Marketers are still largely unconvinced how much social platforms (aside from Pinterest) can drive e-commerce, but now a Swedish startup and Facebook itself are trying to translate the instinct that moves people to post birthday greetings on their high school friends' walls into the urge to buy them something.
The weeks-old Facebook Gifts product and Wrapp, which launched last November in Sweden and has expanded to the U.S. and other markets, have different value propositions for retailers. But they're both predicated on the notion that consumers will be willing to buy gifts for a broader group of people in their lives if the process is simplified for them. Facebook Gifts is a direct e-commerce play that urges users to give gifts to friends within the existing birthday alerts on their news-feed pages, letting them choose from an assortment that recipients then claim by entering a mailing address. Wrapp lets users send gift certificates for small amounts like $5 or $10 to their Facebook friends at no cost to them, essentially disguising a coupon as a present.
Reducing the friction
For Facebook, the pitch to retailers -- a cross-section from Starbucks selling $5 gift cards to Warby Parker offering $95 sunglasses -- essentially boils down to the scale of its user base, even if a clear use case for when and why someone would gift-shop on Facebook hasn't materialized yet.
"I don't know [that ] we would presume to know which classes of friends are the best for giving gifts to, but I can tell you that our goal is to reduce the friction when you do think of someone," said Lee Linden, head of product for Facebook Gifts. Mr. Linden was co-founder of a startup called Karma, a Wrapp competitor that Facebook acquired in May. The e-commerce platform it had built is the core technology powering Facebook Gifts.
Now in the position of differentiating itself from the sector's Goliath, Wrapp -- which says it has 400,000 registered users in Sweden out of a population of roughly 9.5 million, as well as high-profile backers like LinkedIn co-founder Reid Hoffman, who sits on its board -- is presenting itself even more frictionless, since it's free for the gift-giver. (Users can, however, augment free gift cards to partnering retailers, such as Gap, H&M and Sephora, out of their own pockets.)
"By making gift-giving free, we've found many more reasons for you to send gifts," said Wrapp Chief Operating Officer Carl Fritjofsson, who noted that women make up 75% of its current user base.
Wrapp is looking to make what it calls "casual gifting" between friends a normal behavior, but Mr. Fritjofsson also sees potential in corporate gifting, where users might send a gift certificate to someone they've just had a meeting with, for example.
But Forrester retail analyst Sucharita Mulpuru has doubts about the potential of either gifting platform to be a highly profitable enterprise, since the social-networking era has made people less likely to mark a friend's birthday with a gift, a card or even a phone call when a Facebook wall post is seen to suffice.
"The fact that they've even acknowledged your birthday is a gift in itself," she said.