E.B. Boyd of Fast Company wrote yesterday (Sept. 28) of Wrapp, a new Swedish startup created by Hjalmer Winbladh (the former CTO of Spotify and founder of Rebtel, the world's largest independent VoIP company).
"Wrapp, a mobile app that lets people send gift cards to friends, is not a deals company," writes Boyd. "But it is using discounts to deliver customers -- especially the specific demographics individual merchants wan t-- into brick-and-mortar stores."
What sets Wrapp apart from other daily deals services?
The Wrapp app differs from the typical “daily deals” in a couple of ways:
- It allows the merchant offering the voucher to select (narrow down) the demographic eligible for the deal. Unlike daily deals, not everyone man, woman, and child would receive a $25 discount on a, say, laser hair removal treatment. Not only will this result in higher conversion/endorsement rates, but it will result in more repeat business from a merchant’s most profitable market segment.
- The advantage for the consumer is the ability to add additional funds on the top of the discount being offered by the merchant. The app is also convenient as it pre-loads your social networking contacts right into the app, essentially creating a seamless gift suggestion, purchase, and delivery system directly to your friend’s phone.
Potential issues to Wrapp:
Boyd does not provide any information on how much commission the merchants pay to Wrapp, so it would be interesting to see what portion of the sale remains as profit for the merchant. As well, by having a pre-set demographic filter on their vouchers, the merchants may miss out on incremental revenue from new, atypical customers.
For consumers, since the selection of the demographic is largely based on one's social media profile, deals might not always align with their purchasing habits. This can lead to unused vouchers, wasted money and frustrated users.
What Wrapp could mean for wireless retailers:
The competition between wireless retailers is fierce. By offering deals to specific demographics –- around holidays and back to school, for example –- wireless retailers will be able to liquidate merchandise that might otherwise not sell.
In addition, retailers can take advantage of the correlation between smartphone owners and their social media activity. Since Wrapp is delivered via text message (SMS), it is building on the behavior of their core demographics. As well, the sender of the voucher has the ability to add funds to the gift card. Thus, the receiver will be encouraged to purchase higher-end products like handsets and accessories.