Did you know that in 2014 gift card spending grew to $100 billion? Since their inception, gift cards have steadily grown in popularity. Today we’ll go over the basics of gift cards to help you determine if they’re a good fit for your online shop.
What are gift cards?
There are 2 major kinds of gift cards: open-loop (bank) gift cards, which are supported by major payment solutions like Visa, MasterCard and American Express, and closed-loop (or retail) cards, which are only accepted at specific retailers. In this article, we’ll just be addressing closed-loop gift cards your own shop can issue.
Gift card pros for online stores
Gift cards are great not only for customers, but also for the merchants who sell them. Here are a few great reasons to offer gift cards on your online shop:
- It’s easy for the customer--they don’t need to know the recipient’s address or preferences.
- End customers get to pick products they actually want, which reduces the number of returns on your site.
- Your cash flow gets a boost: you’ll be paid before you even ship the product.
- They’re convenient, but more personal than money.
- Gift cards give new customers that may have been hesitant to purchase from you otherwise a reason to get to know you.
- Customers generally pay full price and spend more than the value of the gift card.
Gift card cons for online stores
Of course, with the good comes the bad. Here are some of the negatives of making gift cards available on your shop:
- Increased bookkeeping. You’ll need to keep track of the initial gift card purchase, as well as the product order, which is when the gift card is actually redeemed.
- No returns, only exchanges. For most credit card processors, funds can only be returned to the original purchaser’s card. This makes issuing returns to the gift recipient impossible.
- Potential for fraud. In some instances, a scammer could purchase the gift card, then drain the value of the gift card before you, the merchant, realize that the original order is fraudulent.
How to set up gift cards in PrestaShop
- Install a gift card module. Although it’s possible to manually create each gift card as customers purchase them with our built-in voucher capabilities, we’ve created a module that helps you manage your gift cards. Once you’ve installed a gift card module, you’re ready to set it up.
- Decide on gift card amounts / denominations. You’ll want to offer gift cards in denominations that make sense for your product selection. If your average order value is , make sure you offer gift card amounts that reflect that. Offering gift cards won’t really make sense in this example.
- Set the expiration date. Be aware of laws that regulate this in your country. For example, if you’re based in the US, gift cards cannot expire within 5 years of the purchase. This is just the baseline. Additional state laws may further limit the expiration date.
- Provide all product FAQ’s in the product description. For example, let customers know where the gift card is valid. If you have a physical location, can it be used there? Can the gift card be used on clearance items? If you will assess any additional fees, list them here as well. This ensures that you not only address your customer’s concerns, but you also ensure that there is no confusion about how gift cards are to be used on your website.
- List and promote your gift card. It’s not enough to just create your gift card. Be sure to add a link in your footer and try searching “gift card” in your search bar to verify that it’s easy to find. Next, try promoting the gift card on a homepage slider or in your gift product category.
It’s your turn. Tell us why you do or don’t offer gift cards to your online shop. Have any good or bad experiences share them in the comments below. Not running an online shop yet? Get started today with PrestaShop.