The gift card economy: Exploring the rise of gift cards
The best way to express love and gratitude is to give gifts. Since the history of humanity, the act of giving has been an integral part of all societies in the world.
In traditional society, people send tangible items as gifts, but the transition to a digital society has revealed that gift cards are the currency of the act of giving.
Some time ago, before gift card adoption evolved to a large extent like today, it was considered nothing more than a worthless and ineffective plastic card.
Today in Nigeria, gift cards have become the go-to gift choice for gift givers and recipients due to their convenience, portability and value. The transition to a more digital society has also reshaped people’s shopping behavior, prompting a massive shift to online shopping, thus giving more credit and value to gift cards.
With the use of gift cards, donors do not have to worry about what type of gifts to purchase. They simply buy the gift cards from the stores and send them to the recipient, who will exchange them for any type of gifts that suit them or find ways to how to sell gift cards.
Gift cards serve as a surprise gift for retiree, employee, friend, lover and many others and it is very important to choose gift cards with the highest resale value when donating. This will allow them to enjoy the top gift card prices if they don’t want to buy gifts from the store and decide to sell them.
Some recipients may even sell gift cards for cash if they don’t need the gift.
With the massive acceptance of gift cards over the years, the gift card business will continue to grow with the economy as it provides a more personalized, digital and convenient gifting experience.
The Magical Transformation: From Inefficiency to Effectiveness
The innovation of the first gift card in 1994 and other brands that later joined the gift card market in the early 2000s, was followed by some bottlenecks that projected the invention as ineffective.
Apart from major gift card fraud problem which weighed on the industry due to the weak market, many customers did not redeem the gift cards they purchased.
Many people questioned the effectiveness of gift cards when The New York Times claimed in 2007 that approximately $8 billion of the $80 billion spent on gift cards in 2006 went unredeemed. In fact, due to the rate of unredeemed gift cards, some economists have argued that gift cards are bad gifts that are just gifts bought for the issuing companies that earn them “breakages” (gift cards unclaimed recovered by the issuing company).
However, in recent times, due to technological revolutions and e-commerce, the archaic perspective of gift cards has become history and gift cards have become the most desirable gifting experience.
The Gift Card Economy Trend Gap: An Exchange of Real Value
When we consider the constant e-commerce and digital revolutions we are experiencing, it can be understood that people are open to giving and receiving gift cards for many reasons such as;
1. Flexible Spending and Unlimited Choice of Gift Cards:
Even though there are some closed-loop gift card restrictions that would require users to only spend the gift card on that same brand, 78.7% of people still use gift cards from strange brands and about 87 .7% tend to become customers afterwards. However, an open-loop gift can be redeemed at any store that accepts debit and credit cards. This type of gift card is not limited to branded stores, therefore, the versatility of gift cards makes them a perfect gift choice.
2. Gift card purchases are now scheduled:
Contrary to the old popular belief that the gift card offer is not properly planned, making it a poor gift, an Incomm gift card report stated that 86% of gift cards purchased in the US are planned and 55.8% of recipients received the gift cards for their brand of choice.
3. The number of unused gift cards is decreasing every year:
In the early days of gift card usage, one of the problems was the large proportion of unredeemed gift cards. However, according to Bankrate, the number of unused gift cards has decreased by 25% per year.
4. Purchases of gift cards for personal use:
Individuals tend to buy more gift cards for themselves than they have in the past ten years. According to research by Black Hawk Network, 33% of gift cards purchased in 2019 were for owners.
Some of the reasons individuals buy personal gift cards are;
- Financial budgeting and diplomacy
- The convenience of the gift card transaction
- Gift card security
- An alternative payment method
The gift economy is still growing rapidly and is expected to reach approximately $440 billion by 2027. With the desire for convenience, value, and security in gifts and transactions, gift cards are the gifting strategy ideal and also a very good way to easily carry out in-store and online transactions.