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Designing a holiday gift card strategy: 5 tips for success

Illustration of three gift cards with Christmas designs on them.

Whether you’re the founder of a digitally-native brand or an active e-commerce consumer, the season of giving is here. And one gift that has held through thick and thin? The small (yet mighty) gift card.

In 2022, over half of US consumers said they were likely to purchase gift cards as a present during the holiday season.

Interestingly enough, gift cards aren’t utilized nearly as much as they could be by many merchants in the e-commerce space. While plenty of brands are strategizing the holiday craze with new products or discounts on popular items, gift cards tend to fall by the wayside (if they’re used at all).

With a simple gift card program, digital retailers can open the floodgates to an entirely new channel of revenue not just over the holiday season, but year-round.

How do gift cards work?

A gift card is a form of payment where a pre-determined amount of funding is available to purchase at a specific retailer. Similar to credit or debit cards, gift cards can be used either physically or digitally, with the information provided at an online checkout or presented at a cashier.

Once a gift card is out of funds, it can either be reloaded and used again until the expiration date or discarded after a one-time use. Think of a Starbucks gift card that can be used over and over vs. a one-time Barnes and Noble gift card.

A brief history of gift cards

Before there were gift cards, major retailers were using ‘gift certificates.’ These were essentially branded pieces of paper that acted as a cash equivalent within a specific store.

Perhaps the most memorable gift certificates were those clever booklets showcasing the ‘golden arches.’ One of the largest gift certificates push was a 1970s McDonald’s holiday program:

McDonald’s gift certificates from the 1970s.

Yet due to their paper form, gift certificates were quite easy to forge. With access to a color copier and printer, almost anyone could easily duplicate a certificate and present it at a store. Plus, with a lack of substantial technology in place for tracking, retailers were left scrambling to catch and fight fraud.

Enter DVD rental company, Blockbuster. In 1994, Blockbuster created and showcased the first plastic gift certificates (aka gift cards). These thin, plastic cards held no value unless they were activated safely and securely by a store clerk at checkout. Plus, they were much harder to duplicate.

With the launch of the plastic card as a more secure form of payment, major retailers hopped on board the gift card train. To this day, gift cards are implemented by some of the largest department stores and retailers – the likes of Lowe’s, Macy’s, Target, and more.

And in 2022, the hot commodity is no longer reserved for the aisles of convenience stores or retail checkout counters. Instead, gift cards are on the rise in the e-commerce space, allowing consumers can send gift cards directly to a friend or family member without ever having to leave the house.

Where gift cards were once a sign of lack of thoughtfulness or reserved for last-minute attempts at an easy gift, they are now one of the most popular gift categories that recipients are asking for. Why? Because gift cards embody everything that appeals to a community focused on seamless and speedy experiences.

The gift card market: In stats

Who wants gift cards?

Gift cards can’t hold a candle to a new car with a huge red ribbon on top, but they certainly top many consumers’ holiday wish lists. A study by Statista found that 35% of consumers would be happy to receive a gift card as a holiday present. For e-commerce brands, that’s a hefty amount of customers that could be looking for a digital or physical gift card to purchase.

Who buys gift cards?

The gift card buyer persona is no longer reserved for aunts, uncles, or grandmothers unsure of what to give their family members. In 2020, with stay-at-home orders of the pandemic fueling a rise in e-commerce and social commerce, almost half of U.S. consumers bought a gift card on social media channels. And, about 37% of all gift card purchasers were Millennials!

Post-pandemic gift card sales

Once the COVID-19 pandemic eased its hold on in-person shopping, consumers followed suit and began returning to department stores and malls across the globe. In 2021, consumers spend a considerable amount on gift cards from major retailers like JCPenney and Kohls. JCPenney saw an average of nearly 40 U.S. dollars per device on gift cards while Kohl’s saw an average of $36 spend on gift vouchers per device. But gift cards aren’t limited to just department stores; Disney also saw more sales, with consumers spending about $145 per device on gift cards.

What does the future look like?

While the most popular gift cards are typically in the food and beverage industry or department stores that offer a wide range of products, we’re seeing some recent growth in subscription services like Disney, Netflix, and Apple. Either way, gift cards aren’t going anywhere – revenue is expected to grow upwards of 500 billion dollars by 2025.

The benefits of selling gift cards over the holidays

Offering gift cards over the holidays is not just a great way to boost sales and bring in new customers… it poses benefits for consumers and merchants alike.

Why consumers love gift cards

Shoppers buy gift cards because gift cards are easy! They’re the perfect solution for customers stressing out over giving the ‘perfect’ gift. Gift cards are just as valuable as money or products, and they leave little room for a negative customer experience. No late deliveries, no damaged products, no sneaky shipping costs, and no awkward return process!

For gift givers who are a bit late to the holiday shopping party, gift cards are a way to confidently purchase gifts without having to worry about meeting any shipping deadlines. And, in cases like Starbucks where the card is reloadable and the recipient can earn reward points, it’s truly a gift that keeps giving!

Why retailers love gift cards

For retailers, it’s just as easy to sell gift cards as it is for customers to purchase them. With a simple setup within their e-commerce platform or a third-party vendor, most businesses can add gift cards to meet the needs of all those last-minute shoppers.

Plus, there are no storage or warehouse fees, no shipping costs, no dreaded supply chain issues, and no risk of stockouts when it comes to gift cards. There’s also room for some fulfillment marketing with a cheeky gift card design (both physical and digital gift cards can be fun!)

