A new study by NAPCO Research, a retail research firm, examine the progress and growth areas in digital gifting programmes. The research is based on Blackhawk’s sales data. This includes gift cards sold directly from a restaurant and merchant’s website on its partners’ channels. The research suggests digital gifting rose by 92% since mid-March 2019. NAPCO’s third annual Merchant Gift Card E-Commerce Evaluation offers merchants the opportunity to compare results to previous years. Businesses can get insights into the performance of programmes, see progress in eCommerce sales channels and identify potential growth areas.
Unprecedented growth in digital gifting
According to Theresa McEndree, vice president of marketing at Blackhawk Network “We’ve seen unprecedented growth in digital gifting in 2020. Consumers’ rapid adoption of digital gift cards is here to stay. The gift card market is forecasted to reach nearly $550 billion by 2024. Seventy-one percent of consumers that were surveyed report they are interested in digital gift cards vs. other gifts.”
McEndree adds, “Retailers need to continue their focus on creating the best online experience possible for consumers. We’re seeing that the brands doing digital well across the board are placing an emphasis on omnichannel. They are considering digital customer experience for all shoppers and using gift cards as promotional tools and for B2B programmes. The good news for retailers is that while there is still a lot of room for overall improvement. There is significant money on the table, especially when we’re looking at the online gift card purchase and recipient experience.”
The cross-platform assessment evaluated 150 brands across 109 unique criteria. The research revealed that the gap between eCommerce leaders and laggards is narrowing. This indicates that more merchants are realising the value a strong gift card programme can bring to their organisation. Furthermore, they are taking the steps to act on it. Other key highlights from the evaluation, include:
Top performing digital gifting programmes
Home furnishing merchant programmes have overtaken department store digital gifting programmes as the top-performing category this year with 53%. Department stores (51%) fell to second this year after leading all product categories in the 2018 report. Rounding out the top three were sporting goods brands (50%). In looking at the categories in need of the most improvement. Gaming (18%), grocery/pharmacy (25%) and hotel (28%) programmes had the lowest average scores.
Biggest Overall YOY improvements
There were several positives that emerged from the report, including improved overall year-over-year performances in discoverability, self-use and fraud protection.
- Discoverability. The average score for discoverability, the ability for buyers to find gift cards, was 57%, up from 55% in 2018. Improved performance in discoverability on merchants’ websites, both desktop and mobile, helps to compensate for their struggles in mobile apps.
- Self-use. 31% of merchants provide expedited experience for consumers to buy gift cards for self-use, up from 25% in 2018.
- Fraud protection. 27% of the merchants evaluated declined at least one legitimate card purchase transaction (a false positive). This is a drop from 44% in 2018, but it’s still a problem that brands must address.
Overall Gift Card Programme Trends
Several key gift card programme themes emerged from this year’s evaluation. Some of the highlights from the report include:
- Desktop experience remains the best. The average score earned for merchants’ desktop experience topped that of both mobile channels—mobile web and mobile app. Merchants earned an average score of 49% for desktop websites. This compared to 42% for mobile web and 29% for mobile apps.
- More payment options equal more gift card sales. Merchants are missing opportunities to increase gift card sales because of limited payment options. The average number of payment options for the merchants evaluated was 5.76. More than 20% offered no other payment options beyond the standard four major credit cards.
- Digital natives are playing catch up. Digital-native and direct-to-consumer brands may be shaking up the traditional brick-and-mortar business. However, that disruption surprisingly doesn’t extend to online gift card sales. Of the 27 digital-native brands evaluated, they are, on average, trailing their more traditional retail counterparts when it comes to the eCommerce gift card experience. They are performing below average in each of the three primary channels evaluated—desktop, mobile web and mobile app.
The full report provides merchant scores and rankings in addition to data and insights. Designed to help merchants assess the strengths and opportunities for their own gift card programmes and prioritise areas for investment. Criteria were designed to identify expected and emerging capabilities for merchants’ digital and physical gift card offerings to consumers through desktop, mobile website and mobile app. The study also evaluated B2B e-commerce offerings and the recipient experience for both digital and physical cards, including redemption options.
Enterprise Times: What this means for business?
From personal experience, its unsurprising that retailers and merchants are not effectively utilising digital gifting. On a number of online eCommerce platform, digital gifting options remain basic and unsophisticated and susceptible to fraud. The good news is that merchants are finally waking up to the potential of digital gifting. With more consumers shopping on their phones, offering multiple payment options that speed up and simplify the checkout process can result in increased gift card sales. This is particularly the case for those more likely to abandon their carts at checkout. When consumers are forced to fill out a long-form with payment details, they will simply close the browser.