By Jack M. Germain
March 25, 2021, 5:00 p.m. PT
After the surge in sales of digital cards and e-gift cards late last year, consumer purchasing patterns have continued to settle into new options.
A BrandedPay Post-Holiday report by Blackhawk Network on consumer spending showed digital gift card sales increased more than 80 percent. That research also found total ecommerce gift card sales increased nearly 40 percent during the holiday season.
The results of the report are a sign that consumer trends continue to turn away from in-store shopping when appropriate options are available. The new shopping trend could give ecommerce businesses the boost they need as they consider how to build on the digital momentum in 2021.
As consumer behavior continues the rapid digital migration, gift card programs are no exception. This is a huge win for retailers as gift card recipients are ready and excited to use them, according to Theresa McEndree, global director of marketing and corporate branding at Blackhawk Network.
The study, which was drawn from Blackhawk’s own U.S. sales data, found that consumer spending exceeded projections in the company’s earlier preview for both e-commerce and digital gifting.
“Digital adoption continues and will persist. This stream of digital shoppers will benefit retail sales in the first quarter of the year. Nearly half of the consumers surveyed expect to spend at least $ 25 more than the value of their gift cards. Many plan to do so to spend them within the first few months after the holiday season, “said McEndree.
Top results and trends
A breakdown of e-commerce and digital gift card sales rose when surveyed consumers in the study said an average of 68 percent of their vacation purchases made online. This exceeded the expected 60 percent of surveyed consumers reported before the holiday season.
Following this trend, ecommerce gift card sales growth exceeded predictions ahead of the holidays, more than doubling its 12 percent growth in 2019. Ecommerce gift card sales ahead of the 2020 holiday season rose 21 percent over 2019 and 2019, jumped to nearly 40 percent growth during the holiday season.
The preparation for the shopping period at the end of last year was characterized by the increasing use of digital and e-card purchases over the course of the year. Those sales hovered 74 percent before the year was six percentage points higher.
E-spending here to stay
The adoption of digital and e-card editions is a trend that Blackhawk is expected to continue. This forecast is based on consumer reports that other payment methods had a different purchase experience than previous years.
For example, 41 percent of consumers surveyed said that the payment methods for buying gifts in 2020 were different from those in previous years. Almost one in four surveyed shoppers said they made their first shopping with a mobile wallet during the 2020 holiday season.
The same consumers said the experience will stay with them. More than a third (37 percent) said they will likely continue to use the new payment methods they used to shop this year.
Half of these consumers said they plan to use their gift cards within a month of the vacation. Another 23 percent said they would use their gift cards by the end of the first half of this year.
The average face value for gift cards purchased was approximately $ 45. This is good news for U.S. retailers, Blackhawk researchers predicted, as six in ten shoppers surveyed also reported planning to spend more than the value of their gift card.
New found uses
Consumers are finding other uses for this e-gifting trend. They are much more likely to buy the digital gift for themselves – and also to support local businesses.
“Remember, many gift cards are bought as an investment in retailers to support their businesses, not as gifts,” Nikki Baird, vice president of retail innovation for retail solutions provider Aptos, told the E-Commerce Times.
It’s a great way to show support and trust that the retailer is sticking with it without the shopkeeper having to do anything. There’s no need to find inventory, occupy a store, or in the case of a restaurant, buy groceries and ingredients.
“That has also been a persistent drag on gift card purchases,” she said.
The convenience factor is very high and the stigma of the impersonality of a gift card has decreased significantly, explained Baird. When you can only see yourself through video chats, suddenly sending a gift card doesn’t seem as impersonal as it used to be.
“I think the reluctance to use gift cards is not going to return. The convenience factor in buying, giving away and redeeming is just too high for consumers to stop,” she added.
Advanced Convenience Driving Adoption
Convenience has been a big part of the changing consumer trend to prefer gift cards, along with the fact that more families are now living more dispersed lives. Both situations make the e-gift process more attractive to consumers.
While the convenience of sending an actual gift has gotten better thanks to online shopping, there was still that hassle when the recipient had to exchange it, Baird explained.
“Gift cards are removing all of that, and it’s gotten harder for kids to use cash anyway,” she continued.
If a child wants to use a gift to purchase apps from an app store, parenting intervention is required to achieve this if the child has cash as the spending method. These trends played a role even before the pandemics, Baird noted.
Even before the pandemic, buyers valued convenience. Digital gifts are a great option for friends and family who live far away or who have difficulty shopping, agreed Meaghan Brophy, retail and e-commerce analyst at Fit Small Business.
“Digital gifts are also a popular option for last-minute shoppers because there is no packaging or shipping required,” she told the E-Commerce Times.
Old trend, new appeal
For years, the National Retail Federation has reported that gift cards are the most wanted gift during the holiday season. It became one of the top items buyers wanted to buy and give away, Brophy noted.
“So it’s no surprise that digital gift cards are a popular gift when people don’t gather to exchange gifts in person,” she said.
Shipping has become increasingly expensive during the pandemic. The delivery time has also taken longer and there are hardly any or no service guarantees. Digital gift cards are a reliable way to ensure gifts arrive when they are supposed to arrive without incident, she added.
There may be a surge in traditional gift giving after the pandemic as people seek to bond personally. However, long-term digital gift cards will continue to be a popular gift choice because of the convenience and flexibility they offer to both the gift giver and recipient, Brophy predicted.
Blackhawk Network works with more than 1,000 brands and card partners and is represented in more than 200,000 retail stores in 28 countries. The company delivers branded payment solutions through prepaid products and technologies. and connects to more than 300 million buyers worldwide every week.
Blackhawk Network used two separate samples to collect its research.
The first is based on the results of an Internet-based survey that Leger conducted on August 24-31, 2020 on behalf of Blackhawk Network. The sample size comprised 1,500 respondents. The analysis included results for the gift card category from 2018 to 2020.
Survey Monkey conducted the second phase of the post-holiday shopping study from December 27-29, 2020. Blackhawk analyzed the results of an Internet-based survey of over 2,000 respondents aged 18 and over. The researchers used sales data from the network from over 50,000 dealer locations in the United States