It’s the worst.
You want to buy a gift for a friend. You spend hours online searching for just the right thing. You find it. You get to the checkout page, and you’re stopped dead in your tracks since you don’t know your friend’s shipping address. Asking her would obviously spoil the surprise. You leave the site frustrated, and you leave your friend giftless.
But that might not look so bad if you are one of the many last-minute gifters who’ve lost track of time, only to discover that you’ve missed the shipping window to get a gift ordered and delivered in time.
If you’ve been there, you’re certainly not alone. It’s a situation that Roy Erez, founder and CEO of Loop Commerce, told PYMNTS’ Karen Webster that 40 percent of shoppers faced in the lead-up to Christmas this year. It’s also a problem that he and his cofounder set out to solve with Loop Commerce for consumers and the merchants who miss out on those last-minute gift-giving windows of opportunity.
“Lots of smart people talk about cart abandonment, about converting customers and increasing transactions, and I’m the guy thinking about something even more basic,” Erez said. “If Karen is on the site buying for herself, that’s extremely different than Karen being on the site and buying for someone else, and in that case, adding more reviews or high-definition videos of the product is irrelevant if she doesn’t have the address of her friend to send that gift.”
Loop Commerce provides an enterprise-grade SaaS gifting solution for retailers that fully integrates with online stores and their shopping cart. In a nutshell, Loop Commerce provides a GiftNow™ button on every product page for its client retailers, allowing customers to send the actual item to recipients digitally. Loop Commerce’s gifting solution is used by brands like Neiman Marcus, Macy’s, Saks Fifth Avenue and American Giant, among others.
Erez said that Loop Commerce’s platform was based on consumer research and with the behavioral economics of gifting in mind. “Gifting is a highly social engagement between people,” he said. “It’s about feeling good about what you’re buying; it’s about feeling great about what you’re receiving. But there are reasons people don’t buy — buying a personal gift is highly risky.”
Risk, Erez said, that causes shoppers to abandon their carts or not even try in the first place. Loop Commerce allows gift buyers to send items without having to select a given size, color or other unknowns that might otherwise lead to rejection, exchanges or returns. The receiver gets the gift via email, the day of the gifting occasion, and it can be customized to their liking or exchanged for another item or store credit.
And all the gift giver needs, in this case, is the recipient’s email. Since the gift is delivered in a matter of minutes, it doesn’t even require a lot of pre-planning.
“We decided early on,” said Erez, “to take the extremes of a gift card and give people the ability to buy whatever they want to buy. Gift cards grew to $140 billion as a solution for gifting anxiety and last-minute [purchases]. What we wanted to do at Loop was to give the exact same flexibility with the thoughtfulness of gifting.”
About 50 percent of Loop’s shoppers are male, noted Erez — a group for whom gifting is the ultimate high-risk endeavor. These are the shoppers who want to buy, he said, but typically abandon their carts — afraid to pull the trigger because they don’t know what size to buy.
He also said that Loop has converted the more than 50 percent of gift givers who would never buy or, for some occasions, won’t buy a gift card — which creates a pain point for both gift giver and retailer. For the giver, they’re without a gift. For the retailer, they’re without a sale.
On the retailer’s end, Loop Commerce addresses multiple retail pain points. Adding the eGifting platform to the site drives conversion rates and sales and can bring in additional transactions from gift receivers browsing the site on their own. “What we didn’t account for,” said Erez, “is that 30–75 percent of buyers, depending on the store, are new. On average, across all stores, about 50 percent of buyers are new. We converted them.”
Additionally, Erez pointed out that many of the gift receivers are also new to the store. After receiving a gift, consumers are more likely to buy from the store in question, even if they never had before. “Some of our retailers are literally seeing 170 new customers to file for every 100 transactions,” he said.
Erez said Loop Commerce also saves retailers the cost of returns and opens up new days for retail revenue, noting that retailers are losing up to a month of business each year by closing for holidays and having shipping cutoff times for holiday purchases. Loop Commerce enables day-of, personalized gifting for those 40 percent — for every gifting holiday, be it Mother’s Day, Father’s Day, Valentine’s Day, etc.
Not to mention birthdays, a gifting opportunity that retailers can cash in on year-round, especially with the recent rise of social media. Erez used the example of Facebook, which happens to notify users of others’ birthdays the day of. “If I recalled, right now, that you had a birthday today, there would be nowhere I could go to get you that gift on time. I wouldn’t buy it. Loop Commerce solves for that,” he said.
Loop Commerce is an interesting new model that turns gift-giving on its head and offers a tangible gift alternative to those who really want to give a gift and not the digital (or plastic) version of cash. In addition to the gift card purveyors, there’s one other facet of the ecosystem that might want to keep their eyes on Loop: the wrapping paper and gift bag industry. Who knows — if Loop takes off, instead of unwrapping gifts in the family room on Christmas morning, consumers will, instead, unwrap one digital gift after another on their digital device of choice.