Gift Business: Innovation In Gift Giving (Part 2)

Earlier, in Gift Business: How Do People Buy Gifts? (Part 1), we covered the individual steps of the gift giving process.  Here, in Part 2, we will take a look at innovations that improve, replace or eliminate these steps.

We have already talked about the gift receipt innovation in our previous post.  The logical follow up is the gift card.  Aiming to make the entire process even more efficient, the gift card eliminates the SPECIFIC GIFT substep entirely for the gift giver, and makes the DELIVERY step easier, by reducing the size of the gift significantly, sometimes entirely, in the case of electronic gift cards.  

Because of its convenience, a number of new business models emerged around the gift card idea.  We are not merely talking about existing online and offline retailers, like Amazon or Starbucks selling their gift cards, but rather about new businesses that make concepts previously deemed impossible or impractical come to life.

CashstarOutsourced gift card services is one such concept.  For retailers that do not want to implement a gift card service by themselves, either because they are not tech-savvy enough or simply do not want to make the necessary investment, companies like CashStar provide a practical solution. CashStar’s digital gifting platform lets B2C and B2B retailers integrate a complete e-gift card service to their offering.  Customers can create personalized e-gift cards with their own text, photos and videos, then send them to recipients via the retailer’s website, mobile site or even Facebook.

Speaking of Facebook, the company is the main enabler of another concept made possible by the gift card innovation: social gifting.   In Facebook: Show Me The Money, we talked about Facebook’s role as an Integrated Social Utility:

“Facebook is … a social utility.  Just like other utilities, it is meant to work with other businesses, not compete with them.  That means it can be the provider of all kinds of social data to whoever is willing to pay for it.  Facebook has the ability to be the irreplaceable partner of every internet based business out there, integrated into their systems, providing them with data about their customers they otherwise would not be able to get.”

Wrapp MobileEven though Facebook has acquired social gifting start up Karma last year, and turned it into Facebook Gifts, the company allows its users to send paid-for, discounted or free gift cards to their friends via applications from dedicated gifting companies such as WrappDropGifts, or Boomerang.  CNET editor Paul Sloan explains in his article The Social Gifting Boom:

“It works like this: You sign up for Wrapp, either on the Web site or via the mobile app, by connecting directly to your Facebook account information. Wrapp notifies you of each friend who’s having a birthday, say, or who’s gotten engaged. Then, because of the targeting options it gives its retail partners, Wrapp will match its offers with information about the person you want to send a gift card. The choices you’ll see for a woman 18 to 25 are different than those for a man in his 40s.

While many of the cards are free, there is also an option to add more money. So you can chose to give a free $6 H&M gift card to a friend for Christmas, or you can make it for more, as any real friend would. Once you pick the offer, you write a message, press the Give button and you’re done. Your friend gets a notice on her Timeline, and it shows up in the news feeds of mutual friends (although there are options to send it directly through e-mail or SMS). If you receive a gift, Wrapp requires you to download the app to redeem it.”

Sloan believes that the beauty of the model is not how it works for the user, but the way companies like Wrapp have convinced their retail partners to give away free gift cards. Companies treat these cards almost like coupons, and gladly give away cards of a certain value because they know full well that recipients will either add more money to the card or that when they come to the store to redeem the card, they will end up spending more than just what is on the card.

treaterThere are others, as always, who look for the niche within the niche.  Treater is a gifting platform for sending casual, spur-of-the-moment, consumable, low price gifts.  It does work under the same principles as its larger rivals, but unlike them, it focuses on everyday treats, low cost items and local businesses instead of  formal occasions, big ticket items and national brands.  The idea is that next time a Facebook friends posts a status update on what a bad day they are having, you can send them a cup of mocha to make them feel better or when a friend announces a promotion at work, you can give your congratulations by treating them to a burger for lunch.

Even though gift cards provide recipients with the flexibility of making their own decision at the SPECIFIC GIFT step, there is always the possibility that the recipient may not exactly be happy with the LOCATION, or even the GENERAL IDEA.  In such a situation, the recipient could be stuck with an unwanted gift card.

This is where gift card exchange services come in. Exchange services such as Cardpool or Plastic Jungle allow gift card owners to either sell their gift cards, or trade them for another gift card of their choosing, at a discount.  The process is fairly simple. Once the gift card owner enters the gift card information (merchant, amount, card number) on the exchange’s website, the exchange will make the gift card owner an offer, if they want to sell the card, or display trade options, if they want to trade the card. Most gift cards can be sold or traded online, without the need to visit a store.

