Google Play is launching a dedicated section within its App Store that allows shoppers to search for, purchase, and send digital gift cards, featuring brands ranging from Starbucks to American Eagle. While the move could generate some ancillary revenue for Google, it remains unclear whether consumers will start viewing the Play Store as a primary destination for buying gift cards.
The rollout was surprisingly low-key. Rather than making a formal announcement, Google quietly notified users via email with the subject line: “Important Update to Play: Now you can buy Gift Cards.”
Changing Customer Behavior
Google has a long road ahead in changing consumer habits in this space. Buying digital gift cards through an online marketplace offering multiple retailers is still relatively uncommon.
“Javelin’s statistics show that consumers are most likely to visit a multi-card in person display, a retailer’s own store or website to buy a gift card,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “Significantly fewer people go to a website that sells cards for multiple retailers, which would be the most similar outlet to the Play Store.
“It will give Google a nice additional play to garner a little bit of revenue, but consumers won’t think of it as an obvious place to buy cards,” he said. “I think they’re tapping into that population to try and get net additional sales on top of apps and subscriptions—more than to try and get people specifically shopping for a digital gift card.”
For now, the digital gift cards are available only to shoppers in the U.S., the UK and Mexico. Expanding to the UK could be especially significant, as digital gift cards there now represent more than half of the market. According to Hirschfield, the U.S. is expected to reach a 50/50 split between physical and digital gift cards by the end of the decade.
More Changes in Play
Google has long offered both physical and digital Play Store gift cards. The addition of third-party digital gift cards to the Play Store comes as the company faces pressure to open its marketplace to outside sellers following its long-running legal dispute with Epic Games.
As part of its proposed settlement, Google has told a judge it would make it easier for users to download and install third-party app stores. The company is also reducing its billing fees to 5%, down from the current 15%.
