March 28, 2017
The method of exploiting the impulse purchasing mentality for gift cards is long outdated. In fact, according to FBIC’s 2015 report, e-gifting represents a $131 billion market. In many cases, today’s gift cards have undergone digitization, enabling retailers to easily penetrate the online shopping and gifting market. But what’s even more intriguing is the fact that recently, gift cards and specifically digital gift cards are being used as currency.
One of the better known examples for this is Starbucks. Avid coffee drinkers essentially load funds onto their digital Starbucks gift card from inside the app and then use it in-store when they pick out their latte of choice. According to Starbucks’s COO Kevin Johnson, mobile payments account for 25 percent of all transactions processed in Starbucks stores across the US.
Jifiti, a gifting solution for retailers and brands, has taken this a step further. By connecting to their partnering brands’ digital product catalogs and building consumer facing gifting experiences such as gift registries, they allow for advanced monetization of gift cards.
The company’s platforms essentially allows gift recipients to redeem the value of the gifts selected by their friends and family members through the brands’ digital gift card. For example, if Aunt Jeannie decided to buy you the Kenwood mixer you put on your bridal registry valued at $249, but you’ve lost your knack for baking, you’ll be able to utilize those funds to purchase the premium Bluetooth speakers instead.
This method of utilizing the brands’ gift card has eliminated returns for the retailers, afforded gift recipients the flexibility they crave, and even facilitated big ticket item group gifting (since the funds can always be converted into the brands’ currency if the full amount wasn’t achieved). According to the company’s aggregated stats across their partnering brands, the group gifting function the average gift registry value by over 24 percent. These are significant numbers in a market estimated at $30 billion in the US alone.
In 2014, IKEA rolled out their gift registry platform on the basis of the Jifiti technology in order to enhance their users’ registry experience and eliminate returns. Interestingly, the utilization of digital gift cards in this case allows for flexibility, but keeps the customer loyal (and restricted) to the specific retail chain.
Especially popular among younger crowds, group gifting efforts have grown in popularity due to rising prices and faster lifestyles. Rather than individually looking for a gift, consumers can turn to apps such as Giftfund and HipChip and easily ask friends to chip in certain amounts. Some similar solutions also embed certain gamification elements, making the process of purchasing a gift just a bit more exciting than just punching in credit card details.
The transformation of gift card from commodity to currency, is allowing retailers and brands to acquire customers outside of traditional channels. The digital gift card industry is growing not only at the expense of plastic gift cards but also by it being offered as an alternative means of payment.
Read more about ecommerce trends here at Tech.Co
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