Tips of using Shopify gift card sales help with cashflow during coronavirus

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Gift card sales can be a great way for a Shopify store to help improve cash flow both now and down the road as uncertainty surrounding the coronavirus outbreak grows.

It’s important to keep in mind that most jurisdictions require gift card revenue to be treated as “liabilities” that can’t be counted as revenue until they are redeemed.

Many ecommerce platforms, including Shopify, take care of this for you by not counting the sales as revenue or making the funds available until they are used.

So, with that in mind, how can you use gift card sales to your advantage during these uncertain times?

First, keep in mind that while gift cards redeemed later won’t be available to help with cash flow now, this could actually be a good thing to help “stagger” cashflow down the road — something that could be key with the uncertainty with how long the outbreak will last.

That said, it’s perfectly understandable that many Shopify stores need to maintain a steady cashflow and that gift card sales can be a challenge in this regard.

One way to make gift cards work better for your store cashflow now is to encourage recipients to redeem gift cards as soon as possible — including gift cards sold well before the coronavirus pandemic started since this will obviously free up cash sooner.

One shortcoming of Shopify, however, is that you generally can’t contact recipients, but only the person who bought them.

That said, targeted email marketing campaigns to gift card senders could be a good way to include ideas for them to pass along to the person they bought the gift card for.

Part of the strategy of getting customers to redeem gift cards sooner could also include adding free shipping, local delivery or pickup and other distribution or shipping options that work to how people are weathering the coronavirus crisis.

Another possibility is to advertise special offers for users redeeming gift cards. While it’s not possible to limit a discount code to only work with a payment method such as gift cards in Shopify, strategic messaging combined with a discount code could be a good way to entice users to use gift cards now.

Some stores may also want to consider selling discounted gift cards now — but keep in mind you’ll need to make sure your margins can handle these discounts and that there’s a good chance you won’t see the cash from these sales until later on (unless you have a solid plan to encourage immediate redemption).

Finally, keep in mind that gift card sales may not, ultimately, be the right solution for your store to make it through coronavirus due to the cashflow limitations outlined above.

In some cases, it may even be a good idea to disable gift card sales, limit the total that can purchased or, if you don’t offer them now, not add them.