Gifting products online is a $200-300 billion industry. The average consumer buys more than 20 gifts each year across various life events and holidays, and gift-giving is no longer dominated by just the December holidays. As a result, online gifting (defined as purchasing products for others as gifts) is evolving as a market to which retailers are paying particular attention as they look to compete, innovate and find new ways to increase their customer base and overall sales. Loop Commerce has coined this category “g-commerce” (gift-commerce).

While retailers may have existing loyal customer bases, enormous upside exists if retailers can convince shoppers to consider these same stores for their gifting needs as well. Sounds trivial, but it is far from it. E-commerce has significant obstacles built into it that are preventing shoppers from easily purchasing thoughtful products as gifts for others online. Shoppers may wonder if the recipient will like a certain gift or if an apparel item will fit. They may not know the exact shipping address of the recipient or may need a gift delivered that same day.

A single shopping and checkout flow to cover all shopping use cases does not work and will lead to increased cart abandonment and overall fewer transactions. There’s a big difference between “shopping for yourself” and “shopping for others”, and this needs to be addressed. Thanks to technology and science, effective strategies to overcome these obstacles are emerging and will end up being an integral part of every online retailer’s e-commerce strategy.

Clear and compelling data is now available showing what gift recipients want and what gift givers need to feel comfortable buying gifts online. Based on surveys and Loop Commerce’s consumer behavior and usage data from across its network of retailers, we are able to shed some light on the strategies and actions retailers can embrace this holiday season and beyond to attract more gift shoppers and transactions.

Present A Gift Guide

Starting from the basics, offering a searchable and dedicated gift guide for your customers shows that you are here to help them shop and find the perfect gift. Your suggestions can make shopping for a gift for others easier, faster and more personal. Allowing shoppers to search for gifts based on criteria such as gender, age and occasion allows them to find gifts that are personal and not just safe. In many cases these safer products tend to be deemed as less personal and less exciting. 

Offer Gift Cards as Only One Part of Your G-Commerce Strategy

Gift card sales last year totaled approximately $130 billion. Until now, the gift card was the only safe virtual gift option, as it allowed the recipient to buy his or her own present and could be delivered instantly. There will always be a market for gift cards, as they provide an easy, and oftentimes last minute, gifting solution.

However, recent studies prove that 56% of consumers are reluctant to buy, or do not buy, gift cards, for all or for some of their gift purchases. They want to deliver a gift, and not money for the recipient to buy their own gift. And whether you think this number is actually lower or higher, the fact is that there are still a significant number of consumers who are not catered to. These consumers prefer to gift items that are perceived as personal and thoughtful.

Retailers should also know that, while gift cards are an important component of an e-gifting strategy, actual gifts are proven to deliver up to twice the average order value of gift cards, as people tend to pay a premium for a thoughtful item purchased as a gift, even if it exceeds their original planned budget (on top of the additional upside coming from exchanged gifts, similar to gift cards).

Make Gifting Emotional, Not Transactional

Both giving and receiving gifts should be a “feel good” experience. People want to give a thoughtful gift that is highly personal. But this ideal carries with it a significant challenge, since the best and most personal gift also tends to be the most risky. And the fear of ‘getting it wrong’ causes many to shop elsewhere and for something safer.

Consumers, today more than ever, are seeking the shopping experience as much as they are looking for a good product, and are even willing to pay a premium for it. Retailers should draw people to their site by making gifting enjoyable, not dreaded. When possible, consider the following:

• Imagery should convey a personal yet simple gifting experience and gift suggestions by category, gender, occasion and price should be clearly displayed.
• Greeting notes are an important addition that make the experience more personal.
• Offer a gift receipt that does not show the price. As Behavioral Economics studies teach us, having the price visible when presenting the gift shifts the experience from an emotional and social one, to a transactional one. This reduces the excitement and emotional value for the gift recipient. Consider how obvious it is for us as consumers to remove the price tag from a product when hand-delivering it as a gift. The same reasoning and a thoughtful experience should extend to online gifting.
• Gift wrapping helps improve the experience and creates excitement for both the gift buyer and gift recipient.

Cater to the Procrastinator

Like it or not, about 40% of gifts are purchased the day before or the day of an event. And it’s very likely that this trend is here to stay as people tend to procrastinate or just simply forget (think about the reliance people have on the daily Facebook birthday reminders, for example). Younger shoppers, a growing demographic with significant purchasing power, are much more likely to shop last minute than their older counterparts. In fact, data shows that only 31% of those between the ages of 18-29 admitted to shopping well in advance of a holiday.

With solutions like Amazon’s offering same-day delivery in certain markets, it’s easy to lose customers and transactions to this or other sites offering express delivery. Nearly 20% of consumers surveyed say they have abandoned an online purchase for fear that the gift wouldn’t arrive on time.

Offering last-minute gift ideas and highlighting rush delivery capabilities and options will attract new gifting customers. Free same day (when possible) or next day delivery can help eliminate this fear and reduce the 65%-80% cart abandonment experienced by online retailers.

Offer Consumer-Friendly Shipping and Return Policies

Nearly one-fourth of consumers surveyed hesitate to purchase gifts online because they are worried about the hassle for the recipient associated with returns. Retailers can eliminate this concern by offering free shipping incentives and easy and/or free return policies. This may take the form of “free shipping-free returns”, “buy online-pickup in store” or “buy online-return in store.” The goal should be to eliminate the friction that prevents shoppers from purchasing gifts online—free  shipping and easy returns do just that.

Offer Thoughtful Gift Giving Through New Digital Solutions

Consumers are eager to buy and deliver a personal, thoughtful gift that will delight and surprise the recipient. However, when faced with decisions such as size, color and style, gift givers, more often than not, will abandon the purchase and resort to a typical gift that requires no such personal knowledge, such as flowers or wine. In fact, 34% of consumers surveyed say they hesitate to purchase gifts online for fear of purchasing the wrong size or color.

Not knowing a shipping address or not having enough time to ship are further examples where the current check-out flow presents obstacles for gift shoppers, often resulting in an incomplete transaction.

A digital e-gifting solution, in which the recipient receives an instant (email or other) notification of the purchase of a chosen product, is a proven alternative that offers the same flexibility of a gift card but with the thoughtfulness of an actual gift. After choosing a personal gift, a notification sent to the recipient allows him or her to accept the gift while selecting their desired attributes (such as size and color), or exchange the gift altogether with ease before it is ever shipped.

This concept has proven to enhance the gifting experience for both the giver and the recipient. Gift givers no longer have to fear buying the wrong item and recipients are surprised with a thoughtful and personal gift. In fact, 45% of digital e-gift recipients surveyed did in fact change their gift before it was shipped – a sign that this type of service is needed and appreciated.

Importantly, when executed right, this type of solution increases the customer target audience as it attracts and converts shoppers that were not looking to buy gift cards, or otherwise would have fallen into the abandoned category for the reasons mentioned above.

The gifting market is enormous and very available. Retailers who want a bigger piece of the pie must eliminate the obstacles that have dissuaded consumers from confidently buying products for others as personal gifts online.

While these strategies will be key to success this holiday season, an effective g-commerce strategy throughout the year should be paramount to every retailer with an online presence. There are millions of birthdays and other casual events on a daily basis that are challenging for consumers to shop for, and they represent an amazing growth opportunity for retailers.

Loop Commerce provides technology for retail websites designed to encourage consumers to buy products as gifts.

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