Target gift card featuring three white dogs.

What is a gift card strategy?

Like many products in e-commerce, gift cards won’t always sell themselves. Customer attention spans aren’t as lengthy as they once were, so it’s essential to make gift cards an attractive gifting option at any time of the year.

To boost revenue and sell effectively, brands will need to have both a marketing plan and a selling plan in place once they begin to offer gift cards to their customers.

A stellar gift card strategy starts by asking the following questions:

  • What are your gift card parameters?
  • What are the design options? Can customers choose their design?
  • Can consumers order custom gift cards?
  • Where are gift cards housed on your website?
  • Are you promoting your cards via social media?
  • Do loyalty program members have a different gift card experience?

A good strategy comes with a lot of questions! If your brand decides to sell gift cards, make sure you have a well-defined strategy in place for the holiday season and beyond.

Physical gift cards vs. digital gift cards: Pros and cons

Physical gift card sales

The pros of physical gift cards come with their physical nature. Physical gift cards ensure gift-givers have something they can… well, gift!

A simple gift card can be quickly wrapped in a bow or placed in a card for a lovely, tangible present which makes the design of the card all the more important. Plus, physical cards can easily be included in-store displays as a marketing tactic for future customers engaging in some holiday season window shopping.

BUT: While physical gift cards can be designed and presented with a bow on top, they are more difficult to keep track of. Consumers can quickly lose their valuable cards, while merchants may find it frustrating to keep inventory on the number of units they have available to sell.

Digital gift card sales

In 2022, consumers tend to be more digitally savvy and open to non-traditional forms of commerce. Hence why digital gift cards, while relatively new to the history of gift cards, are racking up revenue.

The biggest pro? Digital gift cards can reach a virtually limitless audience. They can easily be sent to the recipient (no bows or bags needed) to add to mobile wallets or download onto mobile devices. For gift card givers and recipients, it’s extremely convenient.

In addition to a seamless customer experience, merchants won’t have to worry about physical quantities of products or where to store inventory, since the cards will live fully online.

BUT: Even with seamless technology, digital gift cards can pose some roadblocks. Their digital nature makes it possible for consumers to completely lose them or forget about them under a pile of emails. Or perhaps they were sent to the wrong email address! In that case, the original buyer may have to have a lengthy conversation with a support rep.

And, let’s face it: digital gift cards aren’t always as ‘presentable’ as physical ones. If there’s room for a note, it’s usually in a standard font with no options for handwritten cards or additional packaging.

5 Ways to boost gift card sales during the holiday season

So, how can you turn gift cards into a lucrative source of revenue during the holidays? Here are five actionable tips from our partner to make selling gift cards a breeze:

1. Promote your gift cards as the perfect gift for the holiday season

The holiday season can cause unnecessary stress for shoppers as they search for the perfect gifts. You can make the gifting experience stress–free for your customers by offering them the ability to purchase the ‘gift of choice’ (i.e gift cards). 

Ensure your gift cards are visible on your homepage by adding a banner with a link to your gift card product page. See how Miami Heat does this here:

The header from Miami Heat’s online store with e-gift card highlighted.

2. Create a ‘Buy One Get One’ (BOGO) promotion

Amplify the holiday spirit and reward your customers for buying gift cards. 

By providing customers with a complimentary gift card, you can:

  • Incentivize your customers to purchase a Gift Card (as they are getting a great deal)
  • Ensure that your customers return to your store to make another purchase (hopefully exceeding the card amount).

To learn how to set up the BOGO promotion with, click check out our guide. This is a great tool to increase repeat purchase rates and potentially expand your customer base. 

Alternatively, incentivize your customers to purchase Gift Cards by selling them at a discount – e.g sell a $100 Gift Card for $90.

Check out how Calgary’s Retail and Entertainment District executed their BOGO:

An ad from Calgary’s Entertainment for a buy one, get one free promotion.

3. Offer your customers the ability to personalize their gift cards

Gift cards are arguably less personal than a tangible, wrapped gift. However, this doesn’t mean gift cards need to be impersonal. Give your customers the option to customize the look and feel of the greeting experience and add a personalized greeting message. 

There’s nothing more personal than a handwritten note, but in the digital age, a typed message will do the trick. Take a look at this heartfelt message:

A personalized Dr. Squatch gift card.

4. Remind your customers that digital gift cards will ALWAYS arrive in time for Christmas!

Shipping delays and supply chain issues can be troublesome for your customers when trying to buy a last-minute gift.

Digital gift cards are the perfect solution for customers who need an instant gift, or when certain items are out of stock. 

A bonus is that there is no need to guess what color, size, or style the recipient would prefer – a gift card means your customers can’t go wrong. Once you are past your holiday shipping deadline, it’s a good idea to push your digital gift card offering more aggressively via your website and social channels.

5. Corporate Gifting

The ability to offer corporate gifting can increase your gift card revenue significantly. Our recommendation is to generate gift card codes in bulk so that the business purchasing from you can completely customize the gifting experience for those they are sending the gift cards to. Corporations tend to need their own branding and delivery, so sending them the codes for distribution is typically the preferred method. 

Far from being a ‘lazy’ or thoughtless present, gift cards have risen in popularity as consumers seek flexibility and limitless opportunity. By embracing the appeal of gift cards for buyers and recipients alike, brands can offer enhanced convenience during the holiday season and boost revenue during peak season.

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