Social Gifting App Wrapp Hits 1 Million Users (Because People Like Free Stuff)

Next Story

Facebook Graph Search Makes Privacy Seem Selfish

Social gifting startup Wrapp is today announcing that it has grown its user base to 1 million within 14 months – proof that people really do enjoy freebies, it seems. The company, which allows users to send both free and paid digital gifts and gift cards to friends, also had a busy holiday season, hitting 1 million gifts sent per week during the period. And it saw 100,000 gift redemptions per week by the end of December.

In total, there were 7.4 million gifts given to date, the company tells TechCrunch.

For what it’s worth, Wrapp’s 1 million users, over half of which are U.S.-based, isn’t the same as downloads, but rather means active users who have both downloaded the app and who have sent at least one gift through its service. Most users send more, and the average Wrapp user – the highly coveted female, age 20-35 – sends around five gifts per month.

In its announcement, the company compares its rise to 1 million users by positioning its climb against other well-known startups, which is interesting. Pinterest reached 1 million after 20 months, Twitter and Gilt Groupe after 24 months, and Kickstarter and Airbnb took 30 months, the company says. But these aren’t really apples-and-oranges comparisons, because Wrapp is about gifting layered on top of social, while Pinterest and Twitter are mainly about social. Meanwhile, Gilt is for shopping, Kickstarter is for fundraising, and Airbnb is for travel.

It would be more fair, perhaps, to compare Wrapp with other “gifting” startups, but its biggest competitor in the U.S. would have probably been Karma, which was acquired by Facebook just a month after Wrapp entered the U.S. market. (Wrapp was founded in Sweden, actually). Meanwhile, other competitors like San Francisco-based Giftly or Sincerely’s Sesame are a little bit too new on the scene to make for a worthwhile comparison, and semi-competitor Gyft is focused on physical (i.e plastic) gift cards, not “social gifting.”

And then, of course, there’s what became of Karma: Facebook Gifts, which has a potential market of some 170+ million (though likely only a fraction of that switched on). Plus, outside of iTunes digital gift cards, Facebook is mainly about shipping physical gifts, not virtual ones, like in Wrapp.

The problem here is that the other gifting startups aren’t sharing their user numbers publicly at this point, so these comparisons are hard to come by. (We’ve asked Distimo and App Annie for some numbers, but the companies haven’t yet come through. Will update if they do. UPDATE: Distimo provided some figures for us, indicating that Wrapp was the most successful among the three – Gyft, Wrapp and Giftly – in terms of rankings until December 20th. At that point, Gyft became more highly ranked overall. Giftly is not ranked in the top 400 in any subcategory, meanwhile.)

So why is Wrapp so popular? I suppose that can be summed up in this App Store review: “it’s so easy and most importantly not a scam,” writes an unknown user. When you’re talking about a service that basically offers you free money, and allows you to send free trials, subscriptions, and gift card dollars to friends, you can see why people would be wary.

I mean, really, free money usually sounds like a scam.

But it’s not.

It’s the retailers themselves who are providing the funds for these cards, and they’re doing so because it allows them to target specific demographics of users, very narrowly, thanks to the Facebook data. The brands see it as a way to reach the customers they want, or as a way to get them to try new products. Seventy-five percent of Wrapp’s users are women, with an average age of 32 to 33. Not only is that a highly sought-after demographic (especially among apparel brands), Wrapp COO Aaron Forth tells me that when Wrapp’s gift cards are redeemed, the total value of the transaction is between four to six times above the free component.

He says that the majority of Wrapp users are taking advantage of the free/sponsored gifts. These, unlike plastic gift cards, do expire within 30 days. The paid gift cards – those where you add value on top of the free card – are good forever, though.

The company’s biggest value is in increasing foot traffic to its brick-and-mortar retailer partners like Gap, H&M, Old Navy, Office Depot and others. It also works with online sites like Fab, Hulu, Zappos and others, but the bigger vision is about providing e-commerce-like targeting tools to the offline retailer.

During the holidays, Wrapp scored a deal with U.S. gift card distributor Blackhawk, which will see its 400-some brands made available in Wrapp’s app, which the company hopes will later convert into direct relationships once the retailers see the traction.

This would address users’ main app store complaint about the service: “I wish there more stores.

Wrapp has now raised $10.5 million in venture funding from Greylock Partners, Atomico (the VC firm formed by Skype co-founder Niklas Zennström and others), Creandum and others.