May 29, 2012
Social Gifting Arrives
The latest shopping trend merging social networks and smartphones is reportedly social gifting, in which friends get together on Facebook to buy each other gifts.
Wrapp, a Sweden-based firm that helped spread the service across Europe last year, for instance, allows Facebook friends to buy each other gift cards from participating retailers either individually or by teaming up. For the receiver, the gift cards can be stored on mobile devices for redemption either online or inside stores.
In its major launch in early May in the U.S., Wrapp partnered with H&M, Gap, Brooklyn Industries, Sephora, Fab and others.
"Wrapp is the ultimate win, win, win app," said Hjalmar Winbladh, Wrapp’s CEO, in a statement. "You and I get to give our friends free gifts and promotional gift cards from great retailers, the gifts we give are stored in our friends’ phones so they’re always with them when they want to buy something they really want, and the merchants get a proven customer acquisition and retention platform built on Wrapp’s friend-to-friend marketing for conducting performance-based campaigns."
Other social gifting start-ups include CashStar, SocialGift, Groupcard Apps and DropGifts. On the day it went public, Facebook acquired mobile social gifting startup Karma.
According to a few articles tracking Wrapp’s U.S. entry, retailers like it because of the minimal marketing cost. Wrapp, for instance, doesn’t charge retailers until the transaction is made. Like most gift cards, the other benefit for retailers is that consumers frequently buy more once they are inside the store.
"The thing that struck me as unique and interesting about Wrapp is that it is kind of the intersection of three trends: gift cards, social networks and mobile (shopping)," Reid Hoffman, a co-founder of LinkedIn and a partner at Silicon Valley venture-capital firm Greylock Partners that has invested in Wrapp, told Reuters.
Mr. Winbladh told Fortune, "From a retailer perspective, we can send the right customer to your store and help drive more sales."
Sucharita Mulpuru, an analyst with Forrester Research, told Reuters that social gifting could spread quickly with its access to Facebook’s followers, but she said it’s still early. Ms. Mulpuru elaborated, "It could be a very powerful form of marketing [and] drive incremental value. But the challenge is that there is a promise and there is a reality … you can’t just introduce a platform like this and expect it to deliver gold to everybody."
![[Image: Wrapp]](data:image/svg+xml;base64,PHN2ZyB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciIHZpZXdCb3g9IjAgMCAxIDEiIHdpZHRoPSIxIiBoZWlnaHQ9IjEiIGRhdGEtdT0iJTJGcHVibGljJTJGaW1hZ2VzJTJGZGlzY3Vzc2lvbnMlMkYxNjA0MyUyRndyYXBwLXN0aWxsLmpwZyIgZGF0YS13PSIxIiBkYXRhLWg9IjEiIGRhdGEtYmlwPSIiPjwvc3ZnPg==)
- How does Wrapp work? – YouTube
- Wrapp Brings Social Gifting to U.S. with Major Merchants – Wrapp
- Social gifting: the new buzzword in e-commerce – Reuters
- Meet the anti-Groupon – Fortune
- Facebook acquires social gifting company Karma – CNET
- On IPO Day, Facebook Finds Time To Buy Social Gifting Site Karma – The Wall Street Journal
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Recent Discussions
Discussion Questions
Discussion Questions: What questions should retailers have for social gifting app providers? How receptive do you think Facebook and other social media users will be to social gifting?
Poll
This could be a boon for retailers: consumers buying gift cards for each other with minimal expense to the merchant. This also offers Facebook and other social sites another opportunity to gather data about consumers, which allows for more targeted offers.
Social gifting is going to continue to gain momentum. Most consumers have some gift recipients in their life for whom gift shopping is a major choir. If they can use the cloud + social graph to quickly and easily contribute a gift that the recipient will truly appreciate, they are sure to do so.
What I particularly like is that it’s improving a bad customer experience (shopping for gift for a difficult-to-please person) with a good experience (social gifting) without racing to the bottom of the lowest margins/lowest price solution.
I’m not sure we’ve seen the ideal social gifting experiences yet, but they are certain to keep getting better!
Retailers should require providers to walk them through the end-to-end consumer experience. How well does the app integrate into Facebook or other social media platforms? What customer service is available to consumers if something goes wrong? Etc. They should also find out what controls are in place to prevent fraud and obtain assurances and protection in the contract against the possibility that the provider is acquired or ceases operating.
I think it will be a useful tool to at least be a mechanism to provide donations to worthy causes at the start.
Reid Hoffman’s comment is insightful … this is indeed the intersection of three trends with growth potential. And, social gifting may help drive consumers into retail locations that otherwise might simply drive by without stopping. At the same time, ease of the social gifting experience, both from the giver and the recipient, will be important to longer-term success.
For the consumer, the benefits seem to be a no-brainer. I’m not as confident in the underlying economic model, which will have to be proven sustainable over the longer term.
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This could be a boon for retailers: consumers buying gift cards for each other with minimal expense to the merchant. This also offers Facebook and other social sites another opportunity to gather data about consumers, which allows for more targeted offers.
Social gifting is going to continue to gain momentum. Most consumers have some gift recipients in their life for whom gift shopping is a major choir. If they can use the cloud + social graph to quickly and easily contribute a gift that the recipient will truly appreciate, they are sure to do so.
What I particularly like is that it’s improving a bad customer experience (shopping for gift for a difficult-to-please person) with a good experience (social gifting) without racing to the bottom of the lowest margins/lowest price solution.
I’m not sure we’ve seen the ideal social gifting experiences yet, but they are certain to keep getting better!
Retailers should require providers to walk them through the end-to-end consumer experience. How well does the app integrate into Facebook or other social media platforms? What customer service is available to consumers if something goes wrong? Etc. They should also find out what controls are in place to prevent fraud and obtain assurances and protection in the contract against the possibility that the provider is acquired or ceases operating.
I think it will be a useful tool to at least be a mechanism to provide donations to worthy causes at the start.
Reid Hoffman’s comment is insightful … this is indeed the intersection of three trends with growth potential. And, social gifting may help drive consumers into retail locations that otherwise might simply drive by without stopping. At the same time, ease of the social gifting experience, both from the giver and the recipient, will be important to longer-term success.
For the consumer, the benefits seem to be a no-brainer. I’m not as confident in the underlying economic model, which will have to be proven sustainable over the longer term.