Key Points:

  • Gift cards are commonplace for merchants of all sizes, thanks to the increase in the number of gifting occasions and the growing popularity of the gifting culture
  • The average gift card shopper ends up spending $38 more than the preloaded amount in the gift card
  • eCommerce retailers can benefit a lot by integrating eGift cards into their online stores without having to spend a fortune

Since their invention in 1994 by Blockbuster, gift cards have grown into a big business, and have been used by retailers and marketers as part of a promotion strategy to boost sales, drive brand awareness, earn customer loyalty, and encourage repeat purchases.

And the Gift card market shows no signs of slowing down! Global gift card sales are projected to hit $1.9billion by 2027. As eGift cards continue to take root, eCommerce merchants need to implement a gift card strategy for their store to reap their numerous benefits.

In this guide, we'll help you understand the different types of gift cards, their benefits, and the different ways retailers can integrate gift cards into their businesses.

Table of Contents

Gift Cards & eGift Cards in eCommerce

A gift card or a gift certificate is a card with a certain amount of prepaid money that a customer can use for a variety of purchases in a certain store. They are commonly issued by retailers to encourage repeat purchases and earn customer loyalty.

Gift cards can either be physical plastic cards that are issued in a retailer's storefront or eGift cards that can be bought online. Physical gift cards can either be magnetic stripes or barcode gift cards. These are commonly used in physical brick-and-mortar stores.

On the other hand, eGift cards can be purchased via a company's website and redeemed online or in-store. They provide the easiest and most convenient way for eCommerce retailers to integrate gift cards into their business offerings.

What are the benefits?

Gift cards are commonplace for merchants of all sizes, thanks to the increase in the number of gifting occasions and the growing popularity of the gifting culture. With such growth, eCommerce retailers need to figure out how to integrate a gift card program into their businesses.

Here are the benefits of adding a gift card program to your business:

  • Increased Revenue

There are several ways through which gift cards can boost your business revenue. The first one is via gift card sales. Selling gift cards in your businesses is an excellent way to replenish your revenue streams.

But not only that! You stand an opportunity to realize more revenue anytime a customer redeems a gift card. According to First Data, the average gift card shopper ends up spending $38 more than the preloaded amount in the gift card. They’re also more inclined to purchase higher-priced items.

On top of that, Retail Touchpoints estimates that 72% of shoppers who visit a store to purchase a gift card for their friend or family member end up spending some money themselves.

  • Winning new customers

Gift cards open the door for you to win over new customers. This happens when your loyal shoppers purchase gift cards for their friends or their extended family members. This helps you grow your customer base by winning over new customers who would otherwise not have shopped in your store.

You can also grow your business by giving gift cards as charity donations and fundraising events in your local community. This will not only help profile yourself as a business owner who believes in and supports their community but also boost sales because the recipients will probably end up spending more money in your store.

  • Boosting brand awareness

Anything that bears your business name and logo helps boost your brand awareness. Many people will get to know about your business through your own unique gift cards.

  • Driving website traffic

eGift cards are already here and are slowly eliminating the need for paper certificates or plastic gift cards. Gift Card Granny estimates that their value is around $15 billion, with around 40% of shoppers being in favor of digital gift cards over physical cards.

Instead of someone coming to your store, they can easily purchase a gift card via your website, which is then emailed to the recipient. eGift cards are also easy to redeem! Simply scan them via a web-based or phone Apps.

They come with a lot of conveniences, and they can save shoppers a trip to your store - especially last-minute gift purchasers. This helps boost your website traffic.

  • Encouraging customer loyalty

Gift cards are a good way to encourage customer loyalty and win repeat purchases, especially for brands that offer gift card promotions to their current customers during the holidays. For example, you can increase loyalty by offering a free $5 gift card to customers who purchase $50 in gift cards.

Such a bonus gift is not only a great way to encourage your customers to spend more money and boost your gift card sales, but also a good way to incentivize repeat visits. Offering bonus gift cards for a short period can also help you boost slower sales, especially after the holidays.

  • They are a good way to manage returns, rebates, and rewards

According to First Data, 81% of customers are interested in receiving a gift card as a store credit, 71% are interested in receiving a rebate gift card at a time of purchase, and 69% are interested in receiving employee rewards via gift card.

That makes them an option to handle returns in your store and a good way to reward your best employees or customers.

What Are the Different Types of Gift Cards?

Now that you know how beneficial gift cards can be to your business, it is time to understand the different types of gift cards that you can offer to your customers. Here, we discuss the types of gift cards so that you can choose the ones that best fit your business needs.

  1. Electronic Gift Cards

They are also called digital or eGift cards and provide the easiest way for eCommerce retailers to take advantage of the gift card functionality. eGift cards give your shoppers the ability to purchase a gift card online through your website. They have a numerical code that can be redeemed from your store's POS or online.

