Every other customer you get has to be talked into it. They see an ad, they click, they look around, they compare you to three other tabs, and most of them leave. The ones who stay decided somewhere along the way that you were worth the money.
The person holding a gift card from your store skipped all of that. They arrive with the decision already made and the money already paid, by someone else, to you, weeks ago. They are not deciding whether to buy from you. They are deciding what to buy.
Most online stores treat that customer as an afterthought. The gift card sits in a corner of the catalog, sells a few dozen times in December, and gets forgotten until the next December. Nobody plans for who receives it, what they see when they arrive, or whether they ever come back. That is a strange way to treat the cheapest new customer a store will ever get.
The Person Who Paid Is Not the Customer You Are After
When someone buys a gift card, it is tempting to count that as the sale and move on. The money came in. The order is done.
But look at who actually bought it. The person buying a gift card from your store almost always already knows you. They have shopped with you, or they know the recipient loves you, or they found you and trust you enough to put your name on a present. They are an existing relationship.
The recipient is the one you are after. Often they have never bought from you. Sometimes they have never heard of you. And they are arriving with a balance in hand that they can only spend in one place.
The research backs up how strong that pull is. In a February 2026 study of 1,002 US consumers by TSG and Bank of America, 55% said they would try a new business because of a gift card, up from 49% two years earlier. Among millennials the figure was 64%, and among Gen Z it was 61%. A gift card does something no ad can do: it removes the risk of trying you, because the first order is already paid for.
Now compare that to how you usually get a first-time buyer. You pay Meta or Google to show an ad to a stranger, you pay again for the click, and most of those clicks leave without buying. Whatever you spend to land that first order, you spend before a single dollar comes back, which is why we spent a whole piece on how long it takes that money to return in Lifetime Value Does Not Pay This Month's Invoice. With a gift card, the order runs the other way. Someone pays you first, and then delivers the new customer to your door.
Kelly Vaughn and Rhian Beutler, who built a gift card app for Shopify stores, put the idea in its sharpest form on the Own Your Commerce podcast: if you know what it costs you to acquire a customer through ads, why not hand part of that money to customers directly, as something they can give away? That is a bigger idea than a holiday product, and it is the right way to think about the card.
The Money Is Not Yours Yet
Before you build anything around gift cards, get one thing straight about the money, because it changes how you should think about the whole program.
When you sell a $50 gift card, you have $50 in the bank, but you have not earned it. Until the card is used, that money is owed to whoever holds it. Your accountant will record it as deferred revenue, which is a liability on your books, not income. It becomes revenue when the card is redeemed. That matters for your taxes and for how you read your own sales numbers in December, so it is worth a short conversation with whoever does your books before the season starts.
The law also puts a floor under how long that obligation lasts. Under the federal CARD Act rules, which the Consumer Financial Protection Bureau enforces, a store gift card cannot expire sooner than five years from the date it was sold or last loaded. Inactivity or dormancy fees are banned for the first 12 months, and limited after that. Many states go further, and some states require unused balances to be turned over to the state as unclaimed property after a period of time. The rules vary enough that the only safe advice is the boring one: ask your accountant which apply to you.
Here is why this matters strategically. Almost every video on gift cards lists "breakage" as a revenue stream, meaning the cards that are never redeemed, so the store keeps the money without shipping anything. It sounds like free profit. There is plenty of it out there: Bankrate's 2024 survey found that 43% of US adults have at least one unused gift card, voucher or store credit, averaging $244 per person, and 20% have let a card expire.
Treat that as a failure, not a feature. An unredeemed card means a recipient who never came to your store. You collected a few dollars once, and you lost a customer you had already been paid to acquire. Depending on your state, you may not even get to keep the money. And the person who bought the card will eventually hear that their present sat in a drawer, which is not the story you want told about your store.
Most Stores Hide the Gift Card
Walk through your own store as a shopper who wants to buy a gift card and see how long it takes to find one. On a lot of stores, the answer is a footer link, or a search, or nothing at all. The card exists, but nobody would know it.
