Social gifting boom spawns dozens of companies
Buying a birthday present for a friend? Forget the wrapping paper and bow. This is the age of social gifting, and all you need is a Facebook account and mobile application.
The latest buzz in e-commerce is a new category of business that lets people give gifts on social networks or through texting or email. Text a relative a digital gift card to say happy birthday - no last-minute trips to the post office necessary.
Dozens of social gifting companies have cropped up since 2011, promising to make giving gifts easier for consumers and drive more sales for retailers.
And it's not just a startup fad. Facebook and Amazon each launched gifting features last year.
"It's been a land rush in the gift-giving space," said John Poisson, founder and chief executive of online gift-giving service Wantful. "This is a massive business opportunity."
But some say the fad will be short-lived. The reason people like giving and receiving gifts, critics say, is the excitement of unwrapping something and the personal connection of a meaningful exchange.
"I don't think that anyone is giving this in lieu of real gifts in-person," said Sucharita Mulpuru, a retail analyst with Forrester Research.
Social gifting has splintered into a number of niche areas as companies stake out their place in an increasingly crowded landscape. Some apps send digital gift cards, while others let you buy goods - anything from a 5-pound bag of gummy bears to lingerie - and have them delivered from your smartphone. There are apps offering free coupons to post to a friend on Facebook and others that let you buy a friend a beer.
Social gifting companies may have found a sweet spot among online and mobile consumers looking for convenient and instantaneous ways to check that gift off their to-do list.
"I can wish my friends a happy birthday and give a gift in one fell swoop," said San Francisco Bay Area resident April Wall.
Liora Avitan said social gifting companies are more aligned with consumers' shopping habits. Without malls or shopping centers near her New York City apartment, she wants the convenience of buying gifts from her laptop or phone.
"I'm doing everything online already," she said.
Avitan, 27, uses Wrapp, a Sweden-based app that has emerged as the darling of the social gifting scene. She relies on Wrapp's automated birthday notifications - the app is synced with Facebook - to remind her when to buy for her friends and family.
"I think I give more gifts now than I used to," she said.
Wrapp hit 1 million users 14 months after launching, faster growth than Pinterest or Twitter.
It's moving many of its Stockholm operations to its San Francisco office, which opened last May, because the U.S. is its fastest-growing market.
Wrapp's digital gift cards can be downloaded for free, and most are worth $10 or less. The gift cards can be sent through Facebook, email or text, and recipients keep the card in a digital wallet on their phone but have to redeem it in the store.
Aaron Forth, the company's global chief operating officer, said that shoppers tend to spend more money than the amount on the gift card once they're in the store.
Not everyone is a fan. Critics say social gifting companies have reduced gift-giving to another form of advertising, stripping the sentiment from it.
"You log onto Facebook and it tells you that you have six friends with a birthday and sending really loud messages that you should buy them each a Starbucks card. That just makes no sense to me," said Poisson, whose San Francisco-based company, Wantful, offers online personal shopping services that help consumers pick out gifts based on the recipient's tastes.
Greg Spector, chief marketing officer for Wrapp, said the app was never meant to replace the intimacy of gift-giving with someone special.
"I wouldn't use this to give my wife an anniversary gift," he said. "That's just not what this is for."
Even Facebook hasn't found solid footing in social gifting. Chief Financial Officer David Ebersman said on a recent call with investors that Facebook Gifts contributed less than $5 million in revenue during the fourth quarter of 2012, and cautioned analysts that revenue from Gifts "is very small" and not expected to grow in 2013.
WHAT IS SOCIAL GIFTING?
Social gifting is shopping for presents in the digital age. It's a way for people to give gifts through social networks and other digital channels, such as email or texting. Many social gifting companies provide digital gifts such as gift cards and coupons, but other services allow consumers to buy goods for delivery, all with just a few clicks on Facebook or swipes on their smartphone.
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