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After launching in Sweden in November and recently expanding its presence in Europe, Wrapp, the Swedish social gifting startup, is now coming to the U.S. to tap America’s love of gift cards. The startup, founded by Rebtel co-founder Hjalmar Winbladh, is coming ashore with a number of retail partners including Gap, Fab.com, H&M, Sephora, Wall Street Journal and Wayfair and another 15 retailers will also get with the program in the coming weeks.
The service offers retailers a way to drive measurable traffic into their stores, both physical and online. Retailers can offer gift cards with a small amount of value — perhaps $5 or $10– that users of this service get for free. Those users can add more money on to the card before sending it to a friend, or retailers can offer paid gift cards that a user can fill up and send to their Facebook friend.
Wrapp users get alerts for a friend’s upcoming birthday, prompting them to choose from a selection of gift cards. The retailer can offer the free cards based on who they’re trying to reach, but they don’t have to pay anything until the card is redeemed, which is usually part of a larger purchase. Users typically end up spending four to six times the amount of a free card. The “cards” are distributed via a smartphone app on iOS (s aapl) or Android (s goog), which they can use to redeem it in store. Some gift cards can only be redeemed online through Wrapp’s website.
Americans love gift cards
Winbladh expects the U.S. launch to provide a big boost because the U.S. has one of the most mature gift card markets, with the average American adult giving five gift cards a year. Americans also ask for gift cards more than any other gift.
Since the service launched in November, 165,000 people have gifted 1.4 million free cards to their Facebook friends. Wrapp has had 100,000 redemptions in its first four months, said Windbladh. Since getting started in Sweden, Wrapp has expanded to Norway and the UK and has opened offices in Germany, France, the Netherlands, Taiwan, Australia, Japan. The company is racing to stay ahead of Germany’s Samwer brothers, who are giving chase with their own social gifting clone called Dropgifts.
Wrapp has executives with a solid history, having been launched by Windbladh, and Andreas Ehn, Spotify’s first chief technology officer. Magnus Hult, another key early Spotify employee, Leo Giertz, founder of Barefoot Hackers, Carl Fritjofsson, strategy advisor to Groupon.se and Fabian Mansson, the former CEO of H&M are also part of the founding team. That has helped Wrapp attract $10.5 million in funding from Niklas Zennstrom’s Atomico, Greylock’s Reid Hoffman and Nordic VC Creandum.
Staying ahead of the competition
Windbladh said Wrapp will follow up the U.S. launch with a roll out in 15 more countries across Europe, Asia and South America. Not surprisingly, he’s bullish on the benefits of the service for both consumers and retailers. Consumers have an easy and often subsidized way to recognize their friends anywhere in the world on special occasions. And retailers can use the power of social channels to reach consumers and drive people into stores, with a way to track the efficacy of their free cards.
“This is a breakthrough model for sales and an elegant way to do gift carding,” said Windbladh. “You’re tapping into the most efficient marketing which is friends of friends.”
This is another interesting take on how retailers can tap social to drive commerce and market themselves. It’s still really early in the development of social commerce and there are a number of interesting ideas emerging. Wrapp has gotten off to a good start with its move to digitize and socialize gift cards. The U.S. should provide more momentum though it will no doubt attract imitators as well.