The ultimate solution to the unwanted gift issue, however, comes from Amazon.  Even though it has not been implemented yet, Amazon received a patent for a System and Method For Converting Gifts on November 2010.  The background of the patent application explains the motivation behind the innovation:

“…it sometimes occurs that gifts purchased on-line do not meet the needs or tastes of the gift recipient. For example, the recipient may already have the item and may not need another one of that same item. Alternatively, the item may not be the right size, the right type, the right style, and so on. In such situations, the recipient may wish to convert the gift to something else, for example, by exchanging the gift for another item or by obtaining a redemption coupon, gift card, or other gift certificate to be redeemed later.
… However, the process of converting the gift to something else once it has already been opened may be perceived by the recipient as being inconvenient. This may particularly be the case in the context of a gift purchased on-line, where the gift would likely need to be repackaged for shipping back to the merchant. Accordingly, the recipient may not ultimately convert the gift to something else, even though the gift does not meet the needs or tastes of the recipient.”

Amazon Patent Gift ConverterThe patent’s basic idea is a system by which a recipient’s gifts will be converted into things they actually want, through personalized lists and filters. Similar to email filters for products, potential recipients set up a personalized series of rules, and if any gifts sent through the online merchant trigger these rules, the recipients are sent either an item from their Amazon Wish List, or a gift certificate instead of the unwanted gift.

While innovative, the system drew sharp criticism from not only traditional minded gift givers, but also from etiquette experts.  The system was accused of being “dishonest” and while returning gifts that will not be used is deemed acceptable, returning gifts before even receiving them is considered to take the focus away from the appreciation of being given a gift.

wantful catalogThe balance between pragmatism and the spirit of gift giving we like is that of Wantful.  The company enables gift givers to choose gifts and create a small catalog of gifts. The recipient is sent a beautifully designed and personalized hard copy catalog that allows them to choose a gift, which is later sent to them in the mail. It is almost like a nice compromise on all fronts: the gift giver gets the convenience of not having to go to the store and the post office, while the recipient not only gets a nice, “hands on” catalog, but also has a degree of freedom in choosing a gift they want, without the hassle of  having to return an unwanted one.

Yet another innovative concept is group gifting.  Uniting the resources of many gift givers into a gift card enables the recipient to receive a more expensive gift they actually want,  instead of many small valued and mostly unwanted ones.  Group gifts not only make it possible for the gift givers to co-buy a gift of larger value, but also let the recipients choose or sometimes even predetermine their SPECIFIC GIFT.

A number of models have emerged around the group gifting concept.  eBay’s Group Gifts is one of them.  Once the gift fund is set up via an eBay and a PayPal account, gift givers can be notified via email or Facebook, and contribute to the fund with their credit cards.  No one gets charged until everyone chips in, and once it is fully funded, the gift fund will be sent to the designated PayPal account, and the recipient can checkout the same way as they would normally purchase any item on eBay.  It is a simple system that combines existing infrastructures of eBay and PayPal into an innovative service.

DreamBank‘s model is slightly different than the average gift fund.  Rather than focusing on items as gifts, the platform lets a recipient set up a fund for their dreams and enable gift givers to fund the recipient’s dream, which can be anything from a Caribbean cruise to an anniversary party, from a certificate program at the local university to ballroom dancing classes. The service is built as a community, so the recipient and the gift givers can interact over time with each other by sharing progress, resources or even encouragements. Gift givers can also set up a DreamBank account for unsuspecting recipients and surprise them after the dream has been funded.

SocialGift provides outsourced group gifting services for existing online retailers. Similar to what CashStar is doing for gift cards, SocialGift provides retailers with a plug-in for their product pages.  Customers can create a group gift directly from the retailer’s online store via an event page.  Through the event page, gift givers can determine how many people will contribute, track the progress of funds raised, invite more people to contribute or socialize with other gift givers.  The gift is shipped immediately, once the funds have been raised. If the gift is underfunded by a predetermined date, a gift card for the amount raised by the group is sent to the recipient.

While all the innovative concepts mentioned in this post so far have touched upon, utilized or modified most of the steps of the gift giving process, one step alone is outside the scope of most businesses: WRAPPING. This is where Delightfully comes in for digital gifts.

DelightfullyRecognizing the need to capture and enhance the emotional aspect of gift giving, Delightfully presents itself as “wrapping paper re-imagined”. Through Delightfully, gift givers can select an unwrapping experience for their gift, from 3-D mazes to a puzzle, from photo albums to a virtual tour. Gift givers can add their own personal messages and photos to the preexisting tools of the “wrapping paper.” Facebook users even have all of their photos on Facebook available for the platform. Co-founder Jason Shin explains:

Gift-giving is intended to be about a relationship between two people — not a vendor and a recipient.  When we talk about digital gift-wrapping, what we mean is showing some effort, the same way you do when you do a great job wrapping a physical gift.”

We have only talked about but a small subset of innovations and new businesses in the gift space.  Undoubtedly, some of them will prevail, while others will not. John D. Rockefeller once said that “the power to make money is a gift from God.”  Which of the businesses and innovations we have covered have received that gift, and which of them will convert that gift into their own gift cards? Time will tell.

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One response to “Gift Business: Innovation In Gift Giving (Part 2)

  1. Geri bildirim: Gift Business: How Do People Buy Gifts? (Part 1) | AllianceOptima Blog

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