We’ve all given and received gifts, but the process of gift shopping has remained complex and intricate. In this 4 part blog post series, we’ll provide readers with an in-depth analysis of the gifting industry, and offer a thoughtful, data backed perspective on why gifting matters to your business. We’ll challenge what you think you know about gifting in e-commerce, walkthrough how gifting evolved and the available solutions, and share observations about gifting gleaned from a range of Behavioral Economics studies. At the end of the series, you’ll gain actionable insights into how expanding and improving your gifting approach can increase customer satisfaction and drive incremental sales.

Why Should Gifting Matter To You?

We’ve previously written that gift giving is an entrenched tradition that has been prevalent throughout human history – a tradition that often comes with a social value attached to it, as it serves as a powerful expression of love, respect, and affection for others.

Despite the significance of this traditional practice (or perhaps because of it) gift giving has never been an easy process. People put a lot of effort into choosing the perfect, most thoughtful gift – but what’s frustrating is that there still lingers the ‘risk’ of getting a gift that disappoints. As a result, customers often find themselves struggling as they shop across multiple stores, deliberating between different products, or are relegated to buying gift cards (which for many are deemed impersonal). The irony of risk averse gift giving is that in a Time article published late last year, world renowned behavioral economist Prof. Dan Ariely presented findings that gift recipients prefer getting ‘riskier’ gifts. Based on a joint survey conducted by Loop Commerce, Prof. Ariely and the co-founder of Irrational Labs, over ten thousand people were asked about how they felt about the gifts that they received. The survey found that gift buyers underestimated how much joy their gifts would bring, irrespective of what the gift was. This ultimately reflects a mismatch of understanding between gift givers and recipients that needs to be reconciled.

So why should a customer’s gifting experience matter to you?

Firstly, when shopping for a gift, it is instinctive to want to find that ‘perfect’ gift, something that the recipient will absolutely love. But imagine the stress a gift giver goes through as he visits store after store, talking to an endless amount of salespeople and looking through the racks and bins for a gift that fits the ideal ‘perfect’ gift. Even if he manages to find that gift, the gift giver often struggles to recall necessary details such as the recipient’s shipping address, or needs to guess things like size and favorite color, which increases the chances he’ll miss the mark. Each time the gift giver leaves a store or site empty-handed, the disappointment (and pressure) mounts and his abandonment translates into a loss of potential sales for retailers.

Secondly, let’s not forget about the gift recipient. According to a publication by South University, the satisfaction of gift recipients is highly affected by their perceived value of the gift. ‘A person can have immediate feelings of resentment if they feel a person has not spent enough. They feel undervalued or cheated. Or perhaps the gift expresses more feelings than expected.’ This emotional reaction could also drive gift returns and exchanges, causing retailers to incur extra costs that could have otherwise been avoided if the gifting experience was optimized.

Thirdly, retailers should be mindful that the calendar is filled with gifting occasions throughout the year. Retailers have been paying close attention and preparing way beforehand for the holiday seasons, as these occasions can make up close to one-fifth of total annual retail sales. On the other hand, non-seasonal events are often significantly overlooked and rarely promoted by retailers. In fact, a recent survey conducted by Blackhawk Network found that among 440 gift buyers, 88% of them cited year-round occasions like ‘Birthdays’ and ‘Thank You’ as the most common reason for buying a gift card. This implies a huge opportunity that retailers have been missing out on that can be tapped as a revenue generator.

So what can I do to help gift givers?

Encouraging gift givers to take a risk and being mindful to attract them year round will help drive gift purchases (and sales). Also, recent innovations in technology have added an opportunity to engage the gift recipient, making it easier to gather the recipient’s information to be leveraged on to personalize future gift experiences through upselling and cross selling products to match a shopper’s preference. In essence, what started out as a gift purchase can now generate a ripple effect; the recipient gets a great gift, and retailers get the recipient as a new customer.

Gifting is a complex and intricate process to get right, especially so when the giver and recipient each holds different expectations of a perfect gift. But with a stronger understanding of gifting A-Z, retailers gain the ability to provide customers with a memorable gifting experience. This can significantly increase the overall sales from existing customers that have not considered purchasing the same products for others as gifts, as well as attract new gift givers.

As we explore the details of gifting, let’s not forget its main purpose – it is an expression of love, respect and affection for each other. Just think of the gleeful anticipation both gift giver and recipient have as a gift is being carefully unwrapped. In our next blog in this series, we’ll look at the growth of gift cards and its evolution as an alternative gifting real physical products. We’ll leverage behavioral economics to talk about how consumers view gift cards from an emotional standpoint, and we’ll also touch upon the rising demand of digital gift cards.

Join the conversation! 1 Comment

  1. […] This blog is the last from our 4 part series on the state of gifting. Read our first one here. […]


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About Roy Erez

Roy Erez is the Co-Founder and CEO of Loop Commerce. An advocate for making e-commerce more thoughtful and focused on reshaping gifting together with an amazing team. Proud to be backed by industry leaders and grateful for his wife and kids for their love and support throughout this journey.




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