Social gifting: The hottest trend in ecommerce?

MyCustomer.com examines what the growing popularity of 'social gifting' means for brands' eccomerce initiatives.

Big name retailers such as Gamestop, J.C. Penny and Gap may be closing their Facebook storefronts but the bell isn’t tolling the death of Facebook commerce just yet. In fact, quite the opposite. The social network is now playing host to a new trend: social gifting.

Predicted to be this year’s rising star of ecommerce, Facebook allows users to send paid-for, discounted or free gift cards to friends via applications from gifting companies. Start-ups such as Wrapp, DropGifts, Cashstar and Socialgift are at the forefront of the trend and partnering with big name retailers such as Asos, John Lewis and Starbucks to provide the service, receiving pay from retailers when gift cards are sent. 

Even Facebook recently joined the ecommerce rush with the acquisition of Karma, another start-up that not only lets users give gifts, but also lets the receiver personalise their gift, swap it for another or donate it to charity.

Social gifting applications allow Facebook users to send cards either from within the platform or by using social sign-in via the social gifting website or mobile app, which the receiver can then reedem in-store or online. Certain applications also allow friends to club together and contribute to the amount on the gift card, with an option of making the amount viewable on Facebook profile pages.  

Katharine Hirst, MD at UK start-up DropGifts, explains the service is a good way for retailers to get customers into store or online and get people talking about the brand.

She says: “It’s also new way of commercialising Facebook and a way for some brands who are not necessarily known as giftable brands as much at the moment. For example there are some fashion brands where women buy mostly for themselves, whereas social gifting allows friends to send each other gifts on Facebook and talk about the brands in a gifting way.”

And the trend of social gifting doesn’t only begin and end with Facebook or start-up gift companies. In 2011 Heinz launched its ‘Get well’ soup Facebook campaign, allowing users to purchase a can of soup for their suffering friend and personalise with the friend’s name printed on the can. Bought for £1.99 through the brand’s Facebook page, the service was a huge success and re-run the following year. 

Tony Wright, social media manager at Outside Line, said of the campaign: “It created lots of trade buzz and was a quick and personable way for the brand to emphasise the products’ appropriateness for people under the weather, without doing a full blown above-the-line push of the health and wellbeing angle.”

Brand benefits

So what does the emergence of the social gifting trend mean for brands’ ecommerce initiatives and how are they using it to their advantage?

Hjalmar Winbladh, co-founder and CEO at Wrapp believes that Wrapp turns merchants’ Facebook fans into their best-ever sales force: "It allows them to target by age, gender and location exactly who they want in their stores. Then the Wrapp platform gives retailers incomparable brand exposure and endorsement from one friend to another on Facebook."

McDonalds used Wrapp's service in Sweden to launch McWrap, its new healthy, low-calorie product. Winbladh says the fast food giant used the application to give women aged 25 and older a free McWrap. "The campaign was so successful in terms of awareness, product trial, and up-sell (incremental purchases in addition to the free McWrap) that after two weeks the campaign was extended to target both men and women of all ages," he says. 

Tamara Littleton, CEO of eModeration, says that social gifting is important for measuring the ROI of social media.

“It’s a great way for brands to see the impact their social engagement has on sales. It’s also a good way to track offline sales back to online engagement (for cards that are redeemable in-store).  It’s also another way to monetise social games – letting people buy each other branded merchandise for their virtual farms, cafes or wardrobes,” she says. 

Andrew Johnson, director general of the UK Gift Card & Voucher Association, believes brands can encourage social gifting by beginning with existing customer affinity: “Brands could try offering incentives, and should ensure that their social gifting options are clear, simple and easy to use,” he said.

Fad or future?

But whilst still in its infancy and with a cluster of start-ups filling the vendor space, is the future in social gifting more than just a fad?

Littleton sees longevity in the trend: “We already shop online, buy gifts, and wish our friends happy birthday on Facebook. Buying a birthday gift through Facebook just ties those things together. The next step would be a ‘wishlist’, similar to Amazon; then it’s a short hop to a social wedding gift list.

“As for any retailer - the consumer experience has to be a positive one. Customer service will have to be excellent, mistakes rectified quickly, queries answered promptly, and vouchers redeemed effectively. Offers must be relevant and well-targeted (there’s no excuse not to target effectively on social media, where so much demographic data is available),” she says.

Ann Longley, head of social strategy at MEC, believes social gifting is a trend worth watching: “Brands, especially those targeting youth, should pay attention to the popularity and uptake of social gifting as it could signal a good opportunity for them to engage. We expect it to build with the millennial generation who’ve grown up with the internet and its culture of sharing and collaboration.

“Considering the popularity of group buying services like Groupon, there is no reason to think social gifting will not take off. As long at security is strong and the purchasing process frictionless, we can expect to see a rise.”

However, MBA’s planning director James Devon sees gifting as a personal experience and questions if people will want to broadcast what they are buying and how much they have spent.

He says: “Depending on the situation, there are certain circumstances where social gifting may be appropriate. Given that birthdays are easy to see in Facebook – a quick link to be enable users to buy a gift could become a great tool, and well worth experimenting with. But I remain unconvinced that broadcasting this purchase to your friend list is a beneficial thing to do from either the perspective of the gift giver or recipient.”

What do you think of the recent social gifting phenomenon? Is it an emerging trend for the future or a passing fad?