A gift card should be merchandised like a product, because it is one. A few places it earns its spot:
- In the main navigation during gift seasons. Not only December. Mother's Day, Father's Day, graduation and birthdays all send people looking for a gift they cannot get wrong.
- On sold-out product pages. When a size or color is out of stock, the page usually ends in a dead button. Vaughn and Beutler built a "send a gift card instead" option under the sold-out button for exactly this reason. A shopper who wanted to give that item can still give your store.
- After your shipping cutoff. Once the last day for guaranteed holiday delivery passes, every physical gift you sell becomes a promise you might break. A digital gift card is the one gift you can still deliver on Christmas morning. In the last week before the holiday, it should be the first thing on your homepage, not the last. We covered the rest of that calendar in Black Friday Is Won in September, Not November.
- In the cart and on product pages as an add-on, for the shopper buying for someone whose size or taste they are not sure of.
Set your card amounts from your own prices, not from habit. The common defaults are $25, $50, $100 and $200, which is fine if your products happen to fit them. If your best seller costs $58, a $50 card sends the recipient to your store to find out it does not quite cover the thing everyone recommends, and the first feeling they have about your store is being a few dollars short. Pick amounts that let the card buy something real that you are proud of, with a little room to add.
Finally, send the card to the right person. For years the common complaint about Shopify's built-in gift cards was that they went to the buyer, who then had to forward an email to the recipient. That has changed. Shopify now supports a recipient form that lets the buyer enter the recipient's name, email and a message, and schedule delivery up to 90 days ahead. It depends on your theme supporting it, so check that the form actually appears on your gift card product before the season starts. A card that arrives in the recipient's inbox on the morning of their birthday, with your store's name on it, is a far better introduction than a forwarded receipt.
Sell It as a Gift, Not a Coupon
The most common gift card promotion is a discount on the card itself: 20% off gift cards this weekend. It works, in the sense that it sells cards. But you are giving away 20% of every card you sell, to shoppers who were mostly going to buy one anyway, and you are teaching people that your gift cards are something you wait to buy on sale. We have made the broader case against leading with a discount in You Discount Because You Never Built an Offer.
There is a better version that does more work for less money. Instead of cutting the price, give the buyer something extra for themselves. Buy a $100 gift card, and get a $20 bonus card of your own, good from January 15 through the end of February. The recipient's card is still worth its full value. The bonus goes to someone who already likes your store. And because it can only be used after the holidays, it pulls a wave of orders into the slowest weeks of your year, when you actually want them. Restaurant chains have run this kind of bonus-card offer every December for years, and it scales down to a small store without any special software.
The same thinking applies all year. A gift card lands differently from a discount code, even when the dollar amount is identical. Twenty dollars off reads as a sale. A $20 card reads as a present. That makes the card the better tool for a few jobs:
- Thanking a good customer. A card sent after someone's fifth order, or on the anniversary of their first, is received as a thank you. A discount code sent at the same moment reads as a sales email.
- Referrals. Jay Myers, who hosts the Own Your Commerce podcast, made the point that an unlimited "share this link for 10% off" gets ignored, while a small number of real gifts gets used carefully. Give your best customers three $15 cards to hand to friends, no purchase needed. Because there are only three, they think about who would actually use them, and each one arrives as a gift from someone the recipient trusts.
- Winning back a customer who drifted. A modest card to someone who has not ordered in a year gives them a reason to come back without training them to expect a sale.
Watch the margin on any of these. A card you give away costs you the product it buys, so size it to what you can afford on an order, not to what looks generous in an email.
The Card Lands. Then What?
This is where most gift card programs stop, and it is the part that decides whether you gain a customer or just process a transaction.
Think about the recipient's first moment. They open an email, or a card in an envelope, from a store they may not know. They have no idea what you sell, what is good, or why their friend picked you. If the only thing you give them is a code and a link to your homepage, you have asked a stranger to browse your whole catalog with no guidance. Plenty of them will put it off, and a card that gets put off is how a store ends up in Bankrate's survey.
