Wrapp to Open Up Its New Group-Gifting Service in the U.S.
You’ve heard of “group buying,” where large masses of people commit to buying something at a discounted price. Now a company is pitching the idea of “group gifting.”
A Swedish-based company called Wrapp is creating a new way for people to easily give gift cards to their friends through social channels like Facebook, where mutual acquaintances will also be able to contribute additional funds to the card if they wish.
To provide incentive to consumers, Wrapp is partnering with retailers to give the first $5 or $10 off the card.
The logic is that no one will actually give only the minimum. But even if they do, it might drive traffic to the stores and get consumers to buy something when they normally might not have.
Wrapp was founded by a number of successful entrepreneurs from companies you’ve probably heard of.
The company’s co-founder and CEO, Hjalmar Winbladh, previously helped start Sendit, a mobile Internet company purchased by Microsoft; he later co-founded Rebtel, a mobile VoIP company. Also participating is Andreas Ehn, the founding CTO of music phenom Spotify, and Carl Fritjofsson, an advisor to Groupon.se.
The service launched two weeks ago in Sweden, and now the executives are focused on launching in the U.K. and the U.S. before the end of the year.
“Gift cards are a $100 billion business in the U.S., and it has not had that many innovations,” Winbladh said. “It went from a piece of paper with manual logs to a piece of plastic that is integrated with the cash register. It’s still a physical product.”
There’s a ton of social-gifting sites experimenting with different models, including Giftiki, Thoughful, Shareagift, Friendfund, Friendgiftr and eBay’s Gifts Project.
Here’s how Wrapp works: Download the app to either an iPhone or Android phone; log in to your Facebook account; click on a friend, who might be celebrating a birthday or anniversary; pick from one of the gift cards available, which can be targeted based on the intended recipient and contribute as much money as you want.
The recipient will receive a message on their Facebook wall, saying that they have received a gift. Other friends will see the message and have the chance to contribute.
The recipient then shows the mobile application at check-out to redeem it.
Windbladh said many of the gift cards will come with $5 already stored on them.
“If I’m cheap, maybe other common friends will add more money, or maybe I will add more money. The average gift card in the U.S. is $20 to $30,” he said.
But he figures, if someone walks into the store, that’s cheaper than most advertising campaigns.
Wrapp is focused on partnering with large big-box retailers, like Best Buy or Target, which have large marketing campaigns, an interest in seeing their brand on Facebook, and absolutely no interest in offering a daily deal on Groupon or one of its competitors.
The business model it is proposing to retailers is that Wrapp doesn’t get paid until someone redeems the gift card. Then if someone uses it, Wrapp collects a commission on both what the retailer’s contributed to the card and what others contributed beyond that.
So far, the company has raised seed funding from Swedish angels, and is looking to raise money in the next three to six months to support the roll-out in the U.S. Today, it has 15 employees, but will be beefing up its presence in San Francisco for its U.S. launch.