When the WHO declared COVID-19 a global pandemic on March 11, there was an almost immediate impact on businesses across the world. With more consumers shopping online for essentials to comply with social distancing, companies, including Amazon, have adjusted their supply chain strategies, making it difficult for “non-essential” eCommerce businesses to generate revenue. Retailers of all sizes are working to quickly navigate these new circumstances and keep their businesses afloat until the pandemic can be contained. Although we know we don’t have all of the answers, we’re doing whatever we can to help our customers during this uncertain time.
Thinking outside the box
If you’re currently unable to sell physical goods due to the COVID-19, one great way to generate sales for your business is via gift cards. Selling gift cards for your business allows you to bring in cash now to keep your business afloat when you are having supply chain issues or can’t sell via brick-and-mortar.
Below we’ll discuss how to get gift cards up and running quickly with your retail partner, strategies for marketing gift cards to customers and the sales tax implications of gift card sales.
How to get started
One of the quickest ways for retailers to inject cash flow into their business is by selling gift cards. Luckily, several of TaxJar’s partners make it very easy to set up and sell gift cards for your business. Customers integrated with Shopify can create and sell gift cards directly in their store or use the Rise app to sell gift cards and certificates. The company also announced that they will make physical and digital gift cards available on all new and existing Shopify plans.
If your business uses Square, you can set up a free ordering page to sell digital gift cards in your online store. Square is also currently offering customers the ability to send a free marketing email campaign to their customers to promote eGift Cards.
Strategies for marketing gift cards
Once you have the infrastructure in place, it’s time to promote your gift card availability on every channel in your arsenal. Here are three ways you can quickly market gift cards to new and existing customers.
- Email your customers: If this is your first time selling gift cards, send out a promotional email to your marketing list and let them know you’re now offering gift cards. If you have repeat or frequent customers, consider sending them a personalized message letting them know that purchasing a gift card is a great way to support your small business during this time.
- Create a gift card promotion: One easy way to encourage customers to purchase higher-value gift cards from your business is selling them as part of a promotion. For example, consider providing customers the option to purchase a $50 gift card for $45. The promise of a small discount on a future purchase can motivate customers to purchase gift cards in larger quantities than they may normally purchase.
- Leverage social media: Post about your gift cards on all of your social media channels. Be sure to tailor your content to the specific social media channel you are posting on. For example, if you are posting on Instagram, use a high-quality image of the gift card or some of your most popular products that a shopper could purchase with the card.
- Ask for help: Even in the best of times, these are tried-and-true best practices for marketing gift cards. However, given the unique circumstances we are currently living in, we’d like to suggest an additional method for generating gift card sales: ask for help from your community. These are unprecedented times and as businesses struggle, those who are in a position to help are looking for opportunities to do so. Alpenglow Sports in Lake Tahoe, Calif., made an impassioned plea to their community seeking help in supporting their business during these challenging times. This call to action resulted in more than $75,000 in gift card sales in just four days.
Sales tax implications of gift cards
It’s important to note that the sales of gift cards are not taxable. Tax should only be charged as applicable once the gift card is redeemed and a purchase is made. Be sure to double-check your point-of-sale system when gift card purchases are made to confirm sales tax is not being charged on those purchases. If sales tax is charged on a gift card purchase, customers are entitled to come back and request a refund of the sales tax amount.