Egifting in North America

Thursday, October 31st, 2013

By Prof. Dan HorneProfessor Dan Horne, PhD, Co-Founder and CKO of Global Prepaid Exchange (Gx) & Professor, Providence College

Gx-LogoDigital gifting brings another dimension, immediacy, to the gift card arena.  But like mobile payments, the move to digital gifting has occurred a slower pace, uncomfortably so for some, than might have been predicted by experts.  Build a better mousetrap and the world will beat a path to your door.  Build a better gift and … wait for the moderately engaged consumer to figure it out.

Not that progress has not been made. In all five countries, including Canada and the US, where we collected consumer data this September (representative samples of English-speaking adults, n=867 in Canada and n=961 in the US), eGifts were used and were overwhelmingly liked.  Several trends were apparent and our queries into why people have not purchased eGifts highlight the need for improved positioning on key consumer risk factors that are inhibiting purchase.  In the end, if consumers have misperceptions, that is not the fault of the consumer, but a challenge for the industry

Consistent with the receipt of gift cards in general, receiving an eGift is viewed positively with two-thirds of recipients “very satisfied.”  As familiarity increases and the technology continues to improve, satisfaction should increase, and concurrently, so should positive word-of-mouth communications – this drives further sales growth.

We also asked about factors that inhibited those who had not purchased eGifts in the past.  With new products, awareness is always a concern. And with any financial product, trust and safety are key hurdles to overcome before consumers will adopt new products.

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There is apparently fairly good understanding of the concepts of eGifts. However, compared to regular gift cards, there is a long way to go.  And perceived understanding is not always the same as actually understanding; misperceptions may exist.

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The data should provide comfort to retailers considering an eGift programme as the only 10% of Canadians are worried about the safety of these products.  As more consumers develop actual experience, this factor will nearly disappear from the decision making of purchasers.

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Technological problems, even if they are on the part of the recipient, are on the mind of many Canadians.  This suggests givers understand these products are not for everyone; certain recipients, for example those who are younger, are better suited.

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The primary inhibitor however, appears to be the perception that eGfits are impersonal.  This is also consistent with the attitudes of consumers when gift cards themselves were developed. This perception eventually gives way to a more pragmatic attitude.  Some of the work on personalization may help, but with “effort on the part of the giver” as one of the key elements of a “true gift,” it may take several years for this change to occur.

Look for the category to continue to grow as some segments, who value speed and convenience over tradition, move to this gift option.  The rest of the market will follow only slowly.


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