The social e-gift

The social e-gift

If there is one area in e-commerce that has suddenly picked up momentum this year, it has to be social gifting. For all those in India who have missed the bus in this latest rat race, there is more disappointment in store. Leading the social gifting revolution in India is a Mumbai-based startup called Badhai.in (meaning ‘best wishes’ in Hindi), incorporated by Ajay Pandey, an alumnus of IIT Kanpur, in August 2011, with the dream of it becoming the number one gifting service in India. To quote the ice hockey legend, Wayne Gretzky, “I skate to where the puck is going to be, not where it has been.” Personally, I find the e-commerce space similar in nature – you need to steal a march ahead of the others to be in the game.

What does social gifting mean and what does Badhai do? Badhai allows Internet users to buy each other gift cards, either individually or by teaming up, which they can store on their mobile devices. The recipient can then choose to redeem the voucher with any of the participating retailers, present either online or as brick-and-mortar stores. Badhai issues its own online vouchers and has tied up with more than 500 leading stores across categories like electronics, white goods, apparels, jewellery, beauty, lifestyle products, travel, books, etc. for an enjoyable shopping experience. The vouchers are delivered electronically to the intended recipient over their phone and email. And they then have the choice to redeem it in multiple stages at their favourite stores / online sites. To summarise, it is a sublime intersection of three super-hot trends: gift cards, social networks and mobile-shopping.

In essence, Badhai is a gifting platform.What is unique about it is that it allows the recipients to choose the gift and thus, not end up with something they might not like. Badhai has enabled shopping at physical retail stores such as Croma, Pantaloon and Lifestyle, and also on online stores like Flipkart and Travelguru. Badhai has been recently integrated with Facebook. This is an interesting feature where one can track important occasions of friends on Facebook and send or schedule gifts.

Badhai has three different offerings to its customers:

Individual gifting allows users to come online and gift to their loved ones. This takes away the hassle of trying to think of an appropriate gift.

Group gifting allows users to create a group gift event and invite friends to contribute towards the gift. Finally, on the scheduled date, the gift voucher of the combined amount is sent to the recipient. This solves a huge pressing problem of collecting cash and gifting jointly on social occasions such as weddings.

Social gifting allows users to login to Badhai using Facebook credentials and track important occasions of friends present on Facebook. Users can also gift to these friends on Facebook and invite others to do so.

The next step

The company recently secured an investment of US $200,000 from private investors, which they plan to use exclusively for funding and PR activities. The company expects its transactions to grow rapidly, once they start full scale advertising and marketing using a portion of the first round of this funding. So far, Badhai has seen good traction with approximately five to six gifts per day and around 20 to 25 registrations, without any marketing campaigns. The ticket sizes are also significant.

What would be interesting to watch are the next suite of products that Badhai would be launching in India. On top of the list would surely be a mobile application that can enable users to gift from their mobile phones or other handheld devices. But what is planned is a more enjoyable experience for the recipients, who need not plan in advance for using Badhai vouchers. They can redeem the voucher on-the-go over phone / IVR (interactive voice response) and proceed for shopping.

It will be too premature to say that the day of Sodexo vouchers will come to an end and employees will be redeeming Badhai e-vouchers in restaurants/grocery stores instead. But my strong belief is that it may very well be the next logical step for Badhai. How many of us have cursed customers at the checkout counters who are busy counting Sodexo vouchers to pay for their purchases, tediously counting each voucher, while we watch on haplessly from the queue? My guess is that we all go through this predicament every now and then. Badhai expects to take over the corporate gifting market in India, by striking deals with the corporate companies to distribute Badhai vouchers to its employees in lieu of gifts.

Following global trends

Startups such as Sweden-based Wrapp were last heard launching its U.S. business and are rumoured to be getting millions of dollars in venture capital funding. Retailers like Best Buy Co. Inc., Gap Inc. and Starbucks Corp. are queuing up to be a part of it. One of the major reasons for the rise of social gifting as a concept is the fact that brick-and-mortar retailers are looking for new and innovative ways to drive sales into their stores without diluting their brands through heavy discounting. This is where social gifting plays a key role by allowing Internet/Facebook users to buy each other gift cards at the comfort of their homes and without having to remember to carry the vouchers around. Retailers seem to like it because there is little marketing cost involved and also, customers often end up making more impulse purchases once they are inside the store.

In India, the market for e-gifting is huge as the penetration of mobile phones has been massive and so has been the rapid emergence and awareness of national/global brands in smaller towns and even villages. Also, social occasions where gifts are exchanged are numerous like Mother’s Day, Father’s Day, Children’s Day, Teacher’s day, Raksha Bandhan, Diwali, Dussehra, birthdays, wedding anniversaries, Valentine’s Day, Christmas and Eid. And as a nation, we spend on wedding gifts, which would be one of the biggest markets which Badhai can capture. Innovative retailers can come up with special Badhai wedding packages, which can take care of the end-to-end needs of a newly wedded couple – for instance, clothes and accessories from Lifestyle, and furniture and home furnishings from Home Centre. This can be followed by holiday packages from Makemytrip.com. This would surely serve as a panacea for an increasingly time starved generation.

An evolving market

E-gifting or people buying gift cards from a retailer’s website is still in its infancy but technology is naturally progressing towards platforms like social gifting. A host of startups like CashStar, SocialGift, Groupcard Apps and DropGifts are already in the fray to make early inroads into this sector. According to reports, Starbucks expects social gifting to make up a significant portion of its gifting business in the near future.

But amidst all the enthusiasm, there is still some caution to be exercised. Facebook commerce is still very nascent and within that, social gifting is one small area. There is definitely a huge potential but this is one business that hinges on fundamentally changing the gifting habits of customers. But for brick-and-mortar retailers, there seems to be a pot of gold at the end of the tunnel as social gifting is driving customers to their stores with minimal marketing cost. So for now, one can only congratulate them and say ‘Badhai ho!’