Gifting is an under-exploited segment when it comes to social media channels. While the Covid-19 pandemic and the latest Omicron variant should boost online sales for Amazon and omnichannel retailers as Christmas approaches—though this was not the case in November—instant-fix, all-year-round ways of telling someone that you care have yet to get off the ground.
Two startups have been looking at ways to open up new and easier ways of gifting for a younger generation who don’t want to suffer the traditional pain points of physically searching for something in-store, or even online, and wasting time in the process. They also want some novelty value thrown in.
In the past year, YouGiver, based in Switzerland, and smaller British rival Prsnt, have beta tested instant gifting models. Both have launched tech platforms allowing gifts to be given in a matter of seconds and, in some cases, to complete strangers.
Buying presents for someone you don’t know might sound odd but when it come to the world of influencers and their often huge followings, a whole new psychology is at play. In that scenario, online conversations can only go so far, but making that relationship more tangible by mailing an instant gift is now a possibility with the YouGiver app.
Prsnt, which went live in November, does not involve the mailing of products. Instead it offers mobile-to-mobile presents though an app, only in Britain for now. Senders send “mini-gifts” by text message, which the recipient can then retrieve with a QR code. The Prsnt app enables users to choose from over 100 well-known high street retail brands and eateries, both online or in-store.
Instant gifts—a quantum leap from emojies and gifs
YouGiver is the brainchild of Alexander Konovalov, a Ukraine-born entrepreneur now in Switzerland. With business partner, Eugen von Rubinberg, his e-commerce startup, supported by angel investors, is claimed to have solved the issue of giving a gift without divulging the personal details of the recipient or the sender. This is ideal for adoring fans wanting to connect more meaningfully with the idols they follow, or just regular online contacts they may know, or are yet to meet.
Konovalov says he is an ardent advocate of using tech “to make a positive impact on people’s everyday lives” and he believes YouGiver, whose website has already launched and is ready to accept users, will do just that. “Our project is primarily about a new way of social relations,” he said.
The concept took shape in summer 2018 as a free-to-use gifting service monetized through commissions ranging from 10% to 30% on sales from store partners—who do not pay monthly fees to become sellers. A revenue-share model is planned when YouGiver ties up with large social media players to drive volumes which is the ultimate aim. This is expected to be a straight 50:50 split of the commission.
Safety first—securing IDs
A vital component of the set-up is user safety. Konovalov told Forbes.com: “To send a gift there are two options—push and pull—and in each case personal details such as addresses, or even city locations, of both parties are not shared and remain fully secured by us.”
In the pull scenario, influencers, for example, can let followers know they or their charities, are open to receiving gifts by publishing a link on their page, or by sending a personal message with a link. Fans then have immediate access to a catalog of gifts. They select and pay without any need to register, says YouGiver. The gift options will be from online stores in the country of the receiver which cuts out complications of taxes and import duties. In this scenario, there is no registration required from the giver either, just payment details.
In the push scenario, anyone wanting to send a gift can message the potential recipient by sending a link. If the recipient confirms they are happy to receive something, only YouGiver can see the address details they provide and, again, formal registration is not required.
Monetization through a marketplace
“It’s actually a simple idea—we are creating a gifting marketplace,” explained Konovalov, a graduate from the International Institute of Management in Kiev. “Sellers register, indicate their territory and start receiving orders from social networks, messenger services, and partners. It is important to note that no personal details, not even the city, are visible to the gift giver, and supplier names are not revealed on the website or app.”
YouGiver is currently onboarding retail partners who have no subscriptions to pay, only a commission on each sale. “The percentage of the commission depends on the category of goods and a number of other factors,” said Konovalov.
When the online gifting idea came about, it was as a result of another project built around monetizing a messenger service: the world’s first video calling app with translation called DROTR, from which a lot of learnings were amassed. Development work on that concept is still continuing.
“I soon understood that messenger ads are the worst way to monetize,” said Konovalov, and it was the same for fees. “Any payment, even $1, will kill conversion rates by 50 to 100 times.” Other services like WhatsApp and Telegram understand this well which is why they remain free—and have grown fast. “That is despite WhatsApp’s original plan to run with subscriptions,” noted Konovalov.
The biggest messenger services are either free or mostly free. Others like Switzerland’s Threema have chosen a pay-for service and have remained relatively small players. There are many more examples, but not so well known because the big ones are so dominant. This struggle to monetize, but also grow, applies to social networks and dating services too.
“Advertising has become the revenue engine of technological progress,” said Konovalov. “But certain types of ads are becoming increasingly annoying as anyone who has watched music videos being interrupted with adverts on YouTube will know. We are hoping to do our bit to improve this situation.”
