Digital Gift Card Services Increase Loyalty, Create Seamless Exchange And Redemption Process

Gift card purchases are expected to reach $100 billion in sales by 2012, according to research firm TowerGroup in its analysis titled “CARD Act Impact: New Regulations Set to Wipe Out Gift Card Junk Fees and Reposition Market.” With the increased adoption of mobile commerce, digital gift cards are a new, abundant and low-hanging fruit for retailers.

Digital gift cards are a new tactic to drive in-store traffic and loyalty without focusing on discounting strategies such as coupons and daily deals.  In turn, start-up companies such as Wrapp are establishing themselves in the e-gift card space.

Wrapp is a social gifting service designed to allow users to purchase gift cards via mobile and web then send them to friends. To purchase and send gift cards, consumers either can download the Wrapp application for the iPhone or Android, or connect their Facebook accounts with the app. Once a gift card is purchased, the company sends a customized message to the receiver via Facebook and/or the Wrapp app for redemption.


Through the Facebook integration, Wrapp allows retailers to “connect the dots” between mobile, social loyalty initiatives and the in-store experience, according to Hjalmar Winbladh, CEO of Wrapp. “We’re really trying to make it a very simple process for consumers to give, receive and contribute to digital e-gifts,” he noted. “The most common wall post on Facebook is when someone says ‘happy birthday’ to a friend. We think that’s nice, but there’s a major gap between just saying ‘happy birthday’ and being able to include a gift seamlessly. We’d like to make giving a gift card as easy as posting a simple communication.”

By allowing easy access and redemption of digital gift cards, retailers can create a multichannel shopping experience that is easy-to-use for busy shoppers, Winbladh explained. “The nice thing about having the gift card directly linked to the smartphone is that consumers have it with them at all times,” he said. “When shoppers walk into a store, they simply press ‘Redeem’ on the Wrapp app to receive a barcode. Store associates scan the barcode at point-of-sale and shoppers can pay any remaining balance via cash or credit card.” E-gift card receivers also can enter a unique voucher code to redeem gift cards via the web, he noted.

Winbladh anticipates that digital gift cards can help retailers increase loyalty and in-store traffic. “Big retailers and merchants tend not to like couponing sites and daily deals mainly because they’re training the customer to look for a deal,” Winbladh said. “Discounts and coupons also don’t drive loyalty. Our goal was determine how retailers can build loyalty and bring people in-store without driving the process with discounts and pricing. Wrapp is all about giving things to each other, and having that value in-pocket at all times.”

The application currently only operates in Sweden but consumers worldwide can buy and share digital gift cards with friends and family who reside in the country. Fifteen retailers are participating in the service, including sporting goods retailer Stadium, designer underwear brand Björn Borg, street fashion provider WeSC, and home improvement chain Clas Ohlson. Wrapp is expected to expand to retailers in the U.S. and U.K. during Q1 2012, according to Winbladh.

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