May 3, 2012, 2:32 PM

Wrapp launches a digital gift card service in the U.S.

The Swedish startup enables consumers to send gift cards via Facebook.

Lead Photo

An example of the Wrapp gift cards.

Wrapp, a digital gift card service that launched in Sweden last year, has hit the U.S. market. Wrapp enables consumers to send gift cards to each other via Facebook; consumers can add value to the cards, and retailers whose brands are on the cards pay only when shoppers redeem the value on the cards, which they do via their mobile phones when in physical stores.

Consumers must download the Wrapp application from the gift cards they receive to redeem the offers. They can download Wrapp onto computers, tablets and smartphones. Consumers also can visit the Wrapp.com site to join the service; signing up requires a Facebook log in.

The deals offered through Wrapp can range from $5 off department store purchases to a $300 discount for a weekend getaway. Consumers can buy cards only for others, posting them either publicly or privately on recipients’ Facebook walls. If a card is given publicly—for example, in response to a Facebook birthday notification—other friends of the recipient may tag themselves onto the gift and add value to the card until it is redeemed. That way, a $5 congratulatory gift card can grow into a more valuable group gift.

“It’s very low risk, very high reward,” says Scott Ballantyne, chief marketing officer of flash-sale operator Fab.com, one of the more than 25 brands working with Wrapp. The service charges no initial fee to merchants, who pay only when a customer redeems a card. The fees, determined on a contractual basis, remain confidential.

To redeem cards in stores, a consumer must have a mobile device to display her card’s bar code at the point of sale. The Wrapp application can also be used on a computer or tablet for online shopping.

Wrapp aims to make gifting a daily practice, say CEO Hjalmar Winbladh. “We are kind of betting on these two major trends: Facebook and smartphones,” he says. Wrapp has no print option. Wrapp aggregates age and gender data from a Facebook user’s friends to determine potential gift card offers; Winbladh says such data can provide an accurate view of a consumer’s retail preferences.  The application presents each Facebook friend with her name and photo along with an array of items she might like.

Since going live in Sweden in November and then expanding to the United Kingdom and Norway, Wrapp has gained more than 650,000 active users, the company says. On average, each of those consumers sends one card a week, Wrapp says. The company says that consumers who use its cards inside physical stores spend, on average, four to six times what the card is worth.  Wrapp offered no data on online card redemption.

Cosmetics retailer Sephora USA Inc., No. 116 in the Internet Retailer Top 500 Guide,is among the first U.S. retailers that have signed up to work with Wrapp.  The brand was attracted to Wrapp because “clients will think it’s cool that it’s Facebook and mobile-centric,” says Bridget Dolan, Sephora’s vice president of interactive media. Sephora is offering gift cards for $5 off  to all customers regardless of age in its first Wrapp campaign. Dolan would like to see where the first trial goes before tweaking the deals for different demographics.  “You’re always looking to do something a little more fun and stand out,” she says.

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