8 minutes reading time
OCT 14 2022

Top 6 Benefits of Using Digital Gift Cards

Gift-giving can be a taxing process, especially if the recipient isn’t a close friend or loved one. There’s usually some confusion on what to give people whose preferences and tastes are unfamiliar. This is where gift cards come in.

Purchasing a digital gift card takes the stress out of gift-giving. You don’t have to pick something specific or worry about it being the right color or size, etc. it’s no wonder then that a 2022 Query Sprout report recorded 73% shoppers buying gift cards for close family and friends. What’s more, the report also states that the worldwide gift card market will be worth approximately $584 billion by or before 2026.

These are incredible numbers and should be taken into consideration when drafting a brand’s ecommerce strategy. Digital gift cards can be seamlessly added to enhance the consumer experience. They also allow businesses to collect valuable customer data efficiently which, in turn, can be used to sharpen the overall marketing strategy. There are plenty of retail data solutions that can help with this process.

Let’s take a closer look at what the difference is between digital and physical gift cards and how your business can benefit from the former.

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Digital Vs. Physical Gift Cards

Before we dive into the difference between these two gift cards, let’s quickly look at how the cards work. When you purchase a gift card, you’re buying a credit amount that can be used to make further purchases at a particular store, whether physical or digital. Some cards come in pre-made bundles of $50, $100, $200 and so on, while others are blank and can be loaded with any amount of funds.

Gift cards can be bought to use at a specific retailer, for example Amazon or Google cards. These are called closed-loop cards and are useful when you want to purchase all your items at that particular retailer. There are also open-loop gift cards. These can be used at a variety of stores, for example Visa or Mastercard gift cards. Open-loop cards can be used at retailers that accept either Visa or Mastercard payments.

Your business strategy can encompass both digital and physical cards, depending on your marketing goals and customer funnel. Physical cards are usually made of plastic and look like ATM cards. These can be swiped at the till and the credit amount is deducted accordingly. Physical cards are popular among gift-givers as they allow them to create the physical act of gift-giving.

Some stores like Walmart stock physical gift cards for a variety of retailers under one roof. If you plan to do this, however, make sure you display your reseller certificate. Selling physical gift cards for other stores won’t directly help your business though.

Digital gift cards are convenient in that they can’t be lost or stolen. When a customer purchases an e-gift card, they are given a code that is usually sent to them by email or text. They can hold on to this and spend it at their preferred online store. These also allow consumers to use offline card readers to make purchases instead of having to whip out their physical cards. Brands that want to be successful should incorporate digital gift cards into their strategy to ensure a better customer experience and greater ROI.

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The Benefits of Using Digital Gift Cards

Here are some of the reasons why it’s a good idea to use digital gift cards in your business:

1. Decide for the Customer

There are focused shoppers and then there are browsers. These indecisive customers will look through your website for hours on end without settling on what to buy. This becomes more prominent if they’re looking to give someone a gift. You can pull these confused consumers in and offer them the option of buying a digital gift card.

It’ll make the shopping experience smoother for them, creating brand love and loyalty, and you will have won over a new customer. Once they purchase the card, they’ll receive a friendly text message with a CTA and their card number, boosting their warm feelings towards your brand. You can use text messaging for business to ensure standardized yet personal messages to paying customers.

2. Enjoy 24/7 Sales

The best part of selling digital gift cards is that you don’t need to stick to business hours. Customers buy digital gift cards around the clock, unlike physical ones which either have to be purchased from a retail outlet or take days to arrive in the mail. E-gift cards are instant: a customer will click buy and get a text message or email with the code. They can instantly gift it as a virtual reward or spend it themselves, depending on their preference.

The only caveat with round-the-clock sales is the need for a 24/7 dedicated helpline. Members of your older audience might have slight confusion with how digital gift cards work. In this case, you can set up a virtual phone system for small business and either have a pre-recorded message, or an automated phone service to help them out.

3. Boost Seasonal Sales

Most people focus on gift-giving during the holidays and this doesn’t just apply to family. Corporate spaces often have activities like Secret Santa going on, where employees become confused on what to give each other.

This is where your business comes in. Selling e-gift cards means you enjoy a significant spike in sales during the holiday season, whether it’s Christmas, Thanksgiving or Easter. Digital gift cards are great in that they can’t run out, so you’ll always have stock on hand to sell to demanding customers.

You will also enjoy a boost in sales when holiday gift card recipients spend the cards on your site. Since the holidays can be extra challenging, you should consider setting up a dedicated line for customers with queries about your gift cards. You can set up cloud phone services and have remote employees on hand to direct consumers through this busy shopping experience.

4. Increase Credibility and Brand Trust

Digital gift cards, unlike their physical counterparts, are secure and perfect for your customer loyalty program. A physical gift card can be dropped, lost or stolen and, since these don’t require verification like credit cards do, can be unsafe for customers to keep around. You can build brand trust by offering digital gift cards that are theft proof and therefore reliable.

A good way to go about this is to have extensive testing done with sample gift cards. You can set up likely and unlikely scenarios that consumers could face in which they could be at risk of losing their hard-earned money. This will enable you to fix any bugs that come up and make super secure e-gift cards.

You can also task employees with the testing phase for optimum consumer results. A small number of employees can purchase cards and undergo the full customer experience to make sure it’s streamlined. You can divide these tasks with smart schedules; consider downloading a weekly schedule template so the work can be divided equally.

5. Optimize your Order Management System

Digital gift cards are easy to link with Shopify or another e-commerce management system. They make it easier for business owners to observe their inventory and figure out which items they need to restock as well as what they need to let go of. If you employ data analysts, they can keep a close eye on who buys the cards, when they buy them and what they spend them on.

All you need to do is understand what is an OMS system to know how to link e-gift cards and inventory. You can optimize your OMS through testing the consumer experience and smoothing out any bugs. You’ll also find you can predict your sales results more accurately when you track your inventory and orders using digital gift cards as reference points.

6. Automatic Word of Mouth

Let’s say someone gives you a digital gift card to a small business you haven’t heard of before. They have spread awareness about the brand in question to a new consumer without the brand having to spend extra dollars in acquisition costs. Digital gift cards get the word out about your brand in an efficient and non-intrusive way.

Think about it: people are more likely to consider or purchase from a brand that has been recommended to them by a friend, family member or colleague. These odds go higher when they have been given a fun gift card to spend at said brand.

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Do Digital Gift Cards Have Drawbacks?

Digital gift cards have a lot of benefits but may also present certain drawbacks. One of these is the inconsistency in how the cards can be redeemed. Some cards require consumers to scan QR codes to make their purchases while other cards are restricted to online stores like the Play Store. Certain customers may get confused trying to use digital gift cards at physical store locations and be put off by the whole experience.

These limitations aren’t binding and don’t have a serious impact on digital gift card sales. As an increasing number of people get comfortable with using technology in their everyday life, the need for e-gift cards will grow too. Make sure your business is prepared for the growing demand.

Jessica Day
Written by Jessica Day