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November 2, 2017

The Rise of G-Commerce

American Giant Apparel Harnesses The Power Of “Right-Now” Giving

[Originally published in STORES Magazine for the October/November 2017 Edition]

by D. Gail Fleenor

As retail continues its internet-influenced change and customer demand for “right now” service increases, a new area is open for business. There is now no reason to send a shirt that is the wrong size or give an impersonal gift card. Gift commerce is here, offering a new type of personalized transaction and digitalized merchandise. Retailers can grab last-minute shoppers literally up to the moment before a big day — and increase profits through fewer merchandise returns.

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American Giant, an apparel manufacturer in the United States, sells its merchandise online. Press is big for the San Francisco-based company, with Slate calling the brand’s classic full zip sweatshirt “the greatest hoodie ever made” and Forbes labeling the company the “new Levi Strauss.”

Last year, American Giant reviewed its options for online gifting services. Most companies offer a traditional gift card program, but the model was less attractive to American Giant, according to Jenny Patchen, director of ecommerce operations for the company.

“We wanted our customers to have an experience that centered on featuringthe product as a gift,” Patchen says, “not just the monetary value of the gift.”

After reviewing proposals from other companies, American Giant chose Loop Commerce and its GiftNow platform, which doesn’t use gift cards or certificates. “GiftNow emphasizes the product gifted, without sacrificing the recipient’s ability to choose their size or color,” Patchen says.
Gift recipients of American Giant and other retailers using GiftNow receive a “package” via email containing a photo of the present. If sizing is incorrect or the color isn’t suitable, the recipient can make changes immediately online or choose another item.

“While seasonal gifting alone was our key use case, we are also seeing existing customers using the platform year-round. This is driving word-of- mouth interest and incremental sales as well. It is also introducing our brand to new customers,” Patchen says. “Since we launched GiftNow in late 2016, our gifting business quickly increased.”

As a percent of net revenue, it has doubled; on Christmas Eve 2016, Patchen says GiftNow accounted for 24 percent of site-wide sales. “The gifting solution drove six times the revenue of our previous gift certificate solution from the prior year.”

TYING THE LOOP

Loop designed its GiftNow system to allow retailers to sell gifts online without sizing, ship without an address and sell past any shipping cut-off date. The gifting is possible because “merchandise is digitalized,” says Roy Erez, CEO of Loop.

The business officially started in 2012, although Erez began working on it a year prior. “Our vision was and is for GiftNow to be an everyday option in a few years,” he says. He believed that retailers could use GiftNow to reap more sales by offering the concept to hold more customers on their site, rather than lose shoppers to the great unknowns: address, size and colors.

“When our company was in its infancy, we thought it was insane to believe there was no way to just buy a gift online without needing all the information, like sizes and address,” Erez says.

Gift cards have no emotional surprise, something consumers want in a gift. From day one of GiftNow’s development, Erez says, Loop had a Duke University psychology advisor onboard to guide the company about the feelings customers have about gifting.

In this age of online gift buying, he says customers feel frustrated: While trying to buy gifts, something major is “broken” — the emotions attached to giving.

“Online stores were not originally designed for shopping for someone else,” he says.

The Loop process is meant to be simple and quick. Once a gift is chosen, the giver clicks the GiftNow button and enters the recipient’s email. The recipient digitally receives the gift with a personalized message. The gift is opened online and can be accepted as is, customized if necessary or exchanged for a different present. Returns and exchanges occur virtually, and the gift is shipped to the address the recipient provides.

“There is no need for the recipient to add the gift to a cart, go through checkout or enter a gift card code to redeem their present,” Erez says.

Loop’s platform requires no changes to a retailer’s website, order management system, payments, accounting or inventory. The platform has full enterprise security and it takes less than four weeks to become a GiftNow retailer, ready for business with minimal resources needed.

GiftNow was a certified partner on American Giant’s platform, Salesforce Commerce Cloud. “A light tech-lift was critical to our decision and we were able to launch with very little effort,” Patchen says, “in time for peak season.”

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Retailers have seen a significant increase in year-round business by using GiftNow, Erez says. Eliminating the shipping cutoff date extends sales for a retailer. “This concept allows retailers to always be open for business,” Erez says: Retailers can add an extra 42 days of sales each year with last- minute holiday and birthday gifts.

The biggest day for gifting, surprisingly, is not Christmas. “Birthdays are always number one,” Erez says. Many givers tend to wait until the last minute. “Over 40 percent of all gifts are purchased the day before all holidays, including birthdays,” he says.

Digitalizing merchandise allows a gift to be delivered on time, followed later by the actual gift; any product can be sent as an e-gift. Shipping charges and taxes are estimated without knowing the recipient’s address, and digitalized gifts can be delivered within minutes or at a future time specified by the giver.

The concept also increases the range of merchandise that can be sent as a gift. Previously, if a customer wanted to give a pair of shoes but did not know the recipient’s size, the item would have been eliminated as a potential gift.

Loop offers another gifting option: Gift360 is designed for business e-gifting to clients, colleagues and consumers for holidays or anytime occasions.

The latest wave in technology is online personalization, and creating a personal connection with consumers can increase the odds of future sales.

“Loop supports us in developing the relationship between our brand and our customers by channeling emotion and excitement, rather than a singular transaction,” Patchen says. “We are excited in the future to roll out GiftNow’s updates for customers to gift to their recipients via new methods like text as well as email.”

Virginia-based D. Gail Fleenor has written hundreds of articles about retail, technology and consumer research following nearly two decades as a supermarket research manager.

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