Research conducted by Loop last month shows that nearly 50 percent of customers who purchase items for themselves online buy less than half of their gifts at the same stores.  In fact, only 18% said they always buy gifts at the same online stores where they shop for themselves.  This means there’s a significant opportunity for retailers to grow sales from their existing customers, as well as capture gift purchases from new customers. Much of this discrepancy is due to the various challenges involved with buying gifts for others online.

There are ways for retailers to reclaim this lost opportunity and capture the incremental 15 to 20 percent of online purchases from customers buying products as gifts for others. Retailers should consider the following actions to better position themselves and be more successful with online gift shopping and delivery. Our tips are based on extensive research studies we have conducted, trends we observed during recent gift-giving periods and Loop Commerce’s analysis of data flowing through our retail clients.

1. Offer solutions for last minute shoppers.

Aggregate data from Loop’s network of retailers reveal a staggering number of gifts are purchased last minute (defined as gifts bought the day before or the day of a major holiday). Retailers can reduce a great deal of friction in the transaction by modifying or eliminating shipping and delivery deadlines by offering two-day, one day or even same-day delivery.

There is a significant opportunity to capture sales from the approximately 20 percent of people psychologists call “chronic procrastinators” or from those who were not planning to buy someone a gift but felt compelled to do so when they received a gift from that person. Consider offering a personalized e-card that can be sent immediately with a note stating the physical gift is on its way and the sender has not forgotten this special person.

2. Include a gift section to make gift buying easy.

Make it easy and intuitive to purchase a gift despite the large number of product selections and options. Loop research reveals that 35 percent of gift buyers hesitate when buying a gift online due to a fear of “getting it wrong” by purchasing the incorrect size, color or style.

To overcome this barrier and increase holiday sales, retailers should include a gift section curated with the most popular gifts organized by tiered categories, offering comfort to potential buyers that these products make good gifts. Retailers should also tailor their merchandise to meet the needs of their different customer and demographic segments. In general, including gifts that have few attributes help the buyer avoid much of the guesswork of gift buying.

And don’t forget the power of visuals. A 2015 study of over 1,000 consumers by Animoto found that 80 percent of Millennials found videos helpful during initial research for a purchase decision. Make it easy for customers to get a better feel for the product by including photos, videos and customer reviews.

3. Don’t rely heavily on gift cards.

While a gift section should also include gift cards and e-gift certificates, retailers should not rely heavily on gift cards. Many external studies strengthen this point. A Blackhawk Network study from 2014 highlights that one of the top concerns with e-gift cards is that they are “perceived as even more impersonal than physical gift cards.” The Loop survey conducted in September 2015 found that 25 percent of consumers who purchased a product online said they had not or would not purchase gift cards. A further 31 percent said they had only purchased gift cards reluctantly. 

One particularly interesting result from the study found that only 6 percent of respondents said they would be willing to give gift cards to anyone on their gift list. A staggering 94 percent of respondents said they would only give gift cards to certain people, such as acquaintances or friends they did not know very well, but would not give them to their spouse/significant other, their children or mother. The closer the relationship between the gift giver and the recipient, the less likely the respondent is willing to give that person a gift card.

4. Provide hassle-free exchanges and returns.

With gifts, exchanges and returns are always higher since there’s a higher likelihood that a buyer will purchase the “wrong item” when it’s intended for someone else. Loop research and data from its network of retailers found that one in four (24 percent) gift shoppers cited worrying about the hassle of returns as one of the most common reasons they hesitate to buy gifts online. Understanding the buyer’s concern and hefty costs associated with these exchanges, retailers should minimize this obstacle by offering and highlighting flexible exchange policies.

Another way to overcome this barrier for purchasing gifts is to make it easy for the recipient to exchange the gift by offering a “return anywhere” policy. Once a retailer has this procedure and policy in place, the retailer should promote the hassle-free exchange and return policy to those who would be buying gifts.

When retailers incorporate these gifting tips into their overall approach, customers can overcome the psychological and transactional obstacles to shopping for gifts online. As a result, retailers will not only capture more gift-related revenue, but will also provide an improved customer experience that reflects positively on their brand.

Loop Commerce provides gifting technology for online retail sites.

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