At a time when millennials have moved on from taxis to Uber and ‘shaadikishagun’ is now e-cash, can gifting choices be limited to just home décor and fashion? Why waste money on crockeries when the same money can give free rides for a month or even a year? Innovating on transport services seems to be the need of the hour with cab biggies like Uber, Ola making a beeline to launch gift cards for its patrons. So what’s the hulaboo all about? ShwethaSatyanarayan finds out.
The organized gifting market in India is worth a whopping Rs 25,000 croreand the year-on-year growth for the market is estimated at 40-45 per cent. However, when choosing gifts, it most often seems like the choices are limited- gift vouchers or cards, e-money or the age-old tradition of stapling cash in envelopes. Taking a step forward, as more and more urban youth and millennials ditch local taxis for Ola and Uber, the app-based cab players are lining up to attract these consumers.
Peek into the Indian gift card market
According to Ashok Kumar Reddy, founder & CEO, GrabOn, the Indian gift card market is expected to reach $80-85 billion by 2024, with e-gift cards expected retain a lion’s share of the market with 75-80% (close to $65-70 billion).
While the market size of digital or e-gift cards is presently estimated to be Rs 7,500-8000 crore,bank cards account for another Rs 3,500 crore and non-banking gifts stand between Rs 5,000-5,500 crore.
Interestingly, physical gifts still account for the largest share about 62% coming to Rs 15,000 crore and physical gift cards occupy 8% of the market costing Rs 2,000 crore. The global gift cards market is expected to touch $690 billion with India contributing to more than 10% of the total share.
Why customers, cabbies love it!
Although the demand for gift cards and e-gift cards is soaring, what makes it so popular among cab users?
“Gift vouchers or cards associated with cab services are simply adding to the convenience for customers. They are just like any other currency which helps facilitate the transaction. It's more convenient to load them on to the e-wallet rather than paying via card or cash after every trip. It helps a user set a budget and stick to it. Gift vouchers are seen as a win-win for consumers because of the convenience factor and gifting them to their near ones can be counted as a functional gesture,” explains Arvind Prabhakar, CEO, GyFTR.com.
The gift card providers have recently tied-up with an Indian cab aggregator, which sits in the elite unicorn club.
Further, Prabhakar observes that transportation companies too are turning towards gift cards because it not only enhances customers’ reliance on their services, but also ensures there is continued usage and loyalty.
“Gift vouchers have become significantly popular as it falls into the category of low-ticket items and people can purchase the gift vouchers to gift to anyone without giving any second thoughts,” he says.
The corporate connection
“Gift cards are a popular medium with companies who have rewards and recognition programs for employees. A lot of major companies have also changed their incentive/loyalty programs to gratify direct customers as well as offering a choice of gift vouchers,” Prabhakar notes.
Further, he explains that gift cards are not limited to Metro cities alone but there has been higher use in tier 2 and 3 cities as well. “People have become familiar with e-top ups which are often promoted by phone service providers, and hence, the process of purchasing and redeeming gift vouchers is more familiar and convenient,” he says.
Although the gift voucher space has been predominated by brands under apparels, restaurants, electronics, health and beauty, cinema and online shopping categories, supermarkets like MORE, multi-format offline retailer like Spencer’s, entertainment arena Smaaash and even Fab Hotels have also forayed into the gift voucher space, aiming to expand their business online and engage with customers on a real-time basis.
For instance, gift card providers Qwikcilver has partnered with over 300 brands in the country and the recent tie-up has been with Uber.
Commenting about this partnership, Pratap TP, co-founder and director, Qwikcilver Solutions, says, “Uber users can buy a Gift Card for their contacts that can be used for cab rides and also for ordering a meal via Uber Eats. This gifting category for cab rides and meals would open up a huge untapped market with immense potential across 200 million consumer base in India across top cities as well as the Tier 2-3 markets.”
From gifting for occasions like Friendship Day and festivalslikeGaneshaChaturthi, the ticket size ranges from as low as Rs 150 to as high as Rs 10,000, he says.
Furthermore, keeping up with the demand of the users, firms like GrabOn offers discounts and exclusive deals on using gift cards, which further adds to the popularity of the e-cash.
“We provide deals and discounts on gift cards across various verticals like food, fashion, travel and others. While these gifting platforms provide the masses what they want, the demand drives traffic, conversion, and revenue for the brand partners. It's a healthy symbiotic relationship which helps both the users as well as the partners and of course helps the online gifting industry grow,” Reddy says.
The industry players believe that the gift card trend will expand to more categories in the coming years and more brands will jump the bandwagon.