San Francisco-based Gyft announced the launch of its iPhone app yesterday at the TechCrunch Disrupt conference, and announced it has secured $1.2 million in funding led by Google Ventures and 500 Startups, with participation from several angel investors. The gift card management platform gives consumers one platform to buy, store, and send gift cards, and provides retailers with a way to increase gift card redemption rates and brand visibility with the card holders. The company has more than 100 partnerships confirmed with retailers including Sephora, Lowe’s, and Gap.
The inspiration for Gyft came from co-founder CJ MacDonald, who got married last year and received numerous gift cards as presents, but found that he never had them on hand when he was actually shopping. ”I started doing a lot of research on the market. The first thing was that the gift card market was $100 billion in the U.S. alone. And the second thing that popped up was that in 2010 they changed the laws around gift cards…stating that until the card is redeemed, the retailer couldn’t claim it as revenue on their books,” MacDonald commented in an interview.
Gyft’s platform lets consumers enter in their own existing physical gift cards or buy a gift card within the app, either for themselves or as a gift for a friend. Gift cards can be redeemed at stores by scanning a barcode using the iPhone app or by giving the cashier the numeric code to enter. The app also integrates with social networks so users can add their friends’ data and get notified about upcoming birthdays, anniversaries, and other special occasions, and users can send gift cards to friends via Facebook, email or SMS.
Partner merchants sync Gyft with their backend systems in order to enable consumers to purchase, upload, and redeem gift cards for their online or physical locations. Gyft provides retailers with analytics, for example notifying retailers that they have a certain number of gift cards outstanding, and helps them send out incentives like sales and discounts for consumers who redeem their gift cards by a certain date or time. Other features include a built-in geo-tagging option that will notify consumers that a certain retailer is close by if they have a gift card for that location.
The iPhone app is free, and the company takes 8-10 percent of any gift card sold through the app. Down the road they’re also looking at charging retailers for driving traffic to their store, as well as providing an open API that will also allow smaller businesses to push out gift cards to consumers. ”We’re essentially going to have a Gyft button where consumers can just forward all their gift cards and virtual gift cards into our application, and that’s really where our platform comes into play.”
There’s been a lot of movement in the social gifting space with the launch of companies like Wantful, which lets users send personalized gift cards redeemable for physical gifts, and Wrapp, which allows users to give free and paid gift cards to their Facebook friends. Karma, another social gifting startup, was acquired by Facebook in May 2012.
Gyft makes it very clear that it’s not out to reinvent social giving, but to digitize and simplify the existing $100 billion gift card industry. “Our main goal and how we differentiate from anybody else out there is that we’ve built a platform around gift cards and we’re focused on disrupting the $100 billion gift card market. We know that $100 billion was spent last year on gift cards, and we also know there’s a lot of inefficiency in the current landscape in the market,” MacDonald said. While there are other gift card-focused platforms, like gift card exchange platform Cardpool, they focus more on allowing users to trade or sell gift cards, rather than buying and redeeming them on a mobile device.
The company is looking to launch an Android app at the beginning of next year, and they also have their eyes on a number of international markets once they built a strong customer base in the U.S., where they plan to focus most of their attention for the next few months. With a solid list of partners and a plan to expand beyond just the iPhone, the company could find a way to carve out a piece of the existing gift card industry. But for consumers, pulling a physical gift card out of their wallet is likely going to be the default until apps like Gyft get mass adoption.