Online sales at DSW grew 23% in Q1.
On the Web, virtual procrast-inators can noodle gift ideas up to the last second and still come up with something decent: Online gift certificates, which offer near-instant turnaround from purchase to e-mail delivery, saved the day for many late shoppers this past holiday season-and certificate purveyors have the sales to prove it.
Flooz.com, which sells online gift currency accepted at more than 60 Web merchants, logged more than 1 million visits the week before Christmas, a 300% increase over the previous week. And Giftspot.com, a gift certificate provider for Web merchants such as eToys and Amazon.com, saw traffic double in the final days before the holiday.
The last minute shopping spike also boosted retailers’ own certificates. Eddie Bauer Inc. won’t disclose figures but says sales of online gift certificates peaked on Dec. 23-the day after its cut-off for Christmas package delivery. “It really helped us keep the momentum going a little longer,” says Sally McKenzie, the company’s director of merchandising and operations for interactive media. Based on that experience, she adds, online certificates will rank high in the company’s promotional plans for the rest of the year.
Holiday performance aside, online gift certificates represent a small share of overall Web sales. Just 8.4% of an estimated 20 million people who expected to shop online for the holidays planned to buy gift certificates, according to a survey by Jupiter Communications, New York. But the benefits of certificate sales are lasting, and online certificates could prove to be the gift that keeps on giving. “For every single one of these transactions, there are two customers: giver and recipient,” says Hugh Braithwaite of Webcertificate.com. “The viral marketing implications for retailers are tremendous.”
For brick-and-mortar retailers, selling gift certificates online offers one more marketing channel. Web companies that aggregate and sell retail gift certificates as a core business, on the other hand, must scramble to keep their sales up now that the holiday shopping blitz is over. To do that, most will turn to promoting Internet gift certificates for birthdays, Mother’s and Father’s days, corporate incentives and employee bonuses.
Along the way, heated-up competition is bound to eliminate some players from the ranks of online gift certificate sellers. “The most successful companies will be the brick-and-mortar merchants with online offerings,” says Jupiter Communications analyst Ken Cassar, although he sees room for a few well-stocked online aggregators. “The retailers have the brands.”