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Social gifting app Wrapp launches in the UK today, allowing users to send digital gift cards through Facebook.
The service is extremely popular in its home country of Sweden, and is now expanding into other markets to prempt similar moves by copycat apps.
The company's founders, which include veterans of Spotify and Groupon, are aware that Germany’s Samwer brothers are currently trying to copy Wrapp’s business model - so rapid expansion is now on the cards.
The UK has been highlighted as a prime target since its gift cards industry is worth over £4.5bn.
Wrapp is an Android and iOS mobile app that allows users to send free or paid-for gift cards through Facebook. It currently has 130,000 users in Sweden and 1m gift cards have been gifted, of which 100,000 have been redeemed in stores.
Users have to sign up through a Facebook account, and then the gift cards are posted onto their chosen friend’s wall - where mutual friends can then also contribute.
To redeem the gift card, the recipient must also download the app and present a special barcode on their smartphone at the check-out instore.
For its UK launch, the company has signed up ASOS, Fitness First and Pizza Express among others.
COO Carl Fritjofsson says the free vouchers are used as a customer acquisition tool for retailers, so they will only be shown to customers who fit within predefined demographics.
A customer first picks the friend they want to celebrate, then if that friend fits within the target group for any of our retailers then free offers will be shown, otherwise the user can choose to buy a gift card.”
Wrapp allows retailers to define their target audience by demographics including age, gender and location.
As the free offers are targeted to certain groups Fritjofsson says Wrapp avoids the traps that daily deals sites fall into.
We don’t offer universal discounts so there is no danger of damaging your brand, and we drive better customer acquisition as we won’t just have deal hunters using the app. The distribution method is very different as it involves targeting and must be given to you by a friend.”
Retailers only pay Wrapp a commission when the vouchers are redeemed, so the app is more closely aligned to results-based business models such as affiliate marketing.
We are another mobile marketing channel, but it’s very low risk for retailers as it is results driven. It also boosts the retailers' profile as it is all done through Facebook."
Fritjofsson said that integration with social media is essential for new tech companies, but the real challenge lies in understanding how social can benefit their particular business model – it’s not just about clocking up thousands of ‘likes’.
You need to examine what elements of your business could really benefit from social integration. Our business model benefits from Facebook integration as retailers get the additional exposure and we can see actual sales off the back of it.”
Wrapp comes to the UK on the back of some great publicity in its native country, but only time will tell if it can differentiate itself from existing voucher sites such as moneysavingexpert.com - which already has a substantial user base.
It is entering a crowded market place, but the emphasis on gifting and the lure of free offers could be enough to help it gain traction among Facebook users.