Will e-gifting replace gift cards?

Discussion
Source: Loop Commerce
Dec 08, 2016

Gift cards may be considered less crude than cash, but are often seen as less exciting and meaningful as providing a tangible gift. Loop Commerce’s e-gifting solution promises the safety and ease of a gift card in a more personalized package.

With Loop e-gifting, gift givers head to a participating retailer’s website, select a product and then send it by providing only the gift receiver’s e-mail address. Recipients receive notifications of their gifts and are directed to the retailer’s online store to accept them. Recipients can then configure gifts to suit their preferences, or exchange them before having the gift shipped to the address of their choosing.

Two-thirds of the products purchased through Loop Commerce end up being kept by the recipient, either as originally specified or with a tweak, such as a different size or color, according to CNBC.

Marc Metrick, president of Saks Fifth Avenue, which earlier this year partnered with Loop Commerce, told USA Today, “It eliminates the guesswork from gift giving, and helps our customers secure their gifts right up until the last shopping days of the holiday season.”

Loop Commerce’s other major clients include Macy’s, Neiman Marcus and Coach.

Retailer’s promised benefits include:

  • Incremental sales: Loop Commerce has found that those redeeming gifts often opt to exchange it for something more expensive or add more items to their order.
  • New customer acquisition: Eighty percent of gifters and 90 percent of recipients are new to a retailer’s site, according to Loop’s findings.
  • Fewer returns: Being able to adjust sizes and colors or exchange gifts greatly reduces the likelihood of a costly return.
  • Increased loyalty: Both the gift givers and recipients appreciate the step-up from a gift card.

In a column for Internet Retailer, Roy Erez, CEO of Loop Commerce, noted that recent studies show that 56 percent of consumers are reluctant to buy or do not buy gift cards for all or for some of their gift purchases. He wrote, “These consumers prefer to gift items that are perceived as personal and thoughtful.”

DISCUSSION QUESTIONS: Do you see e-gifting as a viable, more personal alternative to gift cards? What are the pros and cons of such as a solution for shoppers and retailers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Making it easy to give something that needs to be customized or configured will definitely help digital gifting gain acceptance."
"...Loop Commerce does solve a lot of logistical issues with returns and exchanges, which is good news for retailers."
"This is like the generic equivalent of prescription medicine. It is so close to an actual, thoughtful gift that nobody can really tell the difference."

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17 Comments on "Will e-gifting replace gift cards?"


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Nikki Baird
BrainTrust
Nikki Baird
VP of Strategy, Aptos
5 years 5 months ago

As someone who knows how to find my family members on Facebook but would have to dig around to find a shipping address, I think it’s safe to say that digital gifting is only going to grow.

But I think retailers have to pay attention to the personalization aspect of it. RSR evaluates retailers’ e-gifting experiences nearly every year, and we find that it’s not about convenience so much as it is about making something that feels impersonal and distant actually be very personal and high-touch. Video, pictures, music and the ability to share socially are all important aspects of personalization that e-gift cards provide that are harder for plastic giving. And the idea of making it easy to give something that needs to be customized or configured will definitely help digital gifting gain acceptance.

Kim Garretson
Guest
5 years 5 months ago

Nikki, as you know, some of the retailers mentioned are turning their wish lists into watch lists, with alerts for price drops, back-in-stocks and new items for each product on their list. That means when you mix in Loop functionality, gifters can either buy off the watch list or set up alerts to watch items of interest and then make the transaction once they are alerted. This increases the customer satisfaction because the gifter knows that the person selected the gift to begin with.

Meaghan Brophy
BrainTrust
Meaghan Brophy
Senior Retail Writer
5 years 5 months ago

Viable, yes. More personal, no. A completely digital interaction takes away the personal aspect of physically giving someone a wrapped gift or card.

However, Loop Commerce does solve a lot of logistical issues with returns and exchanges, which is good news for retailers. It’s also a great option for long-distance friends and family who would be shipping presents anyway. Because e-gifting is slightly impersonal, recipients probably feel more comfortable exchanging or tweaking their gifts and can do so much more easily than waiting in line at a store.

Gene Detroyer
BrainTrust

I am sure there will be occasions when a physical gift card is appropriate. (Funny, I think we had this discussion some years ago about gift cards replacing purchased presents.) But beyond those unique occasions, why would one not use e-gifting instead of a gift card? Everybody wins.

Shep Hyken
BrainTrust

It’s all about convenience. Sure, the tradition of opening an envelope with a gift card (or cash) is always fun, but we are in a digital era where e-anything is almost becoming the norm.

That said, consider something as simple as a thank you note. An emailed note is nice and appreciated. The handwritten thank you note is nicer and even more appreciated.

Bob Amster
BrainTrust

It’s a terrific concept! Especially when one looks at the list of potential benefits. It is more personal than just a gift card and still provides the recipient the flexibility to spend the money (or more money) on what s/he wants. I am still looking for the downside of this service, and I don’t see one.

