Mike Isaac

Recent Posts by Mike Isaac

As Facebook Gears Up for E-Commerce Holidays, Social Gifting Start-Ups Buckle Down

Come Thursday, Facebook is holding an event at the iconic FAO Schwarz toy store in Manhattan, pushing the new Facebook “Gifts” product hard before the holiday shopping season begins.

I’m told Facebook is set to unveil a series of new partnerships with more retailers, bolstering the social giant’s gifting platform with more item choices for users to send one another. As it stands today, Facebook already has more than 100 retail partners for Gifts across industries such as food, fashion and kids’ toys.

But meanwhile, back in start-up land, myriad smaller social gifting companies are shifting into high gear with product updates and partner announcements of their own, hoping to keep out in front of the pack while the spectre of Facebook’s e-commerce play looms.

The most popular defense I’ve seen thus far? Trying to differentiate from Facebook, the 800-pound gorilla in the room.

I’m thinking of two start-ups in particular, Wrapp and Boomerang, which are focused on a market that Facebook isn’t fully immersed in: Digital gift cards. Wrapp and Boomerang users can give gift cards to their friends for free, made available through partnerships between retailers and the respective start-ups.

Both Wrapp and Boomerang offer similar value proposition stories: It’s good for users because you’re able to dole out freebies to your friends. And while retailers may have to eat five or 10 bucks on a free gift card, the potential for drumming up more foot traffic in their brick-and-mortar stores is worth the low upfront cost.

Right now, Facebook partners with only a handful of retailers to offer digital gift cards (though one of those, Starbucks, is a heavy hitter). Instead, Facebook’s focus is on physical retailers, those which tout more traditional mail-order presents like stuffed animals and cookie bouquets.

The problem is, there’s no guarantee that Facebook won’t flip a switch and decide to offer a similar service. In theory, all Facebook would have to do is hammer out a bunch of partnership deals with retailers who offer gift cards, and slot those into the list of choices Facebook users have when selecting gifts for their friends.

Whether Facebook goes that route or not, it’s possible that this isn’t a zero-sum game. Facebook could continue chasing the long tail of smaller, physical good retailers, like it seems to be doing currently. At the same time, companies like Wrapp, Boomerang, Gyft and Treater can handle the digital gift card market by tackling larger retail partnerships with national chains.

But the smaller guys aren’t taking any chances, keeping up momentum in the final days before holiday shopping madness is upon us. Wrapp is pushing out a larger wave of free gift cards from big brands like the Gap and Sephora the day before Black Friday, and announced a recent partnership with Blackhawk Network, essentially expanding Wrapp’s prepaid gift card cache by upward of 300 retailers.

We’ll have to wait and see what Thursday’s “Gifts” event will bring. The new partnerships may signal Facebook’s direction for Gifts, or perhaps the company will debut a surprise feature or acquisition to change up expectations entirely.

It’s sort of like staring at wrapped presents under the tree on Christmas Eve. The hardest part is always the waiting.

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