Gift Card SKU for E-Commerce: Best Practices & Solutions
Gift cards are an excellent addition to any e-commerce store, offering customers the flexibility to buy products for themselves or as gifts for others. Setting up a Gift Card SKU system is an essential step in managing and tracking gift card sales efficiently. This also ensures that each card is correctly accounted for in your inventory and financial systems.
Let’s walk through how to manage gift card SKUs for your e-commerce business, including best practices and potential solutions.
1. Why You Need a Gift Card SKU
A Gift Card SKU serves as a unique identifier for each type of gift card you offer in your store. This is important for:
- Inventory Management: Keep track of how many gift cards are sold, redeemed, or remain available.
- Sales Reporting: Helps with tracking sales, redemption rates, and profitability for gift card products.
- Accounting: Properly differentiate between revenue from gift cards sold and actual product sales.
- Product Variants: If you offer different gift card values, each will need a unique SKU to help manage inventory and orders.
2. How to Structure Gift Card SKUs
When creating SKUs for your gift cards, keep in mind that you want them to be clear, concise, and easy to track. A Gift Card SKU should be structured in a way that it can represent the denomination, and in some cases, even the category or the specific type of gift card.
Example SKU Structure for Gift Cards:
GC-{Value}-{Type}-{001}
- GC: Represents Gift Card (a short prefix to identify it as a gift card product).
- {Value}: Denotes the value of the gift card, such as
$25
,$50
,$100
, etc. - {Type}: Represents whether the gift card is Digital or Physical. You may also use codes like EGC for electronic gift cards or PGC for physical gift cards.
- {001}: The unique identifier or sequence number (e.g., 001, 002, 003, etc.), for easy tracking.
Example SKUs:
- GC-25-DIG-001: A $25 digital gift card.
- GC-50-PHY-002: A $50 physical gift card.
- GC-100-DIG-003: A $100 digital gift card.
This structure ensures that you can easily identify the value, type, and sequence of each gift card product in your system.
3. Integrating Gift Cards into Your E-Commerce Platform
You need to ensure your e-commerce platform is equipped to handle gift card sales and tracking. Most modern e-commerce platforms like Shopify, BigCommerce, WooCommerce, and Magento come with built-in gift card functionality, or you can integrate a third-party gift card solution.
Here are key steps to implement and manage gift cards effectively:
A. Using an E-Commerce Platform (Shopify Example)
- Enable Gift Card Functionality:
- On Shopify, you can activate the gift card feature through the “Gift Cards” section in the Shopify Admin.
- You can then define the value ranges (e.g., $10, $25, $50, $100, or custom amounts).
- Create Gift Card Products:
- Go to the “Products” section and create gift card products with the respective SKUs.
- Set the price for each gift card (the value the customer will pay for the card).
- You can create both physical gift cards (with a physical item SKU) and digital gift cards (which can be delivered via email).
- Automate Redemption Tracking:
- Shopify automatically generates a unique code for each gift card sold. This code can be used by customers for redemption during checkout.
- The redemption process is integrated with the platform, and the remaining balance of the gift card is tracked in real-time.
- Customize Gift Card Designs:
- Shopify allows you to customize the digital design of the gift card, ensuring it matches your brand. You can also create a physical card if you offer tangible gift cards.
B. WooCommerce Example (With Plugin Integration)
- Install a Gift Card Plugin:
- If you’re using WooCommerce (WordPress), you may need to install a third-party plugin like WooCommerce Gift Cards or YITH WooCommerce Gift Cards to enable gift card sales.
- Set Gift Card Product:
- After activating the plugin, create a new product for each denomination (e.g., $25, $50, etc.).
- Assign the relevant SKU to each product.
- Configure Delivery:
- You can choose between electronic delivery (via email) and physical delivery (via mail). Set up the system to send the gift card code to the customer upon purchase.
- Track Redemptions:
- The plugin will track gift card purchases and redemptions. You’ll be able to monitor the current balance of each card.
4. Best Practices for Gift Card SKU Management
A. Offer Clear Denominations
Ensure that your gift card SKUs represent clear and easily understood denominations, such as $25, $50, $100, or $200. If you offer customizable amounts, ensure the system is set up to dynamically create SKUs based on customer input.
B. Differentiate Between Physical and Digital Gift Cards
If you offer both digital and physical gift cards, ensure your SKU system differentiates between the two. For example:
- GC-25-DIG for a $25 digital card
- GC-25-PHY for a $25 physical card
This allows you to accurately track the sales and stock of each type.
C. Integrate with Inventory Systems
For physical gift cards, track the inventory of the cards themselves. This is particularly important if you’re handling the physical gift cards manually. For digital gift cards, you don’t need to track stock, but you should be able to monitor usage and redemption.
D. Set Up Automatic Expiry Dates (Optional)
While gift cards typically don’t expire, some businesses might want to set an expiry date for their gift cards to encourage quicker use. Be sure to communicate this clearly to your customers. Most e-commerce platforms support setting up expiration dates for digital gift cards.
E. Add Gift Card Functionality to Checkout
Make sure that your gift cards are easily redeemable at checkout. This includes allowing customers to enter a gift card code during checkout and seeing the discount or amount applied immediately.
F. Bundle Offers and Promotions
Consider offering discounted gift cards or promotions during holidays or special sales events (e.g., “Buy a $100 gift card, get an extra $10 free”). This can increase sales and customer engagement.
5. Accounting for Gift Cards
Gift cards are often recorded as deferred revenue until they are redeemed. Here’s a brief overview of how gift cards should be treated from an accounting perspective:
- Gift Card Sale:
- When a gift card is sold, you typically record the sale as deferred revenue because the actual product hasn’t been provided yet. This ensures that you don’t count it as income immediately.
- Redemption of Gift Card:
- When a customer redeems a gift card, the revenue is recognized in your accounting system as actual income.
- Track Expirations:
- If your gift cards have an expiration date, track them to recognize the revenue when the card expires or is fully used.
6. Gift Card Solutions by E-Commerce Platform
Shopify Gift Cards:
- Native integration with Shopify makes it easy to sell both physical and digital gift cards with SKUs. Shopify tracks all gift card sales and redemptions automatically.
WooCommerce Gift Cards:
- Installable plugins allow full customization of gift cards in WooCommerce. It supports email delivery for digital cards and can even let customers design their own gift cards.
BigCommerce Gift Cards:
- BigCommerce offers integrated gift card functionality that allows you to create digital gift cards for any denomination. The system automatically tracks balances and redemptions.
Magento Gift Cards:
- Magento users can integrate third-party extensions for gift cards. These offer flexibility in creating and tracking gift card sales, and many come with customizable options for physical and digital cards.
Conclusion
Managing gift card SKUs for your e-commerce store is crucial for seamless inventory tracking, sales reporting, and smooth customer transactions. Whether you are selling physical gift cards or digital gift cards, a well-structured SKU system is essential for proper organization and management. By integrating gift card solutions with your existing e-commerce platform (like Shopify, WooCommerce, or Magento), you can create a streamlined, effective process that enhances both your backend operations and customer experience.