Other eGift card programs support a QR code or regular barcode that can be scanned from the buyer's phone or printed out. The eGift card can then be sent to a friend, or used by the customer online or in-store

They are convenient and easy to use: customers don't have to visit your store location to purchase or redeem their gift cards.By not having physical cards in your storefront, you lose some of the benefits of branding
They are affordable because they have no production cost.They may have some additional processing fee
They require no barcode scanner: they can be scanned directly from the customer's phone, iPad, or tablet.

Related: The Impact of Product returns

2. Barcode Gift Cards

These are physical gift cards that utilize barcode technology. They act as a unique account that stores the customer's data and information. Barcode gift cards are popular for membership or customer loyalty programs, and you will need a barcode scanner to look up and search for customers' information on the gift card.

They are quicker to scanYou have to install a barcode scanner to look up gift cards
They are more secure and don't require as much data securityRisk of being lost
They are reloadable and reusable

3. Magnetic-Stripe Gift Cards

These are also reloadable physical cards that use magnetic stripes and swipe through a store's credit card terminal just like debit or credit cards.

They are the easiest and most secure way for physical stores to accept physical gift cards.  

The customer's data and information are stored on the stripe and the balance is automatically deducted anytime the gift card is swiped.

They have superior data security compared to barcodesThe stripe eventually wears out, especially if the card is stored in a wallet or purse for a long time. This makes it difficult to look up the customer's information in the system.
They provide an easy and secure way for brick-and-mortar stores to accept gift cards

4. Gift Certificates

Gift certificates were prevalent in the '80s and '90s but have become less commonplace today. That said, some businesses still sell gift certificates, and they can be more effective for services rather than for monetary amounts.

A good example of a business that can leverage the use of gift certificates is a SPA business or a salon. Such businesses can still sell gift certificates for a free massage or haircut.

So if you run a service-based business, you can still sell a gift certificate, alongside other gift cards, to make more money while introducing new customers to your business services.

They are less costly to produce than plastic gift cardsThe counterfeit risk -this is part of the reason why blockbuster invented the gift card in 1994. It was due to people counterfeiting their gift certificates.
They are a good way to generate more money for service-based businessesGift certificates are not reusable or reloadable. That makes it hard for customers to spend more in your business than the certificate entitles them to
Being made of paper, gift certificates are far less durable than plastic gift cards
They are more difficult to track and manage credit, especially if the buyer doesn't spend the entire balance.

How to Add Gift Cards to Your Offerings

Now that you know the available gift card options that you can offer to your customers, it is time to know how you can add gift cards to your offerings.

Whether you are just getting started with a new point of sale system, or your business has been running for a while and now wants to integrate gift cards in your system, you will find a way to do exactly that.

  • Offer Gift Cards Through Your POS

An in-house gift card program makes for easy payment processing and reporting. That is why offering gift cards through your Point Of Sale is the easiest way to do it.

You can easily add one by reaching out to your POS company/payment processor to integrate it for you so that your gift card program can work seamlessly with your POS.

You will be able to track gift card sales and redemptions and see how well your gift card program is performing on the fly.

  • Use an Integrated Third-Party Gift Card Company

If your POS system doesn't support all the gift card functionalities you are looking for, using an integrated third-party gift card company may be the way to go. Most POS companies integrate with one or a few companies that specialize in gift cards as an additional add-on.

You can easily set up gift cards with a third-party integration by going directly through your POS system so that it syncs seamlessly.

The best way will be to shop around and select a gift card company that is compatible with your POS, and that provides functionality that your POS system doesn't provide.

Also, you will need to know whether the integrations are free or come at a fee.

  • Use a Standalone Third-Party Gift Card Company

If you use a basic POS that doesn't support any gift card integrations, using a standalone gift card company may be the way to go. That means your gift card transaction will be processed separately from your POS transactions.

Otherwise, you can hire a developer to build custom software that will connect your POS software to your third-party gift company's software to create an integration.

  • Use an eGift Card App

This is the way to go for eCommerce merchants who want to run gift card programs easily. Using an eGift card app is a digital-only gift card option that eCommerce retailers can use to offer gift cards without the need for plastic cards or POS integrations.

With this option, you sell eGift cards online via your website and then download an app on your mobile device that you use to scan the customer's QR code from their phone or print it out.

An eGift card can also be in the form of a numerical redemption code that you key into your terminal. This eliminates the need to integrate your POS with gift card software.

With web-based gift card apps, you can sell eGift cards online via your company website or social media channels that can be redeemed both online or in-store. Some popular companies/apps for SMEs include Givex, GiftUP, Giftly, and Yiftee.

Get Started with Gift Cards Today and Don't Forget About the Shipping

As you can see, there are many benefits of adding gift cards to your business offerings. From boosting sales and encouraging customer loyalty to driving brand awareness and managing returns, eCommerce retailers can benefit a lot by integrating eGift cards into their online stores without having to spend a fortune.

With all the new happy customers using the gift cards, you’ll need to make sure they get their packages safely delivered. With Easyship, you instantly gain access to over 250+ shipping solutions, label generation, a full suite of shipping tools to optimize your workflow, and best of all you’ll save up to 89% on your shipping costs.  

Sign up for a free Easyship account today to get started.