Is Social Gifting a Smarter Strategy for Retailers?

Apr 27, 2012 Comments Off by

The new social gifting service from Wrapp.com was given a good rapp in an article published yesterday in Ragtrader.com.au. Wrapp is a new service that allows users to give their Facebook friends free gift cards made available by retailers using Wrapp.

Ragtrader.com.au article on WrappYou can read the full article here at Ragtrader. Wrapp is a new service that launched in Sweden in November 2011.  It’s already getting some traction in the Swedish marketplace.

According to Venturebeat.com,  Wrapp sent over 250,000 gift cards in Sweden in December 2011, which is a nice way to launch the service.  With over $10M of capital raised, Wrapp is now expanding to different countries, including the US, UK and Australia.

Ragtrader reports that according to Wrapp’s research, participating merchants say each sale averages four to six times the value of the free gift card they let Wrapp users give to their friends.

It’s how the retailer gives a discount without giving a discount. 

It’s also another way the retailer can easily harness the power of social media and the circle of friends each of their customers has.  And as our social media guru Laurel Papworth explains, part of the smarter business use of social media involves finding the Influencers and getting them to continually create social media Ripples.

Add the ability for Facebook friends to create, give and redeem gift cards using mobile devices and you really have some social selling power for Facebook friends to enjoy – which can help those retailers.

You can learn  a little more about Wrapp on their website. They do seem to be keeping a lot of info under wraps. (Sorry.)

But will Wrapp really work?

Wrapp.com website screenshotThe way I see it, Wrapp may provide plenty more socially-driven customers to participating stores. The stores that may win through Wrapp are those with exclusive product lines who don’t really want to be seen to be having continual sales and giving discounts. It may even be sustainable, rather than another new cool faddish marketing concept.

But I doubt if Wrapp will really help high margin retail stores selling high-priced non-exclusive products that are available for a fraction of the price elsewhere online.

Will Wrapp do anything to stop the  trend towards more online purchasing?   It certainly won’t sustainably protect  physical retail businesses from online operations offering the same products much cheaper and often more conveniently.  Friends using social media will continue to help promote these more effectively through good ol’ word of mouth. And other faddish tools like Pinterest.

Social Gifting Online

How long will it take before a Wrapp equivalent offers free gift cards to social friends who can buy at reduced prices in online stores?

I’ll let you into a secret…  It’s been happening in a disorganized way online for years. And you probably know it.

Smarter online stores provide free gift cards in the form of Coupon Codes that can be redeemed at the point of checkout.  These  coupon codes can be shared between friends and groups, and spread widely online through social networks.

Try Googling the name of any online store, adding the phrase ‘coupon code’ in the search and see what comes back at you.

Social Magnet but NOT a Silver Bullet

Social gifting is a smart concept, and Wrapp seems to be harnessing it well in the physical world with increasing numbers of social and mobile shoppers.  But it won’t save the lives of those struggling retail dinosaurs who latch onto it like another life-support system.

Wrapp may help create smart social magnetism for retailers, but imho, it will not be the silver bullet for retailers.  It’s just another tool in the sales and marketing toolbox.

Like any tool, it needs to be used well to be effective.  We need to know, have AND use different tools for different purposes.  Here’s one of my favorite quotes about tools:  “To a person whose only tool is hammer, everything looks like a nail”. (Tip: Don’t hand your whole business over to kids, web companies or digital marketing agencies who just have a few hammers in their toolbox.)

Here’s a YouTube video promoting Wrapp. And yes, it’s from Sweden, which explains the cute accents.  :)

What do you think of social gifting? And would you use Wrapp?

Footnote: I’m not sure exactly how the Wrapp service works in detail. If I was given a free $20 gift card, I can’t imagine that I could go into a participating retail store and buy a $20 belt (for example.)  They really want me to be buying a $120 item – so I reckon the use of the gift card MUST have purchase conditions attached.  And with such conditions come the very obvious realization to everyone concerned that it is NOT really a gift card, but a discount voucher.

I’m not a fashion-conscious girl. (Yes, I admit it.) But if I was, then I would probably say to my friends, “Please don’t bother giving me a discount voucher to a store where I can save $20 on a $120 shirt, when I can buy the same shirt at an online store for say $70.  If you are really my friend, please tell me about the online store…” 

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