The global gift card industry, especially the digital segment, has been recording strong growth momentum over the last few years. Driven by the pandemic outbreak and increased smartphone and internet penetration, the uptake of digital gift cards has surged significantly. The rise in online shopping has also supported the growing adoption of gift cards. The growing uptake of gift cards, however, has also resulted in more and more players entering the market, thereby driving the competitive landscape in the industry.
In 2023, the outlook for the gift card industry remains strong, as higher inflation is projected to drive the adoption of the payment solution among cost-conscious consumers. While the macroeconomic factor, in higher inflation, is a positive sