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The Future of Gifting

By Carlos Tribino | Published October 23, 2013 | Google+

 

“The greatest gift is a portion of thyself.”

– Ralph Waldo Emerson

 

Gifting is as universal as it is old. Though it would seem impossible to track the origins of gifting, it is not a stretch to consider it pre-historic since we can see the act of giving present in animal behavior. Gifting is an emotionally-charged experience that touches both the giver and the receiver with equal or similar levels of satisfaction.

There is no societal structure that lacks this ritual, even though it may take on different expressions, protocols, forms, and formalities. The desire to both give and to receive is omnipresent in all societies from Africa to Antarctica.

In America, gifting is estimated to be a 500B dollar industry. This represents nothing less than 3 percent of the U.S. Gross Domestic Product. The options for gifting are as diverse as the occasions and the motivations to give. While most acts of gifting involve some kind of economic transaction, they all involve an emotional exchange. And while it is ultimately a happy exchange, giving can also involve some level of anxiety. What to get? How much to spend? Will she like it? How do I surprise her?

Throughout the centuries, gifting has consisted mostly of selecting, obtaining (purchasing), packaging, and delivering. You choose a gift, buy it, wrap it, and give it to the intended recipient. Even when giving cash, the money is typically delivered in an envelope. In the 1930’s, department stores introduced the concept of the paper gift certificate. This new gift changed an essential dynamic in the act of gifting. You could give the recipient the opportunity to treat herself to a gift of choice. The gift certificate persisted until the mid-1990’s, when Blockbuster introduced the first plastic gift card. Until recently, the gift card has simply been a gift certificate using different technology.

In less than two decades, the plastic gift card has grown into today’s 110B dollar industry, which represents about 22 percent of all gifting. Why the success? How did a little piece of plastic come to be over one-fifth of a ritual as old as mankind in less than 20 years? And how did it come to be the most preferred gift by women? Or the most popular gift item of the holidays?

The answer is due to two socioeconomic factors. From a functionality viewpoint, the gift card piggy-backed on the popularity of its older sister, the credit card. Secure, convenient, and accepted virtually anywhere, both gift cards and credit cards fit in a wallet, don’t wrinkle, and can be used to buy what you want, when you want it. The second success factor of the gift card is that gift cards allow the recipient to buy whatever her heart desires. No returns, no exchanges, no wrong sizes, and no wrong colors. She gets what she wants, period. This convenience and flexibility reduces the giver’s level of anxiety as well.

Critics, and a reasonable amount of consumers, consider the gift card to be impersonal, a little like cash, mainly because the gift amount is transparent and the actual gift is not selected. Yet the majority of consumers have embraced these aspects in favor of convenience.

 

Gift Cards 2.0

Gift cards have come a long way from the “impersonal” 50 dollar store gift card. Technology and innovation have evolved the humble plastic gift card into a personalized, customized, versatile, and convenient gift. And today they come in many shapes, forms and endless colors.

So-called “open loop gift cards,” typically issued by Visa® or MasterCard®, can be spent anywhere these cards are accepted. The flexibility allows consumers the option to shop anywhere at any time, and to get virtually anything they want, without feeling locked into a single store.

Personalized gift cards allow complete customization with personal photos, personal embossed messages, and personally designed greeting card holders. The gift cards can even be purchased in flexible dollar amounts and they can be used virtually anywhere. Gifting doesn’t get much more personal than this. Send grandma a Visa® gift card with a photo of her grandchildren on it, and the card is likely to stay in her wallet even after the card is redeemed.

Group gift cards leverage social media to create registry-like gifts. Facebook friends, for example, can be invited to pitch in on wedding gift for a common friend. Local gift cards allow someone in Boston to treat a friend in the Bay Area to a favorite pub in the recipient’s neighborhood. Virtual Visa® gift cards, also called e-gift cards, allow you to send last-minute gifts that can be received the same day and spent virtually anywhere online: Amazon, iTunes, Expedia, and so forth. No more belated gifts.

The growth of e-commerce and m-commerce is bringing along next generation mobile e-gift cards that will combine many of the above products with incremental elements such as personalization, convenience, and increased customer satisfaction for both the giver and for the receiver. Digital commerce is estimated at 13 percent of total holiday spending. New technologies and digital wallets allow consumers to shop online with codes and to make purchases on-site with digital QR codes. Moving forward, both will be done via even more seamless transactions.

What is likely to change the gifting industry in general, however, is the ability to do all of the above–personalize products graphically, verbally, and locally to deliver the most personalized gift experience ever.

So what’s the future of gifting? Ralph Waldo Emerson said it best: the opportunity to give a little portion of yourself in a gift.

 

~~ Carlo Tribino

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