Jasmine Glasheen
BrainTrust
Jasmine Glasheen
Principal Writer & Content Strategist, Jasmine Glasheen & Associates
5 years 5 months ago

What a great idea! It’s a surprise that one-third of Loop Commerce purchases aren’t kept by the customer, but understandable that many customers upgrade to a more substantial purchase.

Customers want to give personalized gifts but are scared to lock down on a purchase that may not be the recipient’s style. Mistakes are especially costly when ordering an aspirational item. One wants to be sure it’s exactly right for the recipient. I see Loop Commerce being especially popular for modern luxury items in the $100 to $300 range.

Max Goldberg
Guest

Rather than give an impersonal gift card, and still avoiding the holiday crowds, consumers can now give a specific gift that can be returned or modified prior to shipping — great concept. I hope it soon expands beyond luxury merchants.

Ralph Jacobson
Guest

This is a great option for gift givers. It is more personal than a gift card and less trouble than going to a store. It may take away more of the traditional shopping journey experience, however that may not be a bad thing. Retailers can leverage tools like real-time personalization technologies to make this work seamlessly. I like it!

Lee Kent
Guest

The concept of being able to tweak the gift and have it delivered to you is very cool. The only issue I would raise is the age-old problem with gift cards: receiving a gift from a brand that is of no interest to you. But I suppose that is just going to happen.

For my 2 cents.

Larry Negrich
Guest

This is like taking the generic equivalent of a prescription medicine. It is so very close to an actual, thoughtful gift that nobody can really tell the difference. Somewhere in the formula it is just a small fraction different than a true gift. At the center it has all of the same things a gift possesses. Mostly it will alleviate the issue of gift giving, but it isn’t really as good, is it? Yes, it solves a problem and I’m all about using technology to solve problems — but I would prefer the original formula when possible.

Craig Sundstrom
Guest

Much like Anthony, I came here prepared to bury this idea — I thought it was merely a gift card given electronically — but after reading it, I sort-of like it. It shows the user has actually put a little thought into the purchase, and if the recipient truly hates it, then the problems of physically returning it are avoided. Of course many people still like to open gifts with their hands not their mouse, so it won’t be for everyone, but nevertheless it seems like a sensible adaptation to the e-commerce age … unlike gift cards themselves, which — as I’ve said at every opportunity — I think represent the decline of civilization … or worse.

Martin Mehalchin
Guest
Martin Mehalchin
Managing Director, Retail and Consumer, PK
5 years 5 months ago

Gift cards in general are a great business opportunity that many retailers fail to fully exploit. eGifting is the fastest growing segment of the market, expanding by about 20%/year. If your gift card program is a laggard now, it would make sense to focus on eGifting and start with a distinctive program such as the one offered by Loop Commerce.

Kai Clarke
BrainTrust

This is a simple difference between gift cards and products. There is something to be said about the value of actually giving an item, even if it is something you don’t want. This is a solution to a problem that really isn’t a big issue. Exchanges have become part of our retail tradition as much as gift giving is.

Dave Nixon
Guest
Dave Nixon
Retail Solutions Executive, Teradata
5 years 5 months ago

Convenience doesn’t trump personal. Not yet.

As digital channels increase in adoption, brands will still need to find ways to create that personal bond with shoppers and customers, even through less personal vehicles like Gift Cards and e-Cards. With E-Gifting on the rise, retailers and brands need to leverage the personal touch of wrapping and personally giving someone a “gift.” It still doesn’t have the same feeling to send the “gift” virtually. As the next generation pushes retailers to go fully digital, this “social more” might change. Until then. People still like to give and people like to receive. In person.

Brenda Gilpatrick
Guest
5 years 5 months ago
It’s a great idea, but there’s still work to be done on execution to ensure that it scales. Often, only certain products qualify and awareness still is limited. Go to one of the participating retailers’ websites and seek out information on how to use it — you’ll be hard-press to find it. What makes a ton of sense is marrying this idea with services where gift-giving is a natural component and there’s already a sizable audience. Jifiti, another company offering digital gifting services, has integrated with evite.com. Anyone receiving an invite through evite can send a specially-curated digital gift to the honoree with the click of a couple of buttons. It also makes sense for CPG products that can’t be gifted any other way. Oreo launched a gifting site this holiday season. All the giver has to do is pick out the product they want to gift and then send it to their recipient by email or text. No address needed. What a great way for Oreo to build brand engagement. Imagine how digital gift… Read more »
Eshed Doni
Guest
5 years 3 months ago

Returning an unwanted gift is a hassle. Returning an unwanted gift card (e.g. an Xbox card bought for a kid who owns a Sony Playstation) is a nightmare. This is where solutions such as GiftCrowd come into play, combining the ease of online buying (and in that case also group buying) with the gift receiver’s flexibility in picking up something to their liking.

wpDiscuz
Braintrust
"Making it easy to give something that needs to be customized or configured will definitely help digital gifting gain acceptance."
"...Loop Commerce does solve a lot of logistical issues with returns and exchanges, which is good news for retailers."
"This is like the generic equivalent of prescription medicine. It is so close to an actual, thoughtful gift that nobody can really tell the difference."

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