For retailers, the story is a familiar one — the one that Amazon sets hearts a-palpitating, and revenues a-plunging. But in the brave new world of online commerce, conversion holds sway to an issue thornier than the competitive knots presented by Bezos and company.
That would be gifting. Yes, gifting.
Gifting online has its own problems. People really want to send gifts, but three things hold them back.
They’re not exactly sure the size or color and don’t want to guess wrong and offend. Even if they did, most of the time they don’t know or don’t readily remember the shipping address. And even if they did, unless they thought about all of this a full five business days before the gifting occasion, they were sunk: the gift wouldn’t reach the intended recipient in time.
So what’s a gift giver to do? Send an Amazon gift certificate, most of the time. Loop Commerce Founder and CEO Roy Erez remarked that gift friction, as described, is the same as retailers losing a month and a half of selling time.
“I think that retailers are acknowledging … they have to find new ways to compete with Amazon, [which is] one aspect … but innovation at the end of the day is ‘I want to drive new sales. My customer base is shrinking …’” Erez said. The problems that exist across physical and online locations, he said, are the same problems, but in the case of the latter, for eCommerce, retailers must jockey for the attention of each set of eyeballs. With constraints in place for growth and innovation as competitive pressures mount, these retailers lag against behemoths like Amazon.
To get a sense of the dominance at work here, Erez noted that 46 percent of sales made online on Christmas day were done on Amazon. The lure here for the procrastinators and those who just forgot the holiday, not surprisingly, was the rapid shipping offered by Amazon, whereas most competitors would take three days or more for delivery.
That’s the problem that Loop’s GiftNow solution solves. Gift givers can select a gift that they think their intended receiver might like. Then, with nothing more than an email address, they can send the digital package — wrapped — to the recipient the day the gift was intended. For GiftNow, said the executive, “it’s about the core experience” with a binary effect, where “we unlock transactions that did not exist before.” And on some pretty fancy sites, including Neiman Marcus, Bergdorf Goodman, Saks and Coach.
Erez said that Loop and GiftNow “[convert] people who otherwise would have left,” because, for example, the buyer didn’t know the intended recipient’s sweater size. Sales are lost not because people do not want to buy, but because they can’t.
More than that, GiftNow is a marketing and customer acquisition tool, which has paid off, as 55 percent to 90 percent of recipients, depending on the retailer, are new to those stores. “They’ve now become experience-aware of the brand [for both GiftNow and perhaps of the retailer].”
And in the competitive battle against Amazon, there’s another marketing arrow in the quiver: “This is instant delivery,” said Erez, which compares favorably, of course, against even the speediest, same-day promises of Amazon and others. “What happens is that we drive significant incremental sales. At one retailer this past holiday, GiftNow represented 24 percent of total sales after the shipping window closed,” he told PYMNTS.
Erez told Webster that the advantage also accrues to banks, as those institutions looking to boost transactions across their card products can advertise on a holiday such as Mother’s Day, with an email saying, “use my [card] to GiftNow and get three times the points.”
Loop is also able to work with those issuers to create discounts and promotions that benefit the consumer “because they now are aware of a service, that their card is available to be used with a promotion on GiftNow, and they need to buy Mom a Mother’s Day gift.” Erez said that nearly half of Mother’s Day gifts are bought the day before or the actual day of. Once a gift has been gifted, the retailer is ultimately able to offer promotions to the recipient to cement customer acquisition, he said.
According to Erez, stores using GiftNow are never really, truly closed, and deliveries need not be dependent on cut-off dates, so in effect, as many as 30 to 40 extra sales days are added to the calendar, including on holidays “when it matters the most.”