The gift card’s evolution, from 2002 to today
At first, plastic gift cards appeared as a new way to give presents while showcasing the brand. Widely adopted by consumers, plastic gift cards are now going digital and bring along their fair share of new possibilities. Let’s dive in and examine what those various formats offer customers and brands.
The global gift card market
Gifts cards are gaining ground all over the world. In 2019, global gift card market size was valued at $ 619.25 billion in 2019, and is projected to reach $1,922.87 billion by 2027, growing at a CAGR of 15.4% from 2020 to 2027. Although North America generated the highest revenue in 2019, it is reaching a maturity phase because of the new players on the market. Europe is catching up and is predicted to dominate the market, followed by the APAC region which is expected to attain the highest CAGR during the forecast period.
These figures reflect what customers want. In the US 58.8% said they would like to receive gift cards for the holiday season*. In France and in the UK, 59% of consumers refer gift cards over other holiday presents. With all the mediums and formats, the choice is theirs! It’s a boon to brands wanting to maximize their gift card program revenue.
*National Retail Federation Gift Card Spending Survey
Plastic gift cards: a flexible product
Gift cards are very popular among consumers : they are simple and convenient.
The ideal gift
Gift cards are easy to use, they enable customers to choose freely a gift that they will fully enjoy. What if the purchase exceeds the gift card’s amount? It’s not a problem, consumers can always combine it with another payment method. And what if, on the other hand, the purchase is lower than the card’s amount? They are free to spend what is left another time, in store or online, and indulge themselves once more.
Plastic gift cards are an additional source of revenue for brands. They are an opportunity to reach new customers that wouldn’t have been reached otherwise. For instance : consider a husband looking to buy a present for his spouse, he knows which is his/her favorite brand but has no clue which product they’d truly like. If you offer them a gift card, they are sure not to disappoint!
A consumer-friendly format
Gift cards are famous for being an easy-to-use and ideal gift, and the plastic format also has the advantage of looking reassuring. It has the same shape as a credit or loyalty card and is used the same way.
The plastic gift card’s limits
However, in a society where consumers expect a unique relationship and a fully tailored experience, plastic gift cards have limited options. You can only choose the card’s design according to the occasion, and customize the message. Yet, customization is a key ingredient when it comes to gift-making. According to Virginie Pez-Pérard, university lecturer and researcher in consumer behavior, it proves that “a gift is unique and that it required more effort”.
A customer experience less than optimal
We live in an omnichannel era : consumers are looking for a fluid experience between each sales channel and during their in-store visits. Nevertheless, for a gift card to be redeemable in store and possibly online, customers have to carry the card with them and not lose it. It makes spontaneous visits more complicated. Moreover, customer experience isn’t optimal when ordering plastic gift cards online. The user has to take on the shipping costs and wait a few more days before receiving it. It is a long and deterring process that doesn’t match the pleasure of giving.
Digital gift cards : entirely customizable and omnichannel
In line with the growing number of services and cashless payments, gift cards went through their very own digital makeover. The gift card opened its doors to a new dimension by entering the online world. With this more developed version, recipients won’t have a piece of plastic but a PDF, received by email.
No more printing and shipping costs, once created, the gift card is instantly sent to its recipients. We now have a fast and secure solution that enables brands to reach new types of consumers : all those who are either too late or too busy when it comes to gift-making. Furthermore, e-gift cards allow marketers to send rewards for their loyalty program in just one quick click.
This new gift card version clears the way for tailor-made gifts. Customers used to only be able to personalize the design and message, now they can choose every single detail from start to finish (use a personal picture, create a video, write a very personal and private message, …).
Digital gift cards bring along new possibilities and features. They can be sent at a scheduled time or can be bought as a group gift.
Falling in with the omnichannel strategy
Digital gift cards are fully omnichannel. They are harder to lose than their plastic counterparts and are accessible at any time on any device. They can easily be used in-store and on the website through a code or flash code. What’s more, the remaining balance can be checked directly online.
Nowadays, mobile commerce already represents 67.2 % of all retail e-commerce, and it will account for more than 75 % of online retail purchases by 2021 according to a report by Businesswire (Global M-commerce 2018-2021). Therefore, it is all the more interesting to offer digital gift cards that are mobile-friendly.
What to look out for
Since they are easy to buy, digital gift cards are more prone to fraud. If a fraudster successfully approves a transaction through a stolen credit card, he/she will instantly have access to the gift card and will be able to anonymously spend it in any store. It is therefore essential to install fraud protection and prevention.
In order to meet customers’ expectations and create new opportunities, it is interesting to offer digital as well as plastic gift cards. For fluidity, they should be fully integrated in brick-and-mortar shops as well as online. In addition to acting as a driving force, if digital and plastic are merged into one single offer, they can become a solid cornerstone for the brand’s omnichannel strategy. Customers can instantly buy and send e-gift cards or order plastic ones. Recipients will be able to switch from one format to the other according to their habits and needs.