Rebooting The Gift Card Experience
Tis the season for gift card buying. According to National Retail Federation, Americans will spend over $31 billionon Gift Cards this holiday season – and spending is on the rise, up 83 percent since 2003. It’s no wonder. Giftcards also remain the most requested gift item among consumers this season.
With all these strong tailwinds, it might seem surprising that while consumers really love gift cards, givers don’t get all that excited about giving them. Historically most consumers feel good about giving them to co-workers and casual friends, but purchasing a gift card for those closest to you – well, it still smacks of failure. That problem is compounded by the fact that the majority of consumers also report feeling bad about asking for them, even if it’swhat they actually want.
So all of this means that this very popular item that’s so easy to purchase, simple to give (especially in the era of mobile) and highly desirable, is considered so impersonal that its appeal is quite limited.
And that’s where Vouchr thinks it can enter, and ultimately disrupt the market. Vouchr’s MO is to leverage the gift card’s migration to mobile to build a more personalized gifting experience. CEO Robert Balahura told PYMNTS in a recent podcast interview, that the problem with mobile gift cards, as they are currently done, is that they are essentially a digital copy of an already problematic plastic experience.
“Basically people are just digitizing an already very impersonal experience. The plastic gift card experience is already boring and impersonal, but the digital versions today only make that impersonal experience even more impersonal because now you’re not even handing the person a card,” said Balahura.
Balahura and the Vouchr team come from a social gaming background. Balahura sold his last company, J2Play, to EA Games and started looking for a new opportunity to scratch his entrepreneurial itch. He thought that being able to leverage his knowledge of how to motivate consumers to play games might actually help crack the “boring and impersonal” gift cards problem.
“We thought, hey, this is something that needs help to actually increase engagement. Digitizing the gift card experience provides an opportunity to re-imagine gifting with some of the modern tools that are available today like social accounts and game mechanics theories. So we decided to make gifting, engaging,” said Balahura.
So how does Vouchr make gift giving engaging? Part of the strategy, according to Balahura, is ubiquity. Vouchr wants gifting to be available to anyone looking to send a gift to anyone, anywhere.
“Vouchr allows someone to create a gift card for one of their friends anywhere in the world. A person can send a gift certificate for a small cafe to a friend who’s traveling to Paris using the mobile app. A person can discover a hot new place on Instagram and immediately create a gift certificate to send to a friend for their birthday. One of our bigmantras is ‘no limits’ – people can gift anything to anyone anywhere.
Okay. So that sounds hard, yes? Well it is. And, making Vouchr’s “no limits” mantra possible has forced Vouchr to think differently about how it tracks and catalogs businesses.
“The problem with the traditional catalogs of gifts is that it’s out of date the second it’s released because new products are always coming out and new places are always opening,” Balahura explained. “So we use social media as our catalog. Basically, we comb different stacks like Foursquare, Facebook, Instagram to find new places and more important, the places that people like to go. And, we pull that data into our platform to enable a person to create a gift card in the mobile app, on demand.”
Additionally the company has partnered with SinglePlatform and GoDaddy to collect SKU data from restaurants so that it’s easy to create a gift using exact menu and pricing data from the venue.
The are a variety of ways to use the platform. There is a standard use–where a app carrier can build a gift certificate for someone and send it to the user. The company’s newly release mobile app, Supriise, makes that easy, and offers the service with an interesting twist – the recipient of the gift must go to the merchant to find out what the gift actually is. Until they are in the store the person sent a present has no idea what the present is.
But that’s just where the digital gift differentiation starts with Vouchr, which aims to use its games and social experience to turn the act of giving the gift into an experience. An experience that can begin with tracking one’s friends online.
“We have a feed that surfaces all of a consumer’s gift giving opportunities – birthdays and other things – but we also surface where consumers have posted photos on Facebook, or Instagram or checked in on Swarm or Foursquare,” Balahura explained.
With the combination of the biographical of real-time data, the app allows the user to find out where their friend is at the moment, and send them a gift in real time.
“The next step will surface all the different menu items (at your friend’s current theoretical location) all the different beers. The gift giver can choose one, or make it a general gift certificate for any amount, say $50, or a specific menu item, say a specific beer. The gift certificate will then pre-populate the price or the exact name of the beer or and also deliver a picture of that item. In two steps, a person can create a really personal gift.”
The app also allows further customization options to make the gift more interesting and interactive. Users can choose to send a game that the recipient must play before unlocking their gift. The giver can also request a selfie or a picture of the gift. The digital gifts can even be virtually gift wrapped.
Once the gift is paid for the recipient will receive a text that will prompt them to pick up their present.
“(If they don’t have the app) they download it and they gift will appear in the app in their gift wallet, which is how they receive the gift.”
Vouchr is a very new business. It’s just raised its first round of seed funding, $1.6 funding to launch the Surpriise app. The funding came from Kima Ventures and other angel investors, including individuals from Facebook and Google, reports The Wall Street Journal.
In its early beta phase, they’ve seen some small businesses in Canada and local musicians use the service to bring in fans and friends with trial offers. So far the program is developing well, and they are seeing second generation users (those brought in through offer or invitations/gifts from friends) increasingly appearing.
“We do have this social layer where people are sending pictures back and forth and chatting while they are there. So they are going to the location and they are buying. The really neat thing is that we’re actually getting friends of existing fans and existing customers to come in, which is really, really interesting.”
The next step, says Balahura, is figuring out how to recruit the third generation user and leverage gift giving into something that really can build businesses.
“The ultimate vision is how do you make a real world product go viral,” Balahura mused. “How do you get that second new customer to then create an offer to send to their friend?”
Throughout December 2014 Vouchr will continue with the soft launch of Supriise, and expects a larger scale roll out in late spring 2015.
Last Month’s Breakdown
November has come and gone, leaving $5.2 billion of financial activity in its wake. That represents a step up from October 2014, when total investments clocked in at just around 3.5 billion, but trails September’s $16 billion in investments.
The vast majority of funding floating around the ecosystem in November – 92 percent or $4.2 billion – was driven by strategic or venture-backed investments. Of those VC and strategic investments, about 90 percent or $3.8 billion, were made in retail payments, which themselves represented about 74 percent of the month’s total. Banking was the leading area for VC and strategic retail investment, taking down 70 percent of the total. Data analytics related to retail, shopping, commerce ($19.4 M), Alternative Finance ($10 M), P2P ($6.6 M), P2P ($-) and prepaid ($ 1.5 M) saw the least investment activity.
The months activity was lead by the acquisition of Susquehanna Bancshares by BB&T Corp.Inc. for $2.5 Bn. The second largest transaction came from commerical payments investments – the acquisition of Yayoi by Orix Capital Corporation for $691 M.
November’s most active investor was Bessemer Venture Partners which was invovled in three deals. Sequoia Capital, Rubicon Project, New Enterprise Associates, Kleiner Perkins Caufield & Byers, Khosla Ventures, Intel Capital, Crosslink Capital and Battery Ventures were each involved in two.
The median investment during November was around $2.5 million.