KangoGift Platform Sends Gift Vouchers Via Text, Brings Virtual Goods Convenience to Real-World Use

9/23/10Follow @xconomy

Virtual gifts are a nice way to send someone good thoughts online. But if you’re going to spend real money to get someone a virtual gift like a digital cupcake or bouquet of flowers, why not spend a bit more to get them something concrete? Now Cambridge, MA-based KangoGift makes online gift-giving just as convenient as sending a virtual gift.

The startup has developed technology for sending gift vouchers via text message, which recipients can redeem in physical stores. Here’s how it works: gift givers sign up online, picking out a present from KangoGift’s nearly 50 retail partners, and the service sends the recipient a text message alerting them of the present. Recipients take the text message into the stores, and use that as the currency to obtain their treat.

For example, I got the following text message from KangoGift co-founder and business development head Thad Peterson when he demoed the product at an event last week: “Thad Peterson sent you a Small Latte @ BeanTowne Coffee. Show code @store.” While the message includes a link to a mobile Web page version of the gift certificate, users only need text messaging to receive the gift, meaning the service is open to those beyond the smartphone set.

When I first interacted with KangoGift, I thought it was a convenient, virtual way to act on the “I’ll buy you a drink” statement I often make to friends who are having a rough day or are deserving of a celebration for a successful semester or a new job. Often these outings are hard to schedule, and by the time we get together, the sentiment is somewhat lost.

“It’s like a new, easier way to send these instant thinking-of-you gifts,” says Todd Horton, the company’s CEO and co-founder and a former product manager at Monster.com. The platform is particularly popular for occasions that aren’t big enough for a more substantial present, but where someone normally would have sent a greeting card, he says.

KangoGift got off the ground last October, in an alpha trial with just a handful businesses in Harvard Square, a testing location that both Horton and Peterson say was intentional. “The business community in Cambridge is more willing to embrace new technology and try new things,” says Horton. KangoGift has since been rolled out to a total of ten states, servicing other college towns like Madison, WI; Austin, TX; Chapel Hill, NC; as well as Xconomy hometowns Seattle and San Francisco. The Boston-area retail partners include brands like dessert hotspot Finale, BeanTowne Coffee, and even a real-live cupcake shop—Somerville’s Kickass Cupcakes.

As far as its retailer strategy goes, Horton says the startup is pretty open, and will work with “any retailer that has a very passionate audience.” The price of a Kango gift typically runs from $5 to $25. And the company is focused on giving its vouchers a personal touch, so most of the gifts are specific items, like a cupcake or a latte, rather than a monetary amount.

The KangoGift co-founders say the service has been likened to other social buying programs like Groupon, but that KangoGift has a few differentiators. The platform does help drive traffic into stores, but doesn’t promote products with a massive discount to consumers the way the group buying sites and services do. KangoGift just takes a percentage off each transaction (the team wouldn’t reveal exactly how much this is, but Horton says it runs “less than the group-buying type of sites,” which often keep 30 to 50 percent). And it doesn’t charge the gift-sender an extra fee, like mobile gifting service Giiv does.

The KangoGift marketplace also seems to have much more variety at any given moment, and doesn’t have the deadline to purchase found on sites like Groupon or BuyWithMe. And the platform has a number of options for how retailers can confirm when a voucher was used by the gift recipient. (From what I’ve seen, most of the certificates that come from group buying sites don’t really have many formal mechanisms in place that prevent you from copying the piece of paper and repeatedly using the deal.) Merchants can interact directly with the code on the text message to send an alert to the KangoGift server that the code has been used for purchase. The code can also be entered into the merchant’s own computer checkout system at the time of purchase, or can be copied down and entered separately at a later date (for those with less sophisticated checkout systems).

The different options help KangoGift appeal to a wider range of businesses, from ultra tech-savvy chains, to more mom-and-pop style shops, Horton says.

The team says KangoGift, which has raised a small amount of money from friends and family, stands to benefit from promotion by both the retailers and the consumers. Retailers often promote the service with demos in their stores, or integrate the gift codes into their websites or social media campaigns, says Peterson, also a Monster.com veteran. On the consumer side, those sending the gifts can do so via a regular Internet browser, as well as a mobile version of the website. The service lives on the Web browser, not a phone-specific app, opening it to a wider range of users.

“This is word of mouth marketing in a high-tech world,” says Peterson.

Kango’s big push at the moment is to bring on more retail partners and get more consumers giving gifts. using the platform, but in the long run, the company sees potential for purchases on a bigger scale. Peterson says the platform could be used in the corporate gift-giving space, as an opportunity for companies to send instant rewards and thank-yous to employees. “There’s probably an opportunity for us to partner with enterprises on that level,” he says.

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