the gift card amount. So, this 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.

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!