Free gifts make number of Wrapp users expand 66% in two months

By Raphael MichilisWrapp, the Swedish social e-gifting start-up, has enjoyed a phenomenal April and May.

By the end of May, Wrapp had attracted nearly 250,000 users, an increase of 100,000 compared to the end of March.

In the past two months, Wrapp users gifted 700,000 digital vouchers to friends via Facebook; in the first quarter of 2012, total Wrapp gifts totalled 1m.

In the US, Wrapp has enjoyed early success. Since launching last November, the app has featured in the top 25 Apple iTunes chart in the social networking category.

Wrapp was founded in 2011 and has attracted investment of USD10.5m, including backing from Niklas Zennström, Skype co-founder.

At the time of joining the Wrapp board of directors last year, Zennström said in a statement:

“Wrapp is targeting a huge market by leveraging two mega-trends: social networks and smartphones.”

In addition to selling gift cards from major retailers, Wrapp permits the user to send digital vouchers to friends via Facebook for free.

Free gift cards are uploaded everyday to the application by partner retailers, helping to boost Wrapp popularity.

The social gifting craze is attractive to merchants as a marketing weapon, as it provides access to customer data that can be used in highly targeted advertising operations.

Wrapp’s marketing highlights that the merchant is also rewarded with a friend-to-friend automated advertising campaign, as “each gift card posted on a recipient’s Facebook timeline or wall is seen by about 80% of their friends.”

According to Wrapp, the associated brands’ average sales are worth around four to six times the value of the free vouchers they provide, helping Wrapp gain popularity among suppliers.

Wrapp has reportedly signed up around 70 major retailers in the US and Europe, with 20 signing up since the end of March.

Global expansion
Already up and running in the US, Norway Sweden and the UK, Wrapp has plans to expand into another a number of other countries including Brazil, Germany, France, the Netherlands, Italy, Taiwan, Japan, Australia and Turkey.

At the end of May, Wrapp kicked of its service in Finland and opened an office in Poland.

The buzz created by the launch of Wrapp has also attracted a competitor offering from a German-based start-up, DropGifts.

DropGrifts' service offers free vouchers and, like Wrapp, allows several users to contribute to a single gift.

The digital vouchers can be converted into meals at restaurants, gym and magazine subscriptions, clothing and many other products and can be redeemed online or in person at a partner retailer.

Wrapp’s coupon is purely digital and cannot be printed, so the receiver has to present a smart device at store to be redeemed. By contrast, the DropGift version can be printed or even posted to the recipient’s home address in a physical version.

Other gift cards apps include US-based FreebeeCards. It went live on 21 May and enables Iowa-based companies to offer free gifts, rewards and discounts in the form of vouchers that can be redeemed via a smartphone or printed.

The value of the first FreebeeCards ranged from USD 6 to USD 1000, exchangeable at Jasper Winery and Farrell’s eXtreme Body Shaping gym club.