Konovalov is convinced there is a better way to monetize across messenger, dating and other services—while remaining free—and sending real flowers, perfumes and gifts while chatting is the way to do it, he believes. No ads, no disruption to the user experience, just voluntary engagement—with average gift pricing set in the mid-range in order to attract a solid customer base and wide demographic.
“Our functionality allows users to integrate into 1.5 million Shopify stores, give media subscriptions as a present, and for influencers, to create their own online stores with the ability to send and receive their goods as gifts,” said Konovalov.
“A gift is way better than a like”
At the emotional level, Konovalov believes YouGiver offers a new way of communicating—through a personal gift. He might just be onto something. Today, relationships for Millennials and GenZ have, to a very large degree, moved online as the rhythm of all our lives has accelerated, particularly during the pandemic. An easy and friction-free way to give gifts directly from social apps is an appealing prospect for these cohorts who use social media as their main source of shopping inspiration anyway.
Konovalov thinks YouGiver could eventually become as big as comms apps like Skype, WhatsApp and Zoom, using a new and ‘softer’ platform. “It’s a way to express your feelings and attitude. People who are remote can only convey their emotions through text, video, voice and emojies. Real gifts take that communication to a new level—a gift is way better than a like,” he said.
While Prsnt is not looking to develop by integrating with social platforms which is YouGiver’s strategy, the thinking at the company regarding gift giving is not that different. CEO and co-founder Omid Moallemi told Forbes.com: “When people receive a present on our app, the user can’t see what it is and has to ‘unwrap’ it using their finger on the phone’s touchscreen to see what’s inside. This is an important aspect of the psychology of getting a present.”
He added: “Prsnt is also a more sustainable way of giving a gift and fulfills the momentary need to celebrate somebody you don’t get to see as often as you would like. You don’t want to just send someone a WhatsApp or a text message—it feels underwhelming.” Key to making the service go viral is that giftees have to download the app to open the present and view the personalized message (including video) from the sender.
So far, senders have typically chosen easy options like a cup of Starbucks coffee, or a Body Shop voucher for under £5, though spa weekends and Fortnum & Mason hampers have been added in the run-up to Christmas. Redeeming the coffees or vouchers involves going to the store and having the related QR code scanned.
Currently the uptake is about 3,500 users but Moallemi and the other co-founders—David Parr, Daniel Hamilton, Louis Wren and Hamish Page—are targeting 100,000 users by March 2022. “Prsnt achieves same-second delivery, so it’s perfect for when you realize that it’s a friend’s or family member’s birthday but it’s too late to send something in the post,” said Moallemi. The app also reminds users when their friends’ birthdays are.
So far Prsnt has picked up more than $500,000 via Crunchbase but next year the company hopes to raise £3 million in Series A funding from investors as it focuses on deeper tie-ups with retailers like Asos, Costa Coffee, Deliveroo, M&S, Nike, Spotify, and Uber
Prsnt wants to stay fully digital whereas YouGiver is more complex, with a physical delivery side to its model—but its platform is nevertheless agile. The Swiss app has some practical advantages in that it can be integrated into an individual’s social sites without the need for plug-ins—and be ready to fire up immediately. That means it is not highly-reliant on software developers and according to YouGiver—which still runs on a team of only 15—“anyone can become a client and start receiving gifts in minutes.”
“Our rollout will start with popular bloggers, artists and pop performers, before connecting more widely,” said Konovalov, fully aware that this latter stage will require a big budget. “TikTok invested something like $3 million a day on its promotion in the United States alone—but it delivered results,” he says. “We do not have that type of funding, but we do not need as much.”
Prsnt has also considered celebrities through the use of @usernames. “For example, we are working with influencers who can share their @name so they can receive gifts sent directly by fans. It’s another way for people to connect with celebrities/influencers in a way never before. You could even send Ronaldo a Starbucks coffee for a great goal at the weekend,” said Moallemi.
To scale up and partner with social media giants like Facebook and Instagram, YouGiver will require deep pockets and the company is now looking at an investment round as it moves to its next stage of development.
Konovalov is confident. “The main thing to understand here is that we are 100% different from other e-commerce projects when it comes to forming a sales funnel and a traffic source. If, for all e-commerce projects the source of traffic is from advertising, for us it is traffic from clients of connected bloggers and users of social applications—in other words users who are already engaged.”
The argument is that through YouGiver’s initial audience of bloggers, it can quickly grow its customer base. “We plan to convert to gifts at the level of 0.1% per month from this connected audience,” said Konovalov. YouGiver is building the business not as a trading platform, but more as a communications tool centered on gift giving, which has cultural resonance in many countries.
As tech platforms move forwards, the basis of competition is becoming less about the technology, and more about harnessing exciting new models. Konovalov believes YouGiver is precisely the latter, and will offer genuine competitive advantage to the biggest social media players on the planet. Now he just has to prove it to them.