Shopify Gift Cards: Complete Setup and Marketing Guide

Running a successful e-commerce store on Shopify requires multiple revenue streams and customer acquisition strategies. Gift cards are one of the most underutilized tools for driving revenue, improving cash flow, and building customer loyalty. Yet many store owners never move beyond basic gift card setup, missing significant opportunities to drive sales during peak seasons and generate reliable prepaid revenue.

This comprehensive guide covers everything you need to know about Shopify gift cards—from technical setup and product configuration to marketing strategies that drive consistent revenue, accounting practices that protect your business, and optimization tactics that turn gift cards into one of your store's highest-margin product lines.

Why Gift Cards Matter for Your Shopify Store

Gift cards represent one of the most economically efficient products you can sell. Unlike physical products, gift cards have zero cost of goods sold beyond payment processing fees. They generate immediate revenue (improving cash flow) while building customer relationships that extend far beyond the initial transaction.

The statistics are compelling. The National Retail Federation reports that gift cards account for over $160 billion in annual spending in the United States alone. For e-commerce stores specifically, gift card purchasers are distinct from product purchasers—they represent additional customer acquisition that would not happen through traditional product sales. A customer who buys a $100 gift card for someone else generates both the initial revenue and potential for the gift recipient to become a repeat customer.

Beyond revenue, gift cards solve a critical customer problem: gift-givers struggle with selection. When someone shops for a gift on your store and cannot decide between products, a gift card allows them to move forward with the purchase. This converts browsers who would otherwise leave empty-handed into paying customers.

For Shopify merchants specifically, gift cards are exceptionally valuable during seasonal peaks—particularly the November-December holiday season when gift-giving drives nearly 30% of annual retail revenue. The merchants maximizing gift card revenue are running strategic promotions, bundling digital and physical options, and treating gift cards as a core part of their business strategy rather than an afterthought.

Setting Up Gift Cards on Shopify

Shopify makes gift card setup straightforward, but there are configuration decisions that significantly impact your revenue and customer experience. Let's walk through the complete setup process.

Enabling Gift Cards in Your Store

By default, gift cards are available on all Shopify plans, but they need to be explicitly enabled. From your Shopify admin:

1. Navigate to Products > Gift Cards
2. Click Create Gift Card
3. Choose your denomination options (this is critical—see the next section)
4. Decide if you want physical or digital delivery (or both)
5. Set any restrictions (expiration dates, single-use vs. multiple-use, etc.)
6. Test the purchase flow as a customer to ensure the experience is seamless

The first critical decision is denomination selection. Many stores make the mistake of offering only standard amounts like $25, $50, and $100. High-performing stores offer a much wider range: $15 (impulse purchases), $25 (lower-commitment gifting), $50 (most popular), $75, $100, and custom amounts.

Allowing custom amounts is particularly important. It lets customers choose exactly what they want to spend without rounding up to the next preset amount. This increases average transaction value because customers might spend $85 instead of settling for $50 or jumping to $100.

Creating Your Gift Card Product

In Shopify, gift cards appear as products in your store. You want customers to discover and purchase them easily. Configure your gift card product with:

• Clear product title: "Digital Gift Card" or "Gift Card (Delivered Instantly)" makes the format obvious
• Compelling description: Emphasize the convenience, perfect-gift angle, and delivery speed (if digital)
• High-quality images: If offering physical cards, show the card design prominently
• Visible pricing: Make clear what denominations are available
• Strategic collection placement: Add gift cards to your main collections and create a dedicated "Gift Guides" collection

One often-overlooked element is pricing psychology. A gift card for $50 should be displayed as "$50" not "$50.00"—the cleaner presentation feels higher-value. Similarly, feature your most popular denomination ($50 is often the sweet spot) most prominently, then show "Other amounts available" to suggest flexibility.

Customizing the Gift Card Experience

Shopify allows customization of the gift card email that recipients receive. This is a significant opportunity to create brand experience and drive redemption. Your gift card email should include:

• Your logo and brand colors for recognition
• A personalized message from the gift-giver (make this a required field during purchase)
• Clear instructions on how to redeem the gift card
• A prominent link to your store
• Suggestions for how to use the gift card
• An expiration date (if you use them—most stores do not)

The personalized message from the gift-giver is critical. It creates emotional connection and makes the gift feel more personal. In testing, gift cards that arrive with personalized messages have redemption rates 15-20% higher than those without.

