The Appeal of Digital Gifts This Holiday Season

Why more shoppers are opting for ebooks, online subscriptions, and virtual gift cards.

Woman reading e-book in a coffee shop.(e-book text is LOREM IPSUM fake language)
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As many consumers turn to their smartphones and other gadgets for holiday shopping, some also prefer the convenience of digital gifts such as eBooks, cloud-based software, online subscriptions, and virtual gift cards sent via email, text message, or Facebook. In fact, a 2012 holiday forecast by Mercator Advisory Group, an independent research and advisory services firm focused on the payments industry, predicts that retailers will issue some 8 million virtual gift cards this holiday season.

On a practical level, digital gifts—also called eGifts—make sense. "You can purchase them from the comfort of your own home, and they're perfect for last-minute shoppers," says Andrew Schrage, co-owner of the personal finance blog Money Crashers. An added perk: Delivery is usually free. And for those who are trying to go green, there's no wrapping paper or other packaging to clog landfills.

Andrew Norcross, a WordPress developer in Tampa, points out that digital gifts don't take up physical space in a closet or attic (although they may take up memory on a computer or other device). "Many of my family and friends make mention about having too much stuff," says Norcross, who has given software as gifts. "Since so many folks I know are big fans of their devices, finding things to go with it is not only enjoyable for them, but allows them to continue using something they already have."

[Read: The 5 Best Mobile Apps for Holiday Shopping.]

As with plastic gift cards, though, there's still a fear that eGifts can feel impersonal. They also lack the tangibility and excitement of unwrapping a physical gift. And although they can be delivered instantly—unlike physical gifts—technical glitches can create extra headaches.

Here are some strategies for sending digital gifts this holiday season and beyond:

Match the gift to the recipient's tech use. Unlike a book or necktie that can be returned to the store with a gift receipt, most digital gifts are not returnable. Think carefully about what technology your recipient uses before purchasing a gift. "I wouldn't purchase something without knowing what they'd use it on, whether it's an iPhone app or Kindle book," says Norcross. If the recipient doesn't check email on a regular basis or doesn't own a smartphone or eBook reader, consider more traditional gifts that might be a better fit for that person's lifestyle.

Consider shipping costs. "Ideally, eGift cards should be usable in a store," says Shelley Hunter, gift card consultant and founder of the website Gift Card Girlfriend. "You may have wanted the convenience of online shopping, but that doesn't mean the recipient wants to use part of the gift-card dollars received to pay for shipping. The best eGift cards are ones that can be used online or in the store, or come from sites that offer free shipping."

[Read: Creative, Budget-Friendly Gifts for the Holidays.]

Personalize your digital gift. There are several ways to give a digital gift a more personal touch. If you're seeing the recipient in person, you could print out the email confirmation and roll it up with a ribbon or a package that includes a small related item, such as box of microwave popcorn for a Netflix subscription or earbuds for a Pandora subscription.

If you're emailing a digital gift without seeing the person, there are still ways to personalize. Hunter says a heartfelt message can help. "With a digital gift card, you have to plan your words carefully to make it look like a gift and not just an 'Oops, I forgot your birthday until now' moment," she explains.

Third-party websites also offer creative ways to package a digital gift. Gift givers can use a site like Delightfully.com to attach personal photos, notes, and other content to the gift for a flat rate of $3. Through Wrapp.com, consumers can send greetings and gift cards to Facebook friends. (The recipient is notified through Facebook, text message, or email.) Some retailers offer free gift cards through Wrapp as a marketing tool. You can also add value to a free gift card or choose paid gift cards through other retailers. Sociagram.com offers video recording so that the gift giver can include a video message with the gift and the recipient could send back a thank-you video.