While shopping online can be an effective way to avoid holiday crowds and surly clueless sales clerks, it does nothing to help figure out what to buy Aunt Martha in Iowa, little Jimmy in Sonoma or cousin Bob in Jackson, Mississippi.
GiftCertificates.com chairman Richard Marcus, who was CEO at Neiman Marcus from 1979 to 1988, thinks he has the solution: branded gift certificates for many of the nation’s leading retailers, restaurants, hotels and specialty shops.
Marcus’ new company allows Web surfers to send certificates, good for both online or brick-and-mortar shopping, at a wide variety of retailers ranging from Spiegel and Orvis to Omaha Steaks and Benihana to Barnes & Noble and Blockbuster to etoys.com and Sam Goody to Brookstone and Sharper Image or Saks Fifth Avenue and Chanel.
Desperate gift givers can search for gifts by zip code for nearest physical store, category of gift, occasion or recipient profile. VC Watch tried Sonoma, Calif., in the San Francisco Bay area and while it located no stores in Sonoma proper, it listed more than 50 shops and services within a 20 mile radius. We then tried the suburbs of Jackson, Miss., with an even better response: 11 shops right in town with an additional 30 or so within 20 miles. Then, the ultimate challenge, a small town (Grinnell) in Iowa. There are no stores within 20 miles but a dozen within a 20 to 40 mile radius. There are also more than 29 Internet catalog merchants and a long list of national retailers. The company recently signed Sophia Loren as a spokesperson to represent such clients as Barnes & Noble, Bath & Body Works, Brooks Brothers, Chanel and Sharper Image.
Online gift certificates cost the face value of the certificate; a paper version is an additional $4.95 mailed along with a gift card containing your customized message. The company is waiving the $4.95 fee for the remainder of 1999. The e-mail version can be a life saver because virtual certificates can be sent at the last minute to people you may have forgotten.
Begun in 1997 as a phone business (1-800-Present), the company went online for the holiday season in 1998. It obtained $24.5million in two rounds of venture funding: $6 million in June 1999 from Gotham Partners and the Trump Group, and $18.5 million in November 1999 from SCP (Safeguard), Gotham and Trump.
Key competition for a market the company says is $11 billion include Giftpoint.com, 1-800 GiftCertificates.com (both phone and Web) and Flooz.com.
But the biggest competition may not be other gift certificate companies at all, but the moves toward Web money.
“The real question is whether a universal online currency will become the ultimate gift on the Web or will it continue to be a real world gift certificate,” said Yankee Group analyst Rebecca Nidositko who added that she thinks the industry is about to go into transition. If the online currency concept becomes the market leader, she feels the gift certificate sites will need to transition to service and feature-oriented businesses.
Nidositko believes that Web sites that focus on known brands but limit their merchants to depth rather than a scattershot of width will ultimately rise to the top. “If there are too many types of merchants the customer gets confused and leaves,” Nidositko said. She also feels that the single certificate sites provided by the merchants themselves do very well.
IN A NUTSHELL
Company Name: GiftCertificates.com
Address: 470 Seventh Street, 6th Floor, New York, NY 10018
Phone: (212) 465-2112
Fax: (212) 465-1965
Contact email address: Max Bardon, mbardon@giftcertificates.com
Total Funding: $24.5 million
Investors: Gotham Partners, SCP (Safeguard),The Trump Group.
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