Digital gift cards sales increased throughout the pandemic and surged during the 2020 holiday season. The number of digital gift cards U.S. retailers sold in November 2020 increased 25.0% year over year and increased 106.1% year over year in December 2020, according to survey data from 1,528 U.S. retailers that use Rise.ai Inc.’s re-engagement software.
The data does not include Amazon gift cards nor multi-store gift cards, such as a gift card that could be used at more than one store. For example, a parent brand like Gap Inc. could offer a gift card that could be used at Gap, Old Navy and Banana Republic.
On average per retailer in December, a merchant sold 30,774 digital gift cards.
While Q4 is traditionally the strongest quarter for gift card sales, the pandemic’s impact on shopper behavior drove even more consumers to this product for the holiday season, says Yair Miron, CEO and founder of Rise.ai.
“In 2020, holiday shipping cutoff dates were earlier compared to previous years, due to the impact of the U.S. elections and COVID-19 on global supply chains,” Miron says. “As a result, people took advantage of digital gift cards for last-minute shopping.”
On average, a retailer generated $2.6 million in income from digital gift card sales in December 2020, a 121.1% increase from $1.2 million in digital gift card income in December 2019. Figures are rounded.
Throughout the pandemic, gift cards generated a greater portion of a merchant’s overall income, according to the survey data. For example, in July 2020 2.63% of a merchant’s total revenue came from sales of digital cards compared with 1.17% in July 2019.
With the fear of contracting the coronavirus, consumers avoided both in-store shopping and using cash as a form of payment. Purchasing gift cards is also one way consumers have been supporting local businesses during the pandemic. More corporations are giving gift cards to employees to help small and medium-sized businesses too, according to Rise.ai.
As a result, gift card sales are making up a greater share of merchant’s overall revenue.