Digital vs. Physical Gift Cards: Strategic Differences

The decision between digital and physical gift cards is not binary—the best strategy often includes both options, but optimized for different use cases.

Digital Gift Cards: Speed, Margin, and Convenience

Digital gift cards are delivered via email instantly after purchase. Advantages:

• Zero production cost: No printing, no inventory, no shipping—pure margin after payment processing
• Instant delivery: Perfect for last-minute gifters (which is a much larger segment than you might think—studies show 30% of gift purchases happen in the final week before holidays)
• Scalability: No inventory constraints; you can sell infinite units simultaneously
• Global reach: Can be delivered anywhere without physical shipping costs
• Trackability: Complete visibility into purchase, delivery, and redemption through Shopify analytics

Digital gift cards work exceptionally well for:

• E-commerce stores with primarily online audiences
• Last-minute holiday promotions ("Gift ideas in 60 seconds—send a gift card today")
• Younger demographics who expect instant, digital delivery
• Subscription box businesses and services where physical gifting is not applicable
• High-volume promotional seasons where production would constrain supply

The main limitation of digital gift cards is perceived value. Some customers perceive a digital gift as less thoughtful than a physical one. This is particularly true for luxury brands and premium products where the tangible gift experience matters.

Physical Gift Cards: Premium Positioning and Retail Presence

Physical gift cards are printed cards that arrive in the mail. Advantages:

• Premium perception: A beautifully designed card in an envelope feels more thoughtful and valuable
• Retail integration: Physical cards work in retail gift guides, holiday window displays, and subscription boxes
• Durability: A card in a wallet is a constant brand reminder
• Luxury positioning: Premium brands use physical cards to reinforce brand value
• Bundling opportunities: Physical cards bundled with a product create a cohesive gift experience

Physical gift cards work exceptionally well for:

• Premium and luxury brands where perceived value matters
• Stores with significant retail or popup presence
• Markets where gift-givers value tangible gifts highly
• Bundled offers (gift card + curated product in one package)
• Corporate gifting where the presentation matters

The trade-offs are obvious: production costs ($0.50-2.00 per card depending on design), fulfillment time (3-7 days), and inventory management. But for premium brands and specific markets, the increased perceived value and higher average order value justify the cost.

The Hybrid Strategy: Offer Both

The highest-performing gift card strategy offers both options. Your store should feature:

1. Digital gift cards as the primary option: Prominent placement, "send instantly" copy, lower friction
2. Physical gift cards as the premium option: Positioned as a special gift alternative, bundled with products, higher perceived value
3. Tiered pricing: Encourage larger purchases by offering better bonus percentages on physical cards ($50 physical = free expedited shipping, $100 physical = beautiful branded packaging)

This approach captures the impulse digital buyer while also serving customers who want a more premium gift experience. The additional revenue from premium physical card purchases often exceeds their production costs within a few weeks during peak seasons.

Configuring Promotions and Bonuses

The most powerful gift card promotions follow a specific formula: they create perceived value (a bonus) while driving larger purchase amounts.

Bonus-Based Promotions

"Buy $X, Get $Y Bonus" promotions consistently outperform all other gift card promotional structures. Examples:

• Buy $50, get $55 credit (10% bonus)
• Buy $100, get $120 credit (20% bonus)
• Buy $250, get $300 credit (20% bonus)

Tiered bonuses work even better than flat-rate bonuses:

• $25-49: No bonus (drives upgrading to $50)
• $50-99: 10% bonus ($50 gets $55)
• $100-249: 15% bonus ($100 gets $115)
• $250+: 20% bonus ($250 gets $300)

This structure has multiple benefits: it increases average order value (customers spend more to reach the next bonus tier), it creates urgency (bonuses are time-limited during peak seasons), and it appears generous while maintaining healthy margins.

