Quick summary
Shopify gift cards are available on all paid plans and are set up under Products > Gift cards in the admin. The highest-revenue strategy is to promote gift cards actively in October and November, email non-purchasing subscribers in December with a 'buy a gift card' prompt, and send a dedicated welcome sequence to gift card recipients who are likely new customers.
Gift cards are one of the most straightforward revenue tools available in Shopify, yet many merchants treat them as an afterthought. A well-implemented gift card strategy brings in new customers (gift recipients who have never purchased from you before), drives higher average order values from gift senders, and creates a deferred revenue asset on your balance sheet. Here is how to set them up properly and make the most of them.
How Do Shopify Gift Cards Work?
Shopify gift cards are a product type that generates a unique code worth a specified value. When a customer buys a gift card, they pay the face value immediately. The recipient redeems the code at checkout, reducing their order total by the gift card value.
Gift cards in Shopify can be:
- Digital only: The code is emailed to the buyer or the recipient. No physical fulfilment required.
- Physical: A physical card with the code printed or embossed. Requires fulfilment like any physical product.
Gift card balances are tracked in Shopify and can be partially used across multiple orders.
How Do You Set Up Gift Cards in Shopify?
Gift cards are available on all Shopify plans. To create one:
- In your Shopify admin, go to Products > Gift Cards
- Click "Add gift card product"
- Set the denominations you want to offer (£25, £50, £100, £150 are common starting points)
- Add a product description and images
- Set the gift card as active
Once created, gift cards appear in your store and customers can purchase them like any other product. Shopify handles the code generation, balance tracking, and redemption automatically.
Customising the gift card email: The email sent to the recipient is customisable in Settings > Notifications > Gift card created. Update this template to include your brand photography, a warm personal message, and clear instructions on how to redeem. The default Shopify template is functional but impersonal.
Should You Sell Gift Cards at a Discount?
Some merchants offer gift cards at a discount as a sales mechanic: "Buy a £100 gift card for £85." This can drive volume but has implications:
- It reduces your margin on any purchase made with the discounted gift card
- It can attract bulk buyers who purchase large volumes purely to exploit the discount
- It may cannibalise full-price purchases from customers who would have bought anyway
A more targeted use of discounted gift cards is as a reward: sending existing loyal customers a "bonus £20 when you buy a £100 gift card" as an exclusive loyalty perk. This rewards the right behaviour without becoming a broadly available discount mechanic.
How Do You Use Gift Cards Beyond the Obvious?
As store credit for returns. Instead of refunding cash when a customer returns a product, offer a gift card for the refund value. Many customers accept this readily, and it guarantees the value stays within your store rather than returning to their bank account. Shopify allows you to issue gift cards as part of the refund process.
As compensation for service failures. If an order arrives late, damaged, or incorrect, a gift card as compensation (in addition to resolving the problem) is more expensive than a simple apology but far cheaper than losing the customer permanently. A £15 gift card sent to a customer who had a bad experience often converts them into a vocal advocate.
As a corporate gift card programme. If your products lend themselves to corporate gifting (food, lifestyle, premium goods), bulk gift card sales to businesses are a high-value channel. A simple landing page targeting "corporate gifts" or "business gifts" with information on bulk ordering and co-branding can generate B2B gift card revenue with minimal overhead.
As a post-purchase upsell. After a customer places an order, an automated email offering them a gift card to send to a friend ("you just bought something great, know someone who'd love it too?") can increase gift card sales without requiring any additional advertising spend.
How Do You Track Gift Card Revenue Properly?
Gift card sales create deferred revenue: the cash is received when the gift card is sold, but the revenue is only recognised when the gift card is redeemed (when goods or services are delivered). This distinction matters for your accounting, particularly if you are VAT registered.
In Shopify's reports, you can see:
- Gift card sales (amount sold by period)
- Gift card redemptions (amount redeemed by period)
- Outstanding gift card liability (total unredeemed value)
Discuss the VAT treatment of gift card sales with your accountant. In the UK, HMRC treats gift cards as a voucher for VAT purposes, with VAT becoming due at the point of redemption rather than sale.
Frequently Asked Questions
Are Shopify gift cards available on all Shopify plans?
Yes. Gift card functionality is included on all Shopify plans, including Basic. You can create gift card products with multiple denominations, customise the email sent to recipients, and track outstanding balances directly in your Shopify admin. No additional app is required to sell digital gift cards.
How does VAT work on Shopify gift cards for UK merchants?
HMRC treats gift cards as vouchers for VAT purposes. VAT is not due at the point of sale when the gift card is purchased. It becomes due at the point of redemption, when goods or services are delivered. This means gift card sales create deferred revenue on your balance sheet, not immediate taxable supply. Confirm the treatment with your accountant if you have high gift card volumes.
Can I use Shopify gift cards as store credit for returns?
Yes. When processing a refund in Shopify, you can issue a gift card for the refund amount instead of returning cash to the customer's original payment method. Many customers accept this readily. It keeps the value within your store and avoids the payment processing costs associated with card refunds.
What gift card denominations should I offer on my Shopify store?
The most common starting points for UK stores are £25, £50, £100, and £150. Offering four to five denominations covers the majority of gift-buying scenarios without overwhelming the customer. If your average order value is above £100, consider adding a £200 option. Analyse your existing order values to identify the denominations that align with typical purchase amounts on your store.
SuttonCommerce configures gift card programmes and post-purchase automation for Shopify merchants. If you want to build a gift card strategy that drives new customer acquisition and increases repeat purchase rate, get in touch to discuss your store.