by Deanna Ting | March 18, 2015
Digital gift card sales grew by 10 percent from the same period last year according to internal 2014 holiday data collected by InComm, a prepaid product and transaction services company. The data also shows that retailers can extend the holiday shopping season by offering instantly delivered digital gift cards, which have risen in popularity across all age demographics. 
Aggregated purchasing data for e-commerce sales of physical and digital gift cards through the InComm Digital Solutions (IDS) platform indicated a strong growth in digital gift card sales in 2014 compared to the previous year. While physical gift cards remain an important part of holiday gifting strategies, 2014 saw a greater portion of digital gift cards sold during that same holiday season.

According to IDS data, 67 percent of total sales in December 2014 were digital gift cards compared to 57 percent in 2013. By contrast, physical gift card sales seemed to be on the decline; 33 percent of total sales in December 2014 were physical gift cards, compared to 43 percent in the previous year.
InComm says this this rise mirrors the results of a consumer attitudinal survey conducted prior to the 2014 holiday season, which indicated an increasing preference for digital gift cards and a continued demand for choice. Of the consumers surveyed, 80 percent of total respondents -- and 89 percent of Millennials ages 18-35 -- agreed that they're more interested in purchasing digital gift cards now than they were two to three years ago.  These consumers also expressed an interest in choice, with 77 percent wanting the option to purchase digital or physical gift cards and 34 percent stating that the decision to purchase a digital or physical gift card depended on the recipient.
Another trend that emerged from the data was that as holiday shipping deadlines got close, digital gift card purchases rose while sales of physical gift cards slowed down. In the six days leading up to Christmas, 88 percent of total sales were digital gift cards, compared to 80 percent in 2013. During that same period, 12 percent of total sales were physical gift cards, compared to 20 percent in 2013. Also, Dec. 24 was the highest sales day for digital gift cards.
"Retailers should take note of this data, which reflects the importance of digital gift cards as a complement to physical cards in continuing to driving sales after holiday shipping deadlines have passed," said Mike Fletcher, general manager of IDS.
Smartphones are also contributing to the increasing demand for consumers to purchase, store, and redeem digital gift cards from their mobile devices. Consumer survey responses indicated that 72 percent have purchased a gift card online or through mobile means, and 50 percent of respondents agree that they would prefer to have a digital gift card scanned from their mobile device than to carry an email printout. A total of 53 percent of respondents are interested in storing and using gift cards on their phones.
"Ultimately, data from the 2014 holiday season demonstrates significant overall digital growth across age demographics, especially in the final days leading up to major holidays," said  Fletcher. "When it comes to digital gift cards, a winning strategy must incorporate choice: consumers want to be able to choose between a digital and physical gift card and mobile or email delivery. Retailers need to deliver complementary offerings."