Limited-Time Holiday Campaigns

Time-limited promotions drive urgency and concentrate purchasing during strategic periods. Effective windows include:

• Thanksgiving-to-Christmas (November 15-December 20): Prime holiday gifting season; bonus 15-20%
• Mother's Day (May): Strong gifting occasion; bonus 10-15%
• Father's Day (June): Similar dynamics to Mother's Day; bonus 10-15%
• Back-to-School (August): Niche appeal but strong for some categories; bonus 5-10%
• Valentine's Day (February): Moderate gifting occasion; bonus 10%

The holiday promotions should begin promotion 45-60 days before the holiday. Shopify data shows that holiday gift card purchases peak 15-20 days before the holiday, which means your promotional window should open in November (for December holidays) rather than waiting until December.

Bundled Gift Card Offers

Bundling a gift card with a curated product creates a complete gift solution and increases average order value. Examples:

• Coffee brand: $50 gift card + premium coffee maker = $120 bundle at 25% discount
• Beauty brand: $75 gift card + signature perfume = $110 bundle at 15% discount
• Apparel brand: $100 gift card + bestselling sweater = $150 bundle at 15% discount

Bundled offers work because they:

1. Reduce decision friction ("I do not know what to buy" becomes "here's a curated gift")
2. Increase average order value significantly
3. Drive inventory of products you want to move (bundle slower-moving items with gift cards)
4. Create perceived value (customers see a $180 value at $120 price)

For Shopify stores specifically, bundles can be created using bundle apps like Bold Bundles or by creating a custom bundle product that includes a gift card and physical product together.

Referral and Social Sharing Incentives

Encourage customers to share gift cards with friends by offering bonus credit for successful referrals:

• "Share this gift card link—you both get $10 bonus credit"
• "Refer 3 friends, earn a $25 bonus gift card yourself"

These programs drive word-of-mouth acquisition while making the initial gift card purchaser feel invested in your store.

Holiday Gift Card Marketing Strategies

Holiday marketing is where gift cards generate their highest revenue. The strategies that drive the most sales are:

Pre-Holiday Launch Campaigns (6-8 weeks before)

Start your gift card marketing before people are actively shopping. Email campaigns should target:

1. Past customers: "Give the gift they love—Shopify gift cards now with 15% bonus through December 20"
2. Email subscribers: Dedicated campaign positioning gift cards as the perfect gift solution
3. Website visitors: Homepage banner, pop-up offering 10% off for first gift card purchase
4. Social media: Carousel ads showing different gift denominations, testimonials from previous gift recipients

Holiday Gift Guides

Create a dedicated "Gift Guides" collection on your store organized by recipient type, price point, and occasion:

• "Gifts Under $50"
• "Gifts for Coffee Lovers"
• "Gifts for Her/Him/Them"
• "Last-Minute Gifts (Delivered Digitally)"

Feature your gift card prominently in every guide as "The Gift of Choice" option for those who want to let the recipient decide.

Urgency-Driven Last-Minute Campaigns

In the final week before holidays, shift your messaging to emphasize speed:

• "Last-Minute Gift? Send Digital Gift Cards Instantly"
• "Deadline: Digital gift cards deliver today if ordered by 5 PM"
• "Forget the shipping—give a gift card today"

These campaigns capture an enormous segment of gift-givers: studies show 30% of holiday gift purchases happen in the final week. Many of these are impulse purchases from people who forgot to shop or cannot decide what to buy. Your gift cards are the perfect solution.

Post-Holiday Redemption Messaging

After the holidays, email gift card recipients with redemption instructions and product recommendations:

"Your [Amount] gift card is here! Use it to shop [Product Category] or browse our full collection. [Personalized recommendation based on store data]."

High-performing stores follow up 2 weeks after delivery with redemption reminders, and 4 weeks later with specific product recommendations related to browsing behavior.

Advanced Strategies: Maximizing Gift Card Revenue

Beyond basic setup and promotion, the highest-performing stores implement advanced strategies:

Gift Card Balances and Velocity Tracking

Track how quickly gift cards are redeemed and what products recipients purchase. Shopify's analytics show:

• Average time from purchase to redemption (typically 2-6 weeks for holiday cards)
• Redemption rate (most stores see 85-95% redemption within 12 months)
• Average redemption amount (most recipients spend 1.5-2x the gift card value)
• Product category correlation (what do gift recipients actually buy?)

