This is getting too easy: Giftly makes better gift cards

More personal than a gift card, but without requiring all that pesky work: Giftly has a new way to give targeted cash gifts.

Nothing quite says "you're special to me" like a happy birthday note on your Facebook wall, does it? The person sending the note doesn't have to remember your birthday--Facebook does that for them--and the effort to post the note is so low it can be done between sips of coffee.

Yet these gestures matter, computer-moderated or not. We are social creatures. We get a little pleasure zap in our brain when someone recognizes us, gives us something, or tells us something personal, no matter what the impetus to do so was.

So if it's the thought that counts, does it matter if it's an algorithm that's doing the thinking?

Giftly is a gift card company that takes this idea and runs with it, with an interesting twist on the business model of gift cards, and an even more clever (and still upcoming) idea for how to select the merchants that make up the gift packages. It makes choosing good gifts (if your idea of a good gift includes gift cards) easy and it makes them very, very personal. Not like that Bed and Bath gift card you get every year from your mother-in-law.

With Giftly, your "gift cards" apply to multiple merchants and are actually repayment promises. These are important differentiators from store-branded gift cards.

First, you can give a gift of a "dinner and a movie" that applies to any collection of movie theaters you chose, and any restaurant (three merchants total). An upcoming update from the company will let you scan a person's social network updates and location check-ins and suggest a bunch of retailers it knows they frequent. The demo pitch I got from the company included cafes and restaurants I had checked into on Foursquare during the previous week. I knew it was just a PR stunt, but my emotional brain was sending out "they really know me" signals anyway.

You can customize a Giftly to include any three merchants. Screenshot by Rafe Needleman/CNET

The business model that lets Giftly give coupons or gift cards to any merchant is unusual and a good first step into this business. Giftly doesn't actually have deals with merchants, as most coupon and gift operations do. Instead, when the gift recipient buys something at a location earmarked as a gift target, they check that purchase in, and Giftly reimburses their credit card or PayPal account directly. Check-in of purchases can be with a smartphone app, or just via a pledge on the Web site. Technically, Giftly is rebate service. But to the recipient, it's perceived as a gift. (An actual Visa-enabled cash card is also on the roadmap.)

This is a very clever way to get around what would otherwise be, for any gifting startup, a limited inventory of merchants to allow gifts at. It means any vendor can be a target of a gift, which is cool. It also means Giftly doesn't have to run a massive business-to-business sales campaign.

But this bootstrap trick also deprives Giftly of healthy revenue streams: transaction fees from merchants, and advertising from them. CEO Tim Bentley told me the company may start a merchant marketing campaign in the future, to secure these revenues, but for the time being there's a big focus at the company at making the gift-giving and receiving experience super-smooth and emotionally fulfilling. Think Red Envelope for gift cards. Giftly will soon have a program to package up its gifts physically, even though the service is completely digital. Bentley doesn't want to divert from that mission yet.

For the time being, the giver of a Giftly card pays a fee for the privilege: Nothing for gifts under $20, with tiers of fees beyond that. Once the merchant program gets off the ground, fees to the consumer may be eliminated.

Giftly would get my special "beach stormer" award (if I had one). It's very clever. I'm just not quite sure how it's going to be able to make the transition from startup mode to its next growth phase.

Rafe's rating

  • Product quality: Three out of five stars. Clever way to allow a gift-giver to give a gift card package that's actually personal. Points off since the social network and check-in scanner feature isn't live yet, and because I'm not sure gift recipients will feel as warm and fuzzy about having to pay for their gift first, in order to get a rebate later.
  • Business quality: Three out of five. Again a very clever model that allows the company to cover every merchant on the planet without having deals with them. But it's not clear that the model transcends Giftly's start-up phase.
Note on the Rafe's Rating scores: These are solely my opinions, informed by my experience reviewing consumer technology products and covering startup companies over the last 20+ years.
 

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