11/10/2011 11:15 PM ET|
New way to shop online: Group gifts
Group gift giving is a convenient way to share the costs of a big-ticket item and ensures that the recipient gets something he or she really wants.
Every year, Americans spend hundreds of dollars on their holiday shopping, much of it on cheap, well-intentioned gifts that the recipients neither want nor need.
Instead of buying another sweater for your sweetie or box of candy for your kid's teacher, why not round up enough people to chip in on something they truly covet, such as a new smartphone, flat-screen television or lavish gift card?
A handful of websites -- Shareagift.com, ChipIn, eBay Group Gifts and others -- now allow you to raise funds for gifts with a few clicks, rather than chasing your friends for checks weeks after a purchase.
That's what 37-year-old Reeta Hosein of London did recently after struggling to find a birthday gift she thought her husband, Aleem, would enjoy.
"He is impossible to buy for," she says. She knew he'd had his eye on an outdoor pool table, but at $6,000, it was just too expensive for her to buy alone.
So she made up a page for the gift on Shareagift and asked more than 20 of his friends and relatives to go in on it with her.
"The reaction I got from everyone, was, 'Wow! What a fantastic idea,'" Hosein says. And because the contributions were confidential, she says no one felt pressured to chip in. The site also generated a gift card, for which contributors could type personal messages.
"He was very surprised, especially as it was so expensive . . . and I had been saying he couldn't have one," Hosein said.
Bigger pot, better gift
Group gift giving may be one of the few ways retailers can get more consumers to spend on big-ticket items this year, says Marshal Cohen, the chief industry analyst for market researcher NPD.
"The things people really want these days are more expensive," he says, and there are not many exciting new products at cheaper price points to get shoppers spending on impulse.
Indeed, with the economy limping along and many people paring back spending, getting people to chip in on that one longed-for item makes a lot of sense.
The idea of online group gift giving has been around for at least a couple of years. Some early sites, however, couldn't bring in enough traffic and purchases to effectively raise their profile and keep themselves running.
Now, however, big retailers such as Best Buy are getting into the act, adding this feature to their online stores to cultivate more loyal customers.
"It only gives (shoppers) more reason to be on your home page," Cohen says.
Independent collection sites
And there are some new independent sites that will do the legwork for you.
Shareagift, which was launched in recent weeks, allows you to set up a page on its website or on Facebook to solicit money for a gift. The funds, submitted by credit card or PayPal account, are deposited in the organizer's account. Shareagift will send out reminders as your buying deadline approaches.
"Group buying is something that's happening anyway. We are just bringing it online and simplifying it," says Justine Angelli, the founder and CEO of Shareagift.
Other money collection sites, such as WePay and ChipIn, gather funds for events, team fundraising and charities, as well as for group gifts for friends and family.
As with Shareagift, you set up a page and send the link to your friends. With WePay, the electronic check and credit card donations are sent to a linked account, and you simply click "Get Money Out" to receive the funds and make purchases.
ChipIn donations or contributions are sent solely via PayPal to the organizer's PayPal account.
The big players
Best Buy's group gift program is called the Pitch In Card. Users register online for this free card, which is mailed to them. They can link it to a wish list on the electronics retailer's site and send links to this list, with the option to "pitch in" for one or more of the items by contributing to the card.
The Group Gift page on eBay lets shoppers choose gifts from its fixed-price "Buy It Now" selection. You select a recipient, choose a gift -- gift suggestions are also presented as part of the setup -- and then invite other friends via email or Facebook to chip in with a credit card or PayPal account. You can ask everyone to contribute an equal share or set it to "manual," so friends can kick in what they like.
The funds collected are sent to the organizer's PayPal account so he or she can buy the gift, and an e-card is sent to the gift recipient on whatever day the organizer sends it (or prints it out).
The names of the contributors, but not the amounts contributed, will show up on the gift page. Only the organizer can see who kicked in what amount, so there's less shame in small contributions.
And if you can't find exactly what you're looking for, or your friend Peter buys himself that new iPad before Christmas, the organizer can simply give you your money back (as he or she can on most of these sites).
"We see shopping as an inherently social activity," says Johnna Hoffs, an eBay spokeswoman. And given the large crowds and hassles with parking around the holidays, it just might be more pleasant to shop together online.
The pros and cons
Of course, you will pay something for this convenience. Shareagift charges a $1 administrative fee per contribution, in addition to PayPal's fees, which total 2.9% plus 30 cents per transaction. However, Shareagift founder Angelli says she hopes to eliminate the $1 fee in coming months as its traffic and retail partnerships pick up steam.
Likewise, ChipIn is subject to those same PayPal charges. WePay charges a straight 3.5% fee per contribution. Best Buy's program is free.
Another potential downside is a lack of control over what is being bought, unless you are the organizer in charge of the funds. That means that your friend could buy a brand or model of laptop that you would never buy.
Moreover, with eBay you're also not able to purchase items that aren't categorized as new, aren't in the U.S. and aren't under $2,000. So that classic car or estate jewelry is probably out.
And there's always the chance that some people may be put off by your online solicitation or confused by the whole process.
Adrienne Kleckner, a 29-year-old Chicago medical device salesperson, said some of her relatives were perplexed when she set up a wedding wish list on Honeyfund, rather than set up a registry at a major department store.
"We had to spread the word on how it works," she said. "Not everyone was so Internet-savvy."
But she said it was worth it because she and her husband didn't have to pack their small two-bedroom apartment with traditional gifts such as china or appliances. Instead, they were able to receive exciting excursions, massages and other luxurious experiences they normally wouldn't have been able to afford on their honeymoon.
"I loved it," she says. She says she expects to use group-gifting sites for upcoming birthdays and holidays, even to send ideas to relatives for a gift she wants, like new boots.
That, Angelli says, is the whole idea.
"Eighty-four percent of adults get the gift they don't want at Christmas," she says. This way, she says, "you can tell people, 'This is what I actually want.'"
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