Coupons and Gift Certificates Adapting to Life Online

Coupons and gift certificates, two old standbys of offline retailing, are making the adjustment to an e-commerce world. A pair of surveys look at how the transition is going.

According to a survey by The NPD Group, Inc., grocery and health purchasing remains a key usage of electronic coupons (or e-coupons, those coupons obtained on the Web), as well as traditional coupons, other uses indicate additional opportunities for e-coupon distributors.

NPD’s study also highlighted areas that appear to be of increasing importance to e-coupon use: categories associated with e-commerce, such as toys, books, and music, are among the e-coupons most frequently redeemed through any channel.

The redemption locations (channels) for e-coupons differ depending on the category, NPD found. The e-commerce category coupons tend to be redeemed online more frequently than other coupon categories. Toy e-coupons posted the highest online redemption rate at 87 percent, followed by books at 83 percent. Fast food coupons obtained online claimed the highest retail redemption rate at 96 percent, with groceries close behind at 94 percent. Apparel and health products were split evenly between online and offline redemption of electronic coupons.

NPD’s study also found that electronic coupons are growing in importance among coupon users. Based on a sample of Internet users who had used any kind of coupon in the last month, e-coupons represented 10 percent of their total coupon use in March 2000, up from 5 percent in October 1999. The number of e-coupon users has grown from 23 percent of all Internet users a year ago to 27 percent in the latest survey. This is off slightly from the 30 percent seen during the 1999 holiday shopping season.

Online Coupon Usage by Category
Groceries	59%
Books	32%
Health	30%
Music	26%
Beauty	17%
Fast Food	16%
Apparel	14%
Toys	14%
Other restaurants	13%
Electronics	13%
Respondents may list more than one category Source: NPD Group, Inc.

The top e-coupon Web site remained Coolsavings.com, visited by 51 percent of all online coupon users, followed by Valupage.com at 48 percent and MyPoints.com at 30 percent.

“With minimal effort, online consumers are pointing and clicking their way to savings simply by visiting online coupon distributors’ sites,” said Pamela Smith, NPD VP of online research. “Consumers accustomed to using coupons and communicating via the Internet seem to have no trouble integrating the Internet into their searches for savings. The challenge to coupon distributors will be to reach those consumers who have not made coupons a regular part of their online or offline shopping experiences.”

The number one reason cited by NPD respondents for not using their e-coupons was that they forgot to take the coupons when they made purchases, followed by “didn’t find useful.”

A survey of consumers participating in the BizRate.com Online Research Panel commissioned by CyberSource found that consumers have a strong preference for graphically rich gift certificates, just like those in the physical world. This is in direct contrast to the text-based email format most commonly used for online gift certificates.

According to the survey, only 23 percent of respondents had purchased gift certificates online. Seventy percent of those who have never purchased a gift certificate online cited a low level of satisfaction with current online gift certificate offerings. Eighty-six percent of all online buyers believe that a graphically rich electronic or traditional paper gift certificate has greater gift-giving value than a text-based email certificate. The study also indicates online businesses that provide consumers such high-quality certificates have a major impact on consumer buying decisions and site loyalty — influencing where they will spend their gift dollars online.

For an in-depth look at how e-coupons help eGrocer, read Ad Insight from Channelseven.com.