Build the recipient a proper welcome:
- A landing page, not the homepage. Link the card to a page written for someone who has never heard of you: who you are in two sentences, your best sellers in the card's price range, and a clear "here is how to use your card." Shopify Mastery's walkthrough suggests featuring your three best sellers right in the delivery email, which is a good start.
- A reason to believe the gift was a good one. Reviews, customer photos, the story of the product. The recipient did not choose you, so your first job is to show them why someone who knows them did.
- A reminder, not a nag. A short note a few weeks later, showing the balance and a few new arrivals, catches the card that went into a drawer. Some gift card apps can send these automatically.
- Permission to keep talking. The recipient is not on your email list, and they did not ask to be. When they redeem the card, checkout collects their email, and that is the moment to invite them to join your list properly. Do not quietly add the recipient's address from the buyer's order to your marketing emails. They never agreed to it, and it is a poor way to meet someone.
Once they are on your list, they should get something different from your usual welcome series. Your normal welcome sequence assumes a person who found you and chose you. A recipient did neither. We walked through the flows every store should run in Your Store Sends One Automated Email. It Should Be Sending Five. For recipients, the first one or two emails should do the introducing that the gift giver skipped.
Get this right and the redemption order is often larger than the card. In the TSG and Bank of America study, 44% of consumers said they typically spend more than the value of the card, and another 48% spend about the same. A recipient who arrives with $50 and a good reason to trust you is one of the easiest $65 orders you will ever take.
Count the Recipients, Not the Cards
Most stores measure their gift card program by one number: how many cards they sold. That number tells you how much the buyers like you. It says nothing about whether the program did its real job.
The number that matters is how many recipients came back and bought again with their own money. That is the moment a gift turns into a customer. Everything before it is the buyer's money and the buyer's goodwill.
You can find this without special software. Your store's order history shows which orders were paid in full or in part with a gift card. Pull those orders for the last holiday season and check three things:
- Redemption. What share of the cards you sold has been used at all? A low number means your welcome is not working, or your card amounts do not buy anything worth having.
- First-time customers. Of the orders paid with a gift card, how many came from customers placing their first order? Those are your recipients. If the number is small, most of your cards are being bought by people for themselves or for people who already shop with you. That is fine, but it is a different program.
- The second order. Of those first-time recipients, how many placed another order, without a card, within 90 days? This is the one to watch. It is the gift card equivalent of your repeat-purchase rate, and it tells you whether the introduction worked.
Run the same check after each gift season. If redemption is high and the second-order number is climbing, you have an acquisition channel that is funded by your customers. If cards are selling but recipients are not coming back, the problem is not the card. It is what happens after it arrives.
When a Gift Card Program Is Not Worth Building Yet
None of this means every store should build an elaborate gift card program this fall.
The most honest line in any of the videos on this subject came from Shopify Mastery: if your store has three products and no email list, a gift card program does not have enough to work with. The recipient arrives, finds almost nothing to explore, and has no way to hear from you again. The card still works as a convenience for your buyers, and you should offer it, but the acquisition payoff needs a catalog worth browsing and a way to keep in touch.
If that is you, start smaller. Turn on the gift card, set sensible amounts, make sure the recipient form is working, and put the card in front of shoppers after your shipping cutoff. That alone will catch sales you are losing today. Build the welcome page and the recipient emails once there is something for a new customer to come back to.
For everyone else, the timing matters. The stores that do well with gift cards in December set them up in October: amounts chosen, landing page written, recipient emails built, a bonus-card offer ready to announce. By the time the shopping rush starts, there is no time to design any of it.
Gift cards are one piece of a larger question every online store runs into: where your next customer comes from, and what it costs to meet them. If you would like a hand working through that for your store, it is the work we do every day on our ecommerce marketing team. And if you would rather set up your own program with what is here, that is exactly why we wrote it.
