A Deeper Look at the Surging E-Gift Cards Market

Written by Communicate Staff on Monday, January 18, 2021

The market of e-gift cards is booming in the GCC. Communicate spoke with Husain Makiya, CEO of digital distribution platform for prepaid e-gift cards YouGotaGift, offering an extensive catalogue of 500+ brands (Noon, Amazon, Jarir, Saco, Ikea, Centrepoint, Carrefour, iTunes, Sony Playstation, etc.), to understand why e-gift cards are such a good fit for the times we live in.

Husain Makiya: CEO & Co-Founder of YouGotaGift

How are e-gift cards a good fit for today’s consumers, particularly in the context of the pandemic?
The demand for gift cards during Covid-19 has continued to accelerate in the GCC, with e-gift cards, in particular, witnessing an almost 50% increase in sales during lockdowns, according to our figures. The market of e-gift cards, that was just niche for the past few years, has now become an industry. This trend is expected to bloom in the future with accelerated adoption by consumers and businesses. The key drivers for this growth are the facts that:
- e-gift cards are easy to buy and deliver. They can be purchased online and delivered instantly by email or text message, without the consumer having to go to a shop.
- e-gift-cards are paperless. They deliver an end-to-end digital experience, avoiding all aspects of physical card handling, making them safe during the pandemic. They are also redeemable online or in-store as a form of contactless digital payment, just like any other cash card.

What are the specifics of the e-gift cards market in the GCC, both from the offering and the consumer sides?

Market insights by international market research company ResearchAndMarket.com in July 2020 project that by 2024, the UAE e-gift card market will reach $727.5 million, growing 26% YoY; and that the KSA e-gift card market will reach $508.3 million, growing at 25.1% YoY. Globally, the number of purchased e-gift cards represents 10% of the entire gift card market, and close to 16% in the UK. However, this ratio is projected to be closer to 30% in GCC, given that the market is fairly young with strong e-gift card adoption driving faster penetration. Furthermore, long-term prospects for e-gift cards remain promising as more payment services become mainstream while plastic cards make the switch to digital.

How do e-gift cards influence consumer behavior?

With the growing number of occasions and the increasing popularity of the gifting culture globally, the demand for gift cards has risen significantly over recent years. Moreover, organizations recognize their employees’ performance and offer incentives in the form of gift cards. Every busy shopper knows the benefits of a gift card: it’s an effortless way to wish someone a happy birthday or thank them for a job well done. It lets the recipient buy what they truly want and it’s as easy to use as cash. According to research by CEB Gift Cards Sate of the Union 2014, many customers spend 38% over face value of their cards, resulting in more sales for businesses. Moreover, e-gift cards can enhance personalization, allowing users to add personal messages, photos, and videos – contrary to plastic which virtually knows nothing about you, nor can easily express your personal gifting sentiments.

Who is adopting e-gift cards to engage customers and drive sales?

We have seen three types of behaviors from companies that have switched to e-gift cards.

The first falls under the label of consumer rewards, wherein customers can be rewarded with an e-gift card upon their participation in a certain activation or their purchase of a product. We have worked with the likes of Michelin on massively successful activations. The earliest adopters of this are the marketing agencies and the FMCGs running activations with consumers.

The second relates to customer loyalty. Major loyalty programs, specifically, have been able to benefit from the popularity of e-gift cards to offer their members something that they want to redeem. Gone are the days of loyalty programs pushing antiquated products to their members. Today’s world is all about choice and instant gratification, and the success of the e-gift card in loyalty programs lies in the significant rise in redemption rates. We work closely with major regional telcos (e.g. Etisalat, UAE) and top tier banks (e.g. Ahli, KSA) as redemption partners for their loyalty programs.

The third is employee rewards. For HR professionals, customers are their people and they have made the choice to switch to e-gift cards to reward and recognize their workforce. We have worked with Maersk, Boston Consulting Group and others.

Basically any company can benefit from the contactless, safe, and more importantly streamlined and virtual, nature of e-gift cards. And with this switch, they are eliminating the downsides of managing physical merchandise like inventory upkeep, supply chain management, logistics, and delivery. E-gift cards give marketing, brand, and HR managers a perfect solution to interact and incentivize their customers and employees. Being completely digital, with access to hundreds of brands, they can create thousands of options for their users in no time at all.

How do gif cards also help give brands more exposure?

Gift cards present the opportunity to create stronger relationships with customers, raise brand awareness, boost profits, and attract new shoppers, and no time is better for gift cards than now.

Gift cards enhance brand visibility. Customers purchase gift cards from their favorite stores and give them to their friends and family.  The receiver may or may not be aware of your brand but now, they will surely know about you and will also visit the store to redeem.

Gift cards also play an important role in enhancing the customer behavior towards the brand and building brand loyalty.

How do they fit within the general e-commerce ecosystem and its current growth?

Gifting habits are changing with the pandemic. Shoppers are increasingly buying gift cards to help family and friends out on essentials and buy what they really need, as many have endured a certain level of hardship. Restricted travel and lockdowns are also driving consumers to buy e-gift cards for those they cannot see. It has proven to be the top choice for shoppers this holiday seasons, with a marked increase in consumer gifting sales as witnessed by YouGotaGift.
Consumers are increasingly turning to online for all their shopping habits. Gift cards for e-commerce brands have witnessed significant growth during Covid-19. Globally, e-commerce gift card sales were up more than 12%. That growth is poised to continue this season with a 21% increase in e-commerce gift card sales already this year according to Blackhawk Network BrandedPay Holiday report, Oct 2020.

What are the dos and donts when initiating an e-gift card offering? 

Gift cards must be flexible with no restrictions on how and when to spend it. Consumers must feel free to use them throughout the year, just like cash.

Gift cards must also have adequate validity to gives customers the time to go shopping and buy what they really want, when they need it.

Gift cards should have an omnichannel offering, i.e. the possibility to buy and redeem either in-store or online.

Gift cards must also have great customer support and acceptance to make sure the experience is never spoilt from the time of purchase to the time of redemption.


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