How Gift Card Consumption has Evolved with eCommerce Growth in India

eCommerce is growing at an alarming pace in India and has been making remarkable impact all over the country. India is a billion people nation with web mobile penetration of over 60%. In the next couple of years, we can see that everyone will move online for business.

A majority of our population is very young, which exhibits energy to build and adopt anything new coming their way so a new retail format is expected to have a very fast adoption rate. With the advent of m-commerce, we can see a great opportunity being placed for mobile. It allows and encourages the consumers to browse quickly, easily and purchase products on-the-go, more regularly.

It’s a strong belief that the mobile growth and with the availability of cheaper data plans across telecom brands, digital will grow and the gifting industry in India will soon skip plastic to move towards adopting digital gift cards.

Gift cards are pre-paid cards that can be used to make payments. Such cards have a validity period, which can be replenished with funds and reused within the period. Gift Cards are different from gift vouchers, which are paper-based and can be used only once, while purchasing products. Unlike gift cards, gift vouchers do not allow any partial redemption, wherein balance funds can be carried over for further purchases.

Manufacturing gift cards involve costs of plastic, magnetic strips, and card readers, however, this is changing as consumer’s demand and large retailers are moving towards digital gift cards. Digital gift card is a simple replacement of the paper/plastic gift cards, with a code. The code will be verified and the value attached to it is deducted from the digital card.

As per the stats, earlier, digital gift cards contributed to 7%; recently it has gone up to 17%. We can see the rise in digital gift cards as the consumer preferences and demand is higher for brands and stores and also allows offering a variety of gifting options. Brands like Lifestyle, Flipkart, Dominos, Tanishq are said to experience a consistent demand round the year and largely, during the festival season.

Most precisely, we can see the gift cards / digital gift cards trend booming in the West. Indians are avoiding the hassle of chasing for suitable gifts for each occasion; hence opt for gift cards. This is significantly helping the modern retail in boosting such transactions during the festive season.

Transactions through gift cards are expected to increase from 50% to 80% during October-December. With the increase in demand for gift cards, we can see the change in the Indian consumers’ opinions and preferences. In addition to this, the retailers are too comfortable with the homecoming of the gifts card as the sales are aiming to increase the billing value for transactions paid through gift cards.

The online gifting space, like any other industry, has certain challenges to face. The assurance of same day or fix date delivery, for example, throws up logistical issues that any eCommerce company/s face in terms of manpower and delivery transport etc. Hence, it is imperative for any portals to come up with variety that surprises the buyer as well as the receiver of the gift. In the hectic schedules, a beautifully gift wrapped present can rejuvenate any relation or help maintain the existing ones. The demand for gifts is sure to continue stimulating the online gifting segment significantly.

Online and offline retailers now should collectively view gifting as an opportunity to reach out to their target consumers and promote their brands at almost no extra cost with the help of social media. This social gifting concept is widespread in foreign countries. Considering the digital growth in India, we can see that social gifting will soon be introduced.

Post m-commerce, social commerce will speed up and more people will be connected via social media websites. Retailers will have a major advantage as gifting will give them the chance to engage with its targeted consumers and get timely feedback.


Article by Firoz Khan, Co-founder and CEO, Gift Cards India

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TAGS:   card manufacturing, card services, Global, trends