Social Gifting: The Next Big Thing in eCommerce?

Posted on October 5, 2012 at 1:38 pm

Twenty years ago giving a gift to a friend or family member thousands of miles away wasn’t easy. Often the process involved physically buying a gift, packing it, waiting in line for postage, and shipping it to the recipient. With the evolution of the internet, giving gifts online became significantly easier and now features an array of gift options ranging from traditional “brown box” solution to luxurious “white glove” packaging and wrapping. While the concept of giving a gift online isn’t necessarily new, the way people give gifts online is undergoing some changes thanks to social media.

Giving gifts online in the past would require the sender to know information about the recipient, in particular a shipping address and sometimes even more personal information such as an e-mail address or a telephone number. This isn’t easily accessible information in some instances, unless of course you specifically ask recipients, which then often spoils the surprise of the gift itself.

To bridge this gap between the sender and the recipient, companies are now looking to utilize social media information provided by recipients on social networks. This concept is being dubbed as “social gifting”, and while there have been social gifting solutions in place in the past, Facebook has announced they are launching their own social gifting service for not only digital goods (such as online gift cards) but also physical goods. This is a huge eCommerce initiative for Facebook and will likely impact the concept of “Facebook Commerce” as a whole.

So why is Facebook making such a strong push into the gift segment of eCommerce? Here are a few reasons…

  • Gift cards are one of the most popular gifts given, especially around the holiday season – Approximately 52% of U.S. consumers purchased gift cards last year which indicates the interest in giving gifts is still quite high. Social gifting services are hoping by reducing data barriers, such as the need for an address, that the amount of online gifts given (both physical and digital) will continue to increase.
  • Consumers almost always spend more than the value of the gift card they receive – On average when consumers receive a retailer’s gift card they spend 5.2 times the value of the card either in-store or online. Gift cards are great for retailers because consumers spend money at their store or site and are great for the gifting service as they can profit from the initial gift card transaction.
  • Gifts are popular for limited time (daily deal) offers – Last year approximately 20% of online shoppers in the U.S. purchased a gift during the holiday season through a limited time offer. The scarcity of limited time offers can entice people to make purchases before the offer expires, sometimes even if the recipient of the gift is unknown by the person who buys the gift.

 

There are, however, some industry experts who are skeptical of social gifting and the impact the concept will have on social media and the eCommerce industry. One criticism is social networks such as Facebook are playing catch-up compared to already established eCommerce powers who offer gift services, some of which partner with third-party tools to integrate their gifts with social media networks.  Another criticism is that consumers are still in the mindset of Facebook being a place to share information and photos, not buy products and gifts and because of this social gifting may not be successful.

In short, social gifting could be the next big thing in eCommerce or a miss entirely. Likely it will fall somewhere in between the two, but it will be up to brands and social media sites to work together in order to help consumers become accustomed to shopping within social networks and change the perspective of these networks as a whole. It is interesting to note that Facebook has invested significant time and effort into their social gifting service and this may emphasize that there is an opportunity for brands to capitalize on gift opportunities in eCommerce, even outside of social media.

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