Use this data to optimize:

1. Gift card denominations (if recipients consistently overspend $50 cards on average, push higher denominations)
2. Product recommendations in redemption emails
3. Promotional timing (if gift cards sell well in October, start holiday campaigns earlier)

Expired Gift Card Strategy

Most Shopify stores do not set gift card expiration dates, which is financially wise—unredeemed gift cards become profit. However, some stores strategically use expiration dates to drive urgency:

• "Gift cards expire December 31st" creates deadline urgency
• "Expire in 12 months" gives flexibility while still driving eventual redemption

Check your jurisdiction's laws on gift card expiration and unclaimed property. Some states do not allow expiration dates, while others require expiration to be clearly disclosed. Most Shopify stores find that not setting expiration dates maximizes both revenue and customer goodwill.

Partial Redemption Upselling

When a customer redeems a $50 gift card toward a $75 purchase, they must add $25. This is a critical upsell moment. Optimize your checkout to:

1. Show the gift card balance prominently
2. Highlight products that fit the remaining balance needed
3. Offer bundles or add-ons to reach the next price point
4. Display items that "customers often add" at relevant price points

This subtle optimization drives an additional 15-25% of gift card value as paid purchases—converting a $50 gift card redemption into a $75 transaction.

Gift Card Velocity Programs

For premium or membership stores, create gift card tiers with increasing benefits:

• Standard gift card: standard redemption
• Premium gift card: faster shipping, bonus points, exclusive products
• Membership gift cards: access to member-exclusive content

These create perceived hierarchy and can command premium pricing.

Accounting and Financial Tracking

Properly accounting for gift cards is essential for accurate financial reporting and tax compliance. Many e-commerce store owners make critical mistakes here.

Gift Card Revenue Recognition

The critical principle: gift card revenue is recognized when the gift card is redeemed, not when it is purchased.

When a customer buys a $50 gift card:

• Debit: Cash/Bank Account: $50
• Credit: Gift Card Liability: $50

When the recipient redeems the $50 gift card toward a $50 purchase:

• Debit: Gift Card Liability: $50
• Credit: Revenue (Sales): $50

This is different from regular product sales where revenue is recognized immediately upon purchase. The key reason: you have not yet fulfilled your obligation (providing merchandise) when the gift card is purchased.

Using Accounting Software with Shopify

Modern accounting software integrates directly with Shopify:

• QuickBooks Online: Syncs Shopify transactions automatically; has built-in gift card tracking
• Xero: Integrates with Shopify; categorizes gift card sales separately
• FreshBooks: Includes Shopify integration with customizable transaction categorization

When integrating, ensure:

1. Gift card purchases are categorized as a separate product (with SKU "GIFTCARD-DIGITAL" or "GIFTCARD-PHYSICAL")
2. Redeemed gift cards are tracked separately from regular sales
3. Monthly reconciliation occurs between Shopify and your accounting software
4. Liabilities are properly reported on your balance sheet

Tax Implications

Gift cards have specific tax treatment:

• Income tax: Gift card revenue is taxable when redeemed (not when purchased)
• Sales tax: In most jurisdictions, collecting sales tax on the gift card purchase is optional; tax is paid by the recipient when redeemed
• Unredeemed gift cards: Depending on jurisdiction, unclaimed/expired gift cards may become taxable income (escheatment laws vary by location)

Consult with your accountant about your specific jurisdiction's requirements. Do not assume one approach works everywhere—gift card tax treatment varies significantly across states and countries.

Tracking Unredeemed Gift Cards

Create a monthly reconciliation:

1. Total gift cards issued (from Shopify)
2. Total gift cards redeemed (from Shopify + accounting software)
3. Unredeemed gift cards balance (liability remaining)
4. Aging: categorize unredeemed gift cards by age (0-30 days, 30-90 days, 90+ days)

After 12 months, many jurisdictions allow you to convert unredeemed gift card liability to income (with specific notification requirements to customers). Consult local unclaimed property laws before taking this step.

Integrating Gift Cards with Email Marketing

Email marketing amplifies gift card revenue significantly. Effective email strategies include:

Abandoned Cart Emails for Gift Cards

If someone adds a gift card to their cart but does not complete purchase, send an abandoned cart email within 2 hours:

Subject: "Your gift card is waiting—complete your purchase in 60 seconds"

Body: Show the gift card amount, delivery method (digital/physical), personalized message preview, and a prominent button to complete checkout. Abandoned cart recovery emails for gift cards have 30-40% recovery rates (higher than product carts because the decision is already made—they just abandoned checkout).

Post-Purchase Gift Card Delivery Sequence

1. Immediately (within 1 hour): Confirmation email with gift card details
2. 1 week later: Reminder that gift card was sent; redemption instructions
3. 2 weeks later: Redemption reminder for the gift recipient ("Your gift is waiting!")
4. 4 weeks later: Product recommendations based on store data
5. 8 weeks later (if not redeemed): Second redemption reminder with additional product recommendations

This sequence drives redemption rates from baseline (85%) to 95%+ and increases the average value redeemed.

Segmented Email Campaigns

Segment your email list by purchase behavior:

• Gift card purchasers: Offer 20% bonus on next gift card purchase
• High-value customers: "Send a gift card to friends and receive $25 credit on your next purchase"
• Inactive subscribers: "Come back and give the gift of choice—gift cards now with 15% bonus"

Segmented campaigns outperform broad campaigns by 3-4x in engagement and conversion.

Troubleshooting Common Gift Card Issues

Even with proper setup, issues arise. Here are the most common and how to resolve them:

Low Redemption Rates

If your gift card redemption rate drops below 80%, investigate:

1. Are your redemption instructions clear? The gift card email should include obvious, step-by-step redemption instructions
2. Is your website easy to navigate? Test the gift card purchase and redemption process as a user
3. Are you following up with redemption reminders? The 2-week and 4-week follow-up emails mentioned earlier are critical
4. Is the gift card design clear? Physical cards should clearly display the balance and how to use it

Add a Frequently Asked Questions section to your gift card product page addressing common redemption questions.

Payment Processing Issues

If gift card purchases are failing at checkout:

1. Verify your payment processor supports gift card products (most do, but some have restrictions)
2. Test with different payment methods (credit card, PayPal, Apple Pay)
3. Check if your payment processor has gift card-specific rules or fees
4. Ensure your SSL certificate is current and your checkout is secure

Shopify's payment processors handle gift cards seamlessly, but third-party payment gateways sometimes have issues.

Accounting Reconciliation Problems

If your gift card liability account does not reconcile:

1. Verify all gift card purchases are recorded in your accounting software
2. Ensure redeemed gift cards are properly categorized as revenue
3. Check for partial redemptions that might create confusion
4. Review refunded gift card purchases—these should reverse the original entry

Most reconciliation issues stem from incomplete data syncing between Shopify and accounting software. Manually reconciling monthly catches these discrepancies early.

Conclusion: Making Gift Cards a Core Revenue Stream

Gift cards are one of the highest-margin, lowest-friction revenue streams available to Shopify merchants. Yet most stores treat them as an afterthought rather than a strategic business tool.

The merchants maximizing gift card revenue are:

1. Setting them up strategically with multiple denominations and both digital and physical options
2. Running seasonal promotions with clear bonuses and limited-time offers, especially during peak gifting periods
3. Integrating with email marketing to drive redemption and build customer relationships
4. Tracking finances properly to ensure accurate revenue recognition and tax compliance
5. Continuously optimizing based on redemption data, customer feedback, and marketing performance

If your store does not currently feature gift cards prominently, or if your gift card revenue is minimal, implementing these strategies will generate measurable revenue growth within 30-60 days. The highest-ROI changes are:

• Adding gift cards to your homepage if they are not already there
• Creating a "Gift Cards" collection in your main navigation
• Running a time-limited bonus promotion (buy $50, get $55) for the next 30 days
• Setting up the post-purchase email sequence described earlier
• Tracking gift card metrics separately so you can optimize based on data

For most Shopify merchants, gift cards represent untapped revenue potential—both in absolute dollars and in strategic positioning as the perfect solution for customers who struggle with gift-giving decisions.

Ready to Optimize Your Gift Card Strategy?

If you're looking to maximize gift card revenue and integrate it with a comprehensive e-commerce strategy, our team of e-commerce specialists can help. We work with Shopify merchants to identify and implement the highest-ROI growth opportunities across your entire store—from product positioning to email marketing to financial optimization.

Get your free e-commerce audit to identify where your gift card and broader sales strategy can improve: Free Audit

Ready to discuss a custom strategy for your store? Contact our team to schedule a consultation and learn how other merchants are using gift cards to drive 20-40% revenue increases.