Online gifting experiences suck. Jifiti raises $2.5M and expands nationwide to prove they don't have to

By Michael Carney , written on July 29, 2013

From The News Desk

Gifting is a pain in the ass and technology hasn’t changed that much. This is true, despite the growing popularity of ecommerce and the dozens of social gifting platforms that have emerged in the last few years. When Jifiti launched November, it had a more compelling concept than most, but it was still an imperfect solution that was hamstrung by its geographic limitations. Today the company is introducing a new and much improved version of its product, expanding beyond the Boston area in which it conducted its alpha launch, and announcing $2.5 million in strategic financing.

Version one of the Jifiti platform was all about virtual gift registries and the company launched the platform in partnership with three Boston-area Simon Group shopping malls. Consumers were invited to scan the barcodes of items they wanted in brick-and-mortar stores. Friends and family would then view this list and make purchases from among the listed items, resulting in a gift card that the user could redeem in person in the brick-and-mortar store. This model was a win for physical retailers in that it drove additional foot traffic during a time when most consumers are moving online. But for consumers, it was less than ideal.

Today, as Jifiti plans to expand into more than 100 Simon malls across the country between now and the winter holiday, the platform and user experience has gotten some much-needed attention. With Jifiti 2.0, the recipient doesn’t need to first tag the items that they hope to receive. Gift givers can now initiate a gift either in person or online from among hundreds of participating retailers like Nike, Gap, Banana Republic, Sephora, Gamestop, Brookstone, and Hot Topic.

The new and improved Jifiti removes a number of barriers inherent in most traditional gifting scenarios. Research shows that gift givers typically prefer to give a thoughtful gift rather than cash or store credit. But doing so can require knowing a recipient’s size and style preferences. It also often requires knowing the recipient’s mailing address. Jifiti solves each of these issues. When the recipient receives the gift they can choose, either online or within the Jifiti app whether to pick it up in store or to have it delivered to them. Better yet, the recipient receives the equivalent of a digital gift card, but with a picture of the intended gift. This marks an appealing and flexible hybrid between a thoughtful gift and store credit. The recipient can then choose to receive the selected gift, selecting the size, color, and style of the item, if applicable, or use the credit to purchase an item of equivalent value from the same retailer. Jifiti gift cards can be redeemed in app or online.

“Our mission is to create the ultimate social gifting adventure by merging the unmatched shopping experience you can only get in-store with the unmatched shopping convenience you can only get online,” says Jifiti co-founder and CEO Yaacov Martin. “Gift-giving is by definition a kind and generous act, yet too often it is a source of anxiety for the gifter and frustration for the giftee. Jifiti eliminates both the anxiety and the frustration, while serving as a real boon for bricks and mortar retailers.”

The only awkward element of this experience is that Jifiti prominently features the price of the gift, down to the penny after sales tax. This is a necessary evil if offering the option to redeem for equivalent value merchandise, but it flies counter to the cultural norm of removing price tags from gifts. It shouldn’t be a deal-breaker for most people, but there has to be a more elegant solution.

For retailers, Jifiti offers little downside. The recipient gets the equivalent of credit which must be redeemed online or in store. Retailers pay the company between 5 to 15 percent commission on the gross value of each gift – there is no cost to the consumer – which is reasonable as a customer acquisition cost. Integrating the app does not require any modification to a store’s operations or point of sale system (software or hardware). Rather, the company integrates into the world’s two largest gift card platforms, which combined are used by more than 90 percent of the market.

The notion of Jifiti “launching” new malls is a bit of a misnomer. In its case, launching simply means promoting the product on site, and through local and digital advertising channels to consumers in that geographic region. But a credit issued through Jifiti, for example a Sephora gift card, can be redeemed in any of that retailer’s locations (or online) regardless of whether that mall is in the Jifiti network. As mentioned above, the company will “launch” 100 malls before the winter holiday season, but hopes to have a far larger footprint of active users across North America.

Jifiti’s latest financing includes Simon Property Group, Schottenstein Stores Corp., and the Jesselson Group as backers. Simon is an S&P 100 company and the world’s largest real estate company, with more than 28 billion shoppers visiting its 327 retail real estate properties (242 million square feet) in North America and Asia each year. Mikael Thygesen, Chief Marketing Officer of Simon Property Group and President of Simon Brand Ventures, has joined Jifiti’s board of directors.

Strategic investments can be a risky proposition, as it’s rare and difficult for the two companies involved to be aligned in their objectives and expectations. In the case of Jifiti and Simon, this seems to be a better partnership than most. For the real estate giant, Jifiti helps drive foot traffic and dollars through its retailers’ doors. It also gives the company a stronghold into the future of ecommerce and retail technology. For the startup, the partnership provides access to the world’s largest retailers, nearly all of which have a presence within Simon malls, and also significant marketing muscle.

According to Jifiti co-founder and CMO Shaul Weisband, his company has both the flexibility and the intention to expand beyond Simon into partnerships with other malls and with mom-and-pop retailers. In fact, the company planned to accept a $3.5 million from Simon, but decided to reduce that amount to $2.5 million and keep the additional $1 million allotment in reserve for a second strategic partners. The company is headquartered in Columbus, OH and is an alumni of the Tech Columbus incubator.

Jifiti’s magic is instantly turning an in-store or online product into a digitized gift card, a process which the company has a pending patent. The two-year-old startup is working on a number of additional innovations, including a “Gift It” button which can be embeded on retailer sites. For consumers, the platform is a simple and convenient way to both give and receive gifts, with little downside.

To succeed in this market, Jifiti will need to outcompete some sizeable competitors, most prominently Facebook and its growing gifting platform. AngelList names another 78 gift- and gift card-related startups as well, each of which will hope to claim a piece of this enormous market.

Technology has and will continue to change the way we shop and give gifts. It’s rare, however, that technology is able to benefit the retailer and the consumer equally. Jifiti comes as close to this delicate balance as any platform I’ve encountered. For that reason, and on the strength of is Simon Property Group, I expect this is a concept that will scale.