COVID-19 and the associated economic downturn have left the global economy in a challenging situation. There are some sectors that undergo massive challenges. Industries suffering more than the rest include travel, accommodation and food. A large number of small businesses are facing a lack of resources and increasing expenses. Response to this crisis needs to be timely.
Agencies and big companies have given a hand to help their clients weather the storm. Shopify, a multinational e-commerce giant, immediately takes action to confront COVID-19 impact. They are seeking the most rational solutions to relieve the burden.
Shopify’s first movement is the provision of gift cards on every plan for small merchant clients. In spite of further remedies being needed in upcoming days, the prompt availability of gift cards aids in mitigating cash flow constraints, which improves the situation to a greater or lesser degree.
Other assistance programs include free email marketing for all plans, extended free trials, live events, small business funding and so on. Click here to learn more about Shopify’s responses to COVID-19.
Gift Cards Can Relieve Cash Flow Constraints
Sudden drops in sales figures pose a serious problem to any company’s existence in the long run. Revenues keep dropping dramatically while business expenses remain the same. For instance, companies still have to pay wages, rent, mortgage, insurance, utilities… There is less cash coming in and more cash going out, which means the company is in negative cash flow. Businesses must find a wise key to quickly recover from sales drops. However, it is always a tricky part.
One of the most common solutions is providing digital gift cards. A gift card is a distinctive type of product which customers can use to make a payment towards future purchases. Customers are also able to sell gift cards as well as issue them to others as a reward.
Businesses should consider providing gift cards as a way to allow customer’s support. In detail, customers buy gift cards and exchange for their forthcoming orders. This leads to cash flow constraints diminishing in the short run.
As gift cards are advance payments for orders occurring in the future, businesses are unable to collect cash unless gift cards are completely exchanged. In finance reports, businesses can catch customer’s purchases of gift cards as long as they are redeemed (in Liabilities section).
Shopify Gift Card Feature
As customers are willing to help their favourite companies by purchasing gift cards, Shopify quickly enables this feature on all plans with the aim of helping small businesses go through this challenging time. The e-commerce giant has not specified the end date yet. However, clients can rest assured that Shopify’s gift card feature will be accessible until COVID-19 no longer interrupts business activities. To make sure that merchant clients always stay up-to-date, Shopify will send a notification before the removal of gift card feature on their plans.
A business using a subscription plan which enables gift cards may want to change to another one without the feature. In that event, they cannot provide any additional gift card. However, current gift cards are still accessible and can be managed.
Shopify’s Instructions for Using Gift Cards
Shopify allows merchants to display gift cards on their online stores as a normal product. In addition, they are able to design and modify the label, model, denomination as well as the sales channel of each gift card.
Merchant clients can add a new gift card or update an existing one from Gift cards page as Shopify store admin. Once a customer asks for a gift card, they will receive via email. Gift cards then are redeemed either directly or online. Click here to see the complete guide for creating and updating gift cards.
Shopify recommends that merchants send a notification email to their customers whenever there are adjustments related to the company’s business activities. They should introduce the gift card feature as well as its importance to the company’s financial situation.
Due to lockdowns and stay-at-home orders in some countries, people spend more time surfing the internet at home. The number of online transactions has sharply increased amid COVID-19. Therefore, social media advertising plays a key role in the ability to sell gift cards.
It is also essential that businesses be always available to answer inquiries and gather feedback from customers. Businesses should promote activities on their local online community (local forums, groups, websites) and contact influencers for collaboration to solicit support from customers. Some localities have provided a list of small businesses in those areas so that customers can discover and give assistance to their favourite companies.
With the aim of aiding business clients to deal with the impact of COVID-19, Shopify is seeking and developing further programs besides the gift card feature.
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