To successfully apply a discount to a gift card on your Shopify store, you can either provide a direct discount on the purchase of the gift card or use a Buy X Get Y promotion to offer a free gift card as a bonus for meeting certain purchase criteria. Here's how you can set up each type of discount:

Create a Discount for a Percentage Off a Gift Card

Steps:

1. Add a Gift Card Product: Go to your Shopify admin and navigate to Products. Add a new product and specify that it is a gift card.  

2. Create the Discount:

   • Go to Discounts in your Shopify admin.
   • Click Create discount and choose Discount code or Automatic discount. 
   • Set the Discount value to the percentage off you want to offer. For example, to sell a $100 gift card for $80, you would set a 20% discount. 
   • Under Applies to, select the specific gift card product or variant.
   • Specify any other criteria needed, such as validity dates or minimum purchase requirements.

3. Save and Test: After setting up your discount, ensure to save changes and test by going through a purchase to see if the discount applies correctly.

Create a Buy X Get Y Discount for a Free Gift Card

This promotion is ideal if you want to reward customers who spend a certain amount with a free gift card.

Steps:

1. Add a Gift Card Product: If not already created, add a new gift card product in your Shopify admin under Products.

2. Set Up the Buy X Get Y Discount:

   • Go to Discounts and select Create discount then choose Buy X Get Y. 
   • In the Customer spends section, define the minimum purchase amount and specify which products or collections it applies to.
   • In the Customer gets section, choose Any items from, and select the gift card product. Set the discount value to Free.
   • Optionally, limit the maximum number of uses per order by checking Set the maximum number of uses per order and specify a number.

3. Customize and Activate: Add any other necessary details such as start and end dates for the promotion. Save the discount and test it by making a qualifying purchase to ensure the gift card is correctly added for free.

Additional Considerations

• Single Use: Remember that Shopify currently allows only one automatic discount at a time per checkout and they cannot be combined with other discount codes.
• Visibility: Ensure that customers are aware of these promotions by advertising them clearly on your website, through email campaigns, and on social media.
• Monitoring and Adjustments: Keep track of how these discounts affect your sales and make adjustments as necessary based on their performance.

By following these steps, you can effectively manage and offer discounts on gift cards in your Shopify store, either as direct savings or as part of a broader promotional strategy.