The future is digital gifting
As experts in loyalty, CRM and closed-loop payments systems with a powerful leading-edge cloud platform, we are very excited about our new eGIFT product. We know that developing a digital gift platform could be quite daunting and costly for most retailers, so our solution enables any retailer to enter the digital age, even if they have an existing plastic gift card offering.
Tranxactor’s eGIFT is a 'plug and play' web portal with options for digital gift via SMS or email. We provide management tools including an in-built payment gateway as well as the ability to communicate with buyers and recipients. The eGIFT portal also has the
functionality for bulk order management.
But why are digital gifts so popular vs the traditional gift card?
In 2015, gift card sales in the U.S. reached $130 billion, a 6% increase on the year before. A few years on, we’re at an even more impressive juncture, as gift card sales are in the digital space are estimated to be worth $7.1 billion in volume.
E-gifts make sense in our increasingly digital world. As more payment services become mainstream, and more people utilise online wallets instead of physical wallets, it makes sense that the gifting and reward space will also see vast changes in how they appeal to consumers and recipients of gift cards.
For smart retailers, this is all about taking a look at how consumers like to spend their money. According to CEB Tower Group, many consumers spend more than the value of the gift card, resulting in more sales for retailers. And for eight years straight, gift cards have been the most-asked-for gift item, the National Retail Federation found. At the same time, you can see from your own behaviour that our confidence and trust in mobile retail and payment apps is growing and this is good news for retailers!
So, why else would a retailer make the move to digital gift cards? After all, plastic in the wallet is another mini marketing touchpoint for the brand.
Here are some of the key benefits for retailers.
Simply, virtual gift cards cost less than plastic ones to make and deliver. There are also cost savings in tracking their usage and helping keep money safe until it is spent. The costs also come back to the retailer if they allow a balance to be uploaded to a card – turning what would have been a plastic card into an online, mini banking system where the consumer can store funds. Another benefit for the retailer is the potential overspend vs the face value of an eGift. Surveys by National Retail Federation Gift Card Spending Survey showed that recipients who spend more than 38% of card’s face value account for around 65% of certificate’s owners.
2. Response to consumer demand
Retailers haven’t driven the rise of eGifts – consumers have, by being early adopters. According First Data in 2016, since 2014, self-purchase of digital certificates has increased by 13% and more than half of e-gift cards are self-purchased. To sum up, at the present, e-gift cards play an important role in the global market with the prospective outlook in the long run.
Purchasing an e-gift offers consumers a huge convenience. With an internet connected mobile device, with instant delivery options and customisation, gift vouchers feel very relevant very ‘now’.
This shows in the stats, and according to Global Market Research, the gross revenues of digital gift vouchers globally is estimated to reach US $698.2 billion. The report of the research also highlighted an impressive growth rate expected of 10% annually from 2015 to 2025.
3. Future growth predictions in incentives and loyalty rewards
Smart retailers know to look for areas of growth, and by teaming loyalty and rewards with eGifting, there’s a way in. According to a survey, on average, respondents have purchased two gift cards in the past twelve months because loyalty or rewards points were offered. Furthermore, a third of respondents ended up making a purchase at a particular store because an incentive was offered, even when they were not planning to do so. 40 percent spent more than originally planned because an incentive was offered.
By linking up rewards and incentive programs with gift cards – for example, by offering customers a discount on their purchases when they also buy a gift card – merchants can turn one-time shoppers into repeat customers and bigger spenders. Rewards and incentives could also convince customers to top up their gift cards after use, keeping them top of mind and utilising that ‘payment’ function we mentioned. The future for savvy retailers will be tying in loyalty trends with gifting habits to create an all in one solution that has an incredible impact on the business.
Are you interested in doing the same?
If you’d like to speak to someone about moving your business into the e-gifting space, click here to contact us.
PS Don’t forget to take a look at our work with the Loyalty Awards. Click here to learn more.