Gift Cards: The Ultimate eCommerce Strategy for Boosting Sales and Customer Loyalty

Introduction

In the ever-evolving world of eCommerce, businesses are constantly seeking innovative ways to drive sales, enhance customer engagement, and build brand loyalty. One such powerful tool that has stood the test of time is the gift card. Since their inception by Blockbuster in 1994, gift cards have transformed into a multibillion-dollar industry, serving as a versatile marketing and sales strategy for retailers worldwide.

The gift card market continues to experience remarkable growth, with global sales projected to reach a staggering $1.9 billion by 2027. As the popularity of eGift cards surges, it's crucial for eCommerce merchants to implement a robust gift card strategy to harness their numerous benefits. In this comprehensive guide, we'll explore the different types of gift cards, their advantages, and how retailers can seamlessly integrate them into their business operations.

Understanding Gift Cards in eCommerce

A gift card, also known as a gift certificate, is a prepaid card loaded with a specific monetary value that customers can use for various purchases within a particular store. Retailers commonly issue these cards to encourage repeat purchases and foster customer loyalty. Gift cards come in two primary forms:

1. Physical plastic cards issued in a retailer's storefront
2. eGift cards that can be purchased online

Physical gift cards typically feature magnetic stripes or barcodes and are widely used in brick-and-mortar stores. On the other hand, eGift cards offer a more convenient option for eCommerce retailers, as they can be purchased through a company's website and redeemed both online and in-store.

The Benefits of Implementing a Gift Card Program

As the gifting culture continues to grow and gifting occasions multiply, eCommerce retailers must consider integrating a gift card program into their business model. Here are the key benefits of adding a gift card program to your eCommerce store:

1. Increased Revenue

Gift cards can significantly boost your business revenue through various channels:

• Direct gift card sales
• Additional spending during gift card redemption
• Impulse purchases by gift card buyers

According to First Data, the average gift card shopper spends $38 more than the preloaded amount on the card. Moreover, Retail Touchpoints reports that 72% of shoppers who visit a store to purchase a gift card end up making additional purchases for themselves.

2. Winning New Customers

Gift cards serve as an excellent tool for expanding your customer base. When loyal customers purchase gift cards for friends or family members, they essentially introduce your brand to potential new customers who might not have otherwise discovered your store.

Additionally, offering gift cards as charity donations or for fundraising events in your local community can help you profile yourself as a socially responsible business owner while simultaneously boosting sales.

3. Boosting Brand Awareness

Every item bearing your business name and logo contributes to increased brand awareness. Gift cards act as miniature billboards, exposing your brand to a wider audience and potentially attracting new customers.

4. Driving Website Traffic

eGift cards are gaining popularity, with Gift Card Granny estimating their value at around $15 billion. Approximately 40% of shoppers prefer digital gift cards over physical ones. By offering eGift cards, you can drive traffic to your website as customers purchase and redeem them online, potentially leading to additional sales and increased engagement with your brand.

5. Encouraging Customer Loyalty

Gift cards are an effective way to foster customer loyalty and encourage repeat purchases. By offering gift card promotions, such as bonus gift cards for purchases over a certain amount, you can incentivize customers to spend more and return to your store. These promotions can also help boost sales during slower periods, particularly after the holiday season.

6. Managing Returns, Rebates, and Rewards

Gift cards offer a versatile solution for handling various aspects of customer service and employee management:

• 81% of customers are interested in receiving gift cards as store credit for returns
• 71% are interested in receiving rebate gift cards at the time of purchase
• 69% are interested in receiving employee rewards via gift cards

This versatility makes gift cards an excellent option for managing returns, offering rebates, and rewarding employees or loyal customers.

Types of Gift Cards for eCommerce Businesses

To choose the right gift card option for your eCommerce business, it's essential to understand the different types available:

1. Electronic Gift Cards (eGift Cards)

eGift cards are the most suitable option for eCommerce retailers. They allow customers to purchase gift cards online through your website and typically feature a numerical code or QR code that can be redeemed at your store's point of sale (POS) or online.

Pros:

• Convenient and easy to use
• Affordable with no production costs
• No need for a barcode scanner

Cons:

• Lack of physical branding in-store
• May incur additional processing fees

2. Barcode Gift Cards

These physical gift cards utilize barcode technology to store customer data and information. They are popular for membership or customer loyalty programs and require a barcode scanner for lookup.

Pros:

• Quick to scan
• More secure and require less data security
• Reloadable and reusable

Cons:

• Require installation of a barcode scanner
• Risk of being lost

3. Magnetic-Stripe Gift Cards

These reloadable physical cards use magnetic stripes and can be swiped through a store's credit card terminal. They are the easiest and most secure way for physical stores to accept gift cards.

Pros:

• Superior data security compared to barcodes
• Easy and secure for brick-and-mortar stores

Cons:

• Magnetic stripe may wear out over time

4. Gift Certificates

Although less common today, gift certificates can still be effective for service-based businesses, such as spas or salons. They can be sold alongside other gift card options to generate additional revenue and introduce new customers to your services.

Pros:

• Less costly to produce than plastic cards
• Ideal for service-based businesses

Cons:

• Higher risk of counterfeiting
• Not reusable or reloadable
• Less durable than plastic cards
• More difficult to track and manage credit

How to Add Gift Cards to Your eCommerce Offerings

Now that you understand the benefits and types of gift cards, here are several ways to integrate them into your eCommerce business:

1. Offer Gift Cards Through Your POS

Integrating gift cards directly into your Point of Sale system is the easiest way to implement a gift card program. Contact your POS provider or payment processor to set up seamless integration, allowing you to track gift card sales and redemptions efficiently.

2. Use an Integrated Third-Party Gift Card Company

If your POS system doesn't support all the desired gift card functionalities, consider using an integrated third-party gift card company. Many POS providers offer integrations with specialized gift card companies as add-ons. Research and select a compatible gift card company that provides features your POS system may lack.

3. Use a Standalone Third-Party Gift Card Company

For businesses using basic POS systems without gift card integrations, a standalone gift card company may be the best option. This approach processes gift card transactions separately from your POS transactions. Alternatively, you can hire a developer to create custom software that connects your POS to the third-party gift card company's software.

4. Use an eGift Card App

eGift card apps offer a digital-only solution ideal for eCommerce merchants. These apps allow you to sell eGift cards through your website and use a mobile device to scan customer QR codes or enter redemption codes manually. Popular eGift card apps for small and medium-sized enterprises include Givex, GiftUP, Giftly, and Yiftee.

Conclusion

Implementing a gift card program in your eCommerce business can yield numerous benefits, from increased sales and customer loyalty to enhanced brand awareness and improved return management. By choosing the right type of gift card and integration method for your business, you can harness the power of this versatile tool to drive growth and success in the competitive eCommerce landscape.

As you embark on your gift card journey, remember that the ultimate goal is to provide a seamless and enjoyable experience for your customers. By offering gift cards, you're not only boosting your bottom line but also giving your customers a convenient and flexible way to share your products and services with their friends and loved ones.

At FreightAmigo, we understand the importance of seamless Digital Logistics Solutions in supporting your eCommerce growth. As you implement your gift card strategy and prepare for increased sales, our Digital Platform can help you manage your shipping needs efficiently. From comparing freight quotes to tracking shipments and arranging customs clearance, FreightAmigo's comprehensive Digital Logistics Platform is designed to streamline your logistics operations and ensure a hassle-free experience for both you and your customers.