2021 is going to be a gift of a year for e-commerce

Darren Sinden

In 2019 Amazon Starbucks and Home Depot shoppers spent $98 billion on gift cards that figure represented a 90% growth rate from 2005 those numbers look certain to be eclipsed in 2020

Disruption in retail FX

E-commerce was already a growing trend before the government lockdowns struck early in 2020. However, it exploded as people found themselves at home with time on their hands often with disposable income burning a metaphorical hole in their pockets.

The prospect of widespread vaccination and the potential reopening of our economies in the second half of 2021 might have been thought likely to have a put a lid on the online shopping trend. However new research from Lipper Analytics suggests otherwise.

Lipper research finds that 2021 is likely to be another year of growth for e-commerce and that the trend will get a kick start early in the year because the most popular gift in the USA and Canada at Christmas 2020 is a pre-paid gift card.

The Lipper findings are backed up by research from consumer intelligence specialist InMarket who found that purchases of gift cards were up by 363% in September and October 2020 compared to the same period in 2019 and that year over year the average shopper was spending an additional 17.58% on gift cards compared to the prior period. They are also buying them more frequently with the average number of gift card purchases per shopper rising by 12.33% in 2020.

Lipper found that a 48% of consumers will be gifting a gift card this Christmas the cards shared the first spot on the list of most popular gift with clothing and accessories.

However, not all American rush to spend their gift cards and between 2 and 4% of all gift cards in the USA are never spent or redeemed and that means that on average around $3.0 billion per annum goes unspent.

InMarket also looked at the sectors that were benefiting from the uptick in gift card purchases perhaps counter-intuitively given that in its opinion Covid19 is still widespread in the USA, casual dining and beverage brands have been the number one beneficiaries with Starbucks capturing more than16% of all gift card purchases in the sector made in September and October.

Whilst McDonald’s saw its customer’s spending on gift cards increase to an average of $30.81 whilst at the same time capturing an additional1.95% market share of quick services restaurants gift card purchases.

Among technology and electronics brands Apple captured 6.93% of gift card purchases with Google lagging at just 2.95%, whilst shoppers at electrical retail chain BestBuy spent the most on gift cards with an averaged purchase of just over $182.0 per gift card.

Of course, not every gift card is brand-specific and prepaid debit cards are also a popular choice. VISA has seen its market share of this space rise to 10.08 % this year with US consumers spending just over $100 on average on purchases of its prepaid cards. Rival Mastercard’s market share is just 2.41% however.

No discussion of e-commerce can exclude category killer Amazon which has 6.74% of the non – brand specific gift card market. In 2019 Amazon, Starbucks and Home Depot shoppers spent $98 billion on gift cards that figure represented a 90% growth rate from 2005 those numbers look certain to be eclipsed in 2020.

Consumer loyalty and consumer engagement firm Paytronix estimates that 70% of all gift cards sold by retailers will be spent within the first 6 months of 2021.

All of these card purchases and the sales that result from their use will, of course, help to boost the turnover of payment processing fintech’s across the USA and elsewhere which should keep Silicon Valley and Wall Street smiling as well.

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