The Bright Future of Consuming – Digital Gift Certificates
Gift certificates first appeared back in the 1990’s and seemed to reach the peak of their popularity in the early 2000’s. However, the ever-changing modern world gave the gift cards a new twist. The digital version of gift certificates is becoming popular among the younger generation of users. The convenience of such gift cards allows them to grow at an impressive rate. In 2016, the annual growth of physical gift cards was 6 %, while e-gift certificates were growing at an impressive rate of 200% (1).
The $127M gift card industry is booming. The e-gift cards are its fastest growing segment. (1)
Why Are E-Gift Cards So Popular?
Be it the upcoming Christmas holiday, someone’s birthday or a special occasion, e-gift cards are becoming the most popular solution. Digging deeper to find the reason for such popularity is not necessary. It’s much harder to find a gift for someone than to give him or her the power of choice.
Gift cards are the perfect replacement for the banal “money” gift. Gift cards ensure that the receiver is satisfied with the gift and the giver is freed from the responsibility of too much research just to end up buying the wrong thing.
Meanwhile, an e-gift card is making it even easier on both by eliminating the factor of an actual visit to the physical store. Since most modern-day shoppers make most of their purchases online, (3) the popularity of e-gift cards is not about to wane. Especially, considering that a whopping 40% of consumers tend to lose their physical gift card (2) before using them. Digital gift cards have various and even unexpected uses. For example, employers often use them as an incentive to commend the employees for their achievements. (4)
Where Are The E-Gift Cards Most Used?
Here are some of the most popular industries where the e-gift cards are used:
The restaurant industry in the USA is worth about $800 billion (5). That’s why it’s not surprising that most of the e-gift card use can be attributed to restaurants. Meanwhile, some resources offer an e-gift cardholder an opportunity to choose the restaurant to dine in instead of going to a specific venue. This makes such a gift close to perfect.
Department Stores (34.4%)
Department stores offer a broad choice of goods both at brick-and-mortar locations and online. Most of the time such a gift can hit home for even the pickiest customers by allowing the recipient to make the choice on his or her own.
Coffee Shops (20.1%)
The coffee shop industry in the USA is almost as large as the restaurant business. Since many consumers frequent coffee shops, such e-gift certificates are gaining popularity. For example, in 2016, more than 20% of all Starbucks purchases were completed using digital gift cards (6).
The entertainment industry is reaping the benefits of the booming e-gift card industry thanks to the easy access to the desired movies, video games, and music. Such websites as Netflix, RegMovies, and GameWorks allow consumers to be entertained without leaving the comfort of their home.
The Future of E-Gift Certificates
The future of e-gift cards is impressively bright. Thanks to the convenience of modern apps, most digital gift certificates can be stored in the consumer’s mobile phone. As a result, using them is becoming easier with each new retailer who joins the program. The factor of the lost gift card is reduced to a minimum. Forgetting to use a gift card or leaving it at home is no longer an issue.
Persistence Market Research states that the global gift card market will double by 2024. (4) More and more industries are taking advantage of the digital gift cards thanks to their versatility. If 20 years ago gift certificates were mostly used as a variation of Christmas and birthday gifts, today, they are constantly gaining new uses, such as employee incentives, entertainment, or even health care.
The number of consumers using digital gift cards is growing at a fast pace. In 2016, it grew by 33 % in the USA. Meanwhile, the global use of digital gift cards is on the rise as well. The digital gift card industry is expected to reach about $160 billion by 2018. (2)
Benefits for Businesses
Offering e-gift cards allows each business to attract new customers. This is a marketing strategy, which is virtually free for the company.
- 40% of consumers spend more than the value of a gift card (about 60% of them spend 40% more).
- 41% of recipients visit a new store because they received a gift card.
- 72% of gift card recipients return to the store, where they used a gift card. (8)
By selling a digital gift card, a retailer receives money before actually selling the goods. They improve cash flow by generating revenue before the sales. Meanwhile, the gift cards build brand awareness and provide the business with additional promotional opportunities.
The e-gift card industry is growing at a fast pace. It’s not about to slow down anytime soon.