gift giving

You’d think that gifting startups would take the hint. Many have failed, been acquired, or otherwise sputtered before coming anywhere close to changing the way we purchase presents. We keep on buying gifts the same way we did before, and many of these services live and die before most people even know of their existence.

Loop Commerce plans to change that by altering the entire checkout experience around gift-giving. It isn’t making it easier to buy presents for your Facebook friends or creating an entire marketplace through which you can buy carefully curated items for your family. It’s putting gifts at the forefront of the shopping experience and appealing to retailers by promising to reduce the amount of returns they receive, increase their potential customers, and provide all some data on the side.

The company is today announcing that PayPal has made a $5 million follow-on investment to the $7 million Series A funding round announced in November. (The company declined to offer the exact amount it raised in the round, but confirmed that it has now raised $13 million in total funding, including a $1 million seed round.) The funding will be used to develop the company’s service, which is currently in private beta.

The service effectively creates a separate checkout process for consumers purchasing gifts. It allows them to select an item from any supporting online retailer, enter the recipient’s email address, and then forget about the rest. The recipient then receives a link in their inbox where they can select the specifics of whichever item the gift-giver chose — say the color or size of a shirt — and then order the item.

“Others just got it wrong,” says Loop Commerce CEO Roy Erez. “Gifting is not for us. Gifting is not a social app or a mobile app or whatever it is. And that’s really what the majority of companies were trying to do.”

According to Erez, changing the gift-giving process is meant to help retailers save money on the many gifts returned throughout the year, increase the number of people visiting their sites, and reduce the rate at which consumers abandon their online shopping carts. Loop Commerce as a company isn’t necessarily focused on gifting — it just so happens that building a better gifting experience might allow it to solve all those other problems.

Given the company’s private beta and unwillingness to name the retailers with which it has already partnered, it’s difficult to assess how much it’s actually changed the gift-giving process. From the description offered by Erez, it seems like a slightly convoluted process that requires more time than most online shopping tools but could lead to fewer headaches because of the recipient’s role in the process. Until it’s built into more websites, however, that’s hardly more than idle speculation.

[Illustration by Hallie Bateman for PandoDaily]