Giftly Looks to Disrupt Traditional Gift Card Market

11/26/12Follow @xconomy

When CEO Tim Bentley founded Giftly, a site that allows users to give gift certificates through recipients’ credit cards, he realized business would be heavily seasonal. The three big holidays for gift cards are Christmas, Mother’s Day, and Father’s Day, and almost 50 percent of the market is sold in the fourth quarter of the year.

“A lot of folks are using traditional gift cards for obligatory gifts,” he says. “They’re great when you’re in a situation where you definitely want to give a gift, you don’t know what they want, but you know their interests. I know with my dad, a gift card to Best Buy will 100 percent get used.”

But those obligatory gift holidays left his San Francisco-based business stuck squarely in the fourth quarter.

To encourage gifts throughout the year, he came up with the idea of “microgifting.” Instead of just giving gifts for special occasions, Bentley thought it would be great if he could send a friend a small present to help celebrate or commiserate about something, without having to be in the same location. “You can send a friend of yours having a bad day a cupcake, a beer, or coffee, something to make them feel a little bit better,” he says. “Or send something to someone who’s having a great day and got a promotion. People have so many friends all over the country now, you can’t always do that.”

A page from Giftly's mobile app

A page from Giftly's mobile app

Here’s how Giftly works: Users can pick the type of gift they want to give, from a microgift like a doughnut to a traditional meal or even a pair of shoes from a boutique; they then choose the amount of money they want to spend, and the location where the gift can be redeemed. The “Giftly” can be sent through Facebook, via text message, email, or even a printed piece of paper.

To redeem it, a recipient registers his own credit card on Giftly, and then makes purchases at the designated retailer. If users aren’t sure what store or vendor to choose, they can give a gift with general categories—for example, a specific café, or any café. Once recipients have used their gifts, they can simply log back into the site or app, and redeem the gift in two clicks. Then, the credit card is credited with the price of the gift.

Giftly competes with a similar San Francisco-based startup called GiftRocket, which sells online gift cards that can be redeemed for cash via bank transfer, PayPal, credit card, or a check in the mail. Both companies earn revenue by charging the giver a nominal service fee—on average about 5 percent, in Giftly’s case.

Because Giftly works directly with credit card companies and vendors, Bentley says, it can always guarantee that users will be able to get a certificate to the restaurant, cupcakery or boutique of their choice, no matter the city or size of the store; they just have to take credit cards.

For Bentley, being able to buy a gift certificate anywhere was a really important piece of the business. The idea first came to him in 2010, shortly after he left Aardvark, a social search service acquired by Google that year. He wanted to send his mother gift certificates to a Vermont restaurant called Sarducci’s and the local movie theater, but … Next Page »

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  • http://www.socialbakers.com/ Peter Kelly

    In my opinion, with those “micro-gifts”, the potential of Giftly is really high. I mean, people like when they do something good for others, when they can cheer them up with a coffee or something like that. I think that this has been a great move from Giftly.