Digital Gifting Solutions: Unlocking a blind spot in digital commerce
Consumers shopping for others bring different expectations and needs than those shopping for themselves. Until now, retailers have turned a blind eye to the enormous sales opportunities in digital gifting, which is estimated to represent $200 billion-300 billion in sales annually. Leading retailers and brands such as Macy’s, Saks Fifth Avenue, Bergdorf Goodman, Neiman Marcus, Coach, Lilly Pulitzer, Vera Bradley, and others have begun to embrace innovative, new digital gifting solutions and monetize the emerging digital gifting category.
Retail executives and industry experts came together in June in New York City for a first-ever summit focused on opportunities within digital gifting entitled, “Shopping for Others: Unlocking a Blind Spot in Digital Commerce.” The event included a panel discussion on how retailers can tap into the benefits of digital gifting to capture incremental sales, acquire new customers and reduce the cost of return, not to mention build brand value and excitement in a way that increases consumer engagement with the store.
The discussion was led by Fung Global Retail & Technology managing director Deborah Weinswig, who moderated an executive panel that included Milton Pappas, senior VP of digital marketing for Hudson’s Bay Company’s HBC digital division, Victor Ortiz, VP of digital product management for Toys “R” Us, and myself.
Based on the discussion, here are five reasons why top retailers and brands are now adopting digital gifting solutions.
1. Converting Online Visits to Sales
Tracking gift card sales as well as offering gift wrapping can distinguish gift purchases from self-purchases, but it doesn’t give enough visibility into the recipient and their preferences. And traditional e-commerce models and checkout flows, built and optimized for self-purchase, can’t distinguish between products purchased for the buyer versus someone else.
Through new digital gifting solutions, retailers can see the differences between a consumer shopping for themselves and a consumer shopping for others. This enables retailers to convert site visitors previously unable to purchase, and attract and excite new and existing customers in a way that enhances brand loyalty and customer engagement.
2. Harnessing Gift Recipient Data to Expand Reach and Encourage Future Purchases
Often, a gift recipient is invisible to the store, offering very little information into the lifecycle of the purchase and the relationships between the buyer and recipient. Digital gifting solutions can deepen the data gathered on the gift buyer and recipient by showing the full lifecycle of the transaction, such as why the gift was bought and what the recipient did with the gift (change the size, exchange or return), and track their purchase behavior from that point forward.
However, while it has become standard for retailers to send personalized offers based on self-purchase data, the line can be blurred when targeting gift recipients that may not have offered their data first-hand. For example, Toys “R” Us uses data gathered through a baby registry to reach out to parents when the baby is about to turn one. Weinswig noted that this could feel “creepy,” as though the store knows too much about a child. However, Ortiz stated that consistent, personalized marketing establishes a brand connection slowly, and makes a promotion for a birthday natural.
3. Reducing Cost of Returns, Exchanges and Unredeemed Gift Cards
Returns are a challenge for retailers. While they are a mechanism to drive traffic to the store, they can be costly. Further, gift cards also present a liability if they go unused.
New digital gifting solutions enable the gift recipient to modify, exchange or return the gift before it has ever left the facility, particularly relevant with “hard-to-gift” items like shoes which require the correct size, or toys for children. Buying for children is especially difficult because their interests change quickly. At the panel, HBC's Pappas explained, “Anything we can do from a gifting perspective to enable them to make personal gifts versus gift cards is a win-win. We have more satisfied customers, and we reduce the return rate.”
When done right, digital gifting solutions have demonstrated nearly 100% gift redemption rates with no added cost to ship.
4. Meeting Consumer Demand for Immediacy and Instant Gratification
Thanks to social media, consumers have become accustomed to saying, “Happy Birthday” with the click of a button. However, when Facebook reminds someone of a birthday, it is usually too late to ship a thoughtful gift, leaving consumers with few options other than an impersonal gift card. In-store pickup is sometimes an option, but it was noted that about 40% of gifting transactions are cross-state. Amazon’s growing same-day delivery is also adding competition for traditional retailers.
Digital gifting platforms bring retailers online tools to compete by facilitating the sending of thoughtful gifts immediately.
5. Diminishing Cart Abandonment
Cart abandonment rates are very high in e-commerce, and even higher in online gifting. This represents significant missed opportunities for retailers, but it is important to understand why customers – particularly those looking to purchase for others – are abandoning their carts.
Many times, it is because they didn’t want to get the wrong gift which would need to be exchanged. Toys "R" Us' Ortiz talked about his visitors shopping for registry gifts.
“Some of it is friction and frustration based on all the items being gone within their budget," Ortiz said. "We need to help them pull together a nice basket, even if all that is left is baby bottles.” The good news is this is fundamentally easy to solve with technology – particularly a platform that doesn’t ask a gift buyer about the size of a shirt they are buying for another person.
HBC's Pappas reinforced the value digital gifting brings to his business. “We see a good rate of new customers and recipients, a new source of email addresses, and if we can get them to the store it’s huge. It’s an acquisition vehicle for us... I’m getting a lot of new customers, and a high conversion rate," he said.
Retailers willing to adopt new, innovative digital gifting solutions are finding that they benefit from decreased cart abandonment, higher traffic, more customers and higher margins as the retail industry evolves around this new and growing online retail category.
Roy Erez is CEO and co-founder of Loop Commerce, an enterprise-grade, fully customizable, e-gifting solution whose GiftNow service integrates the personalization of gifting with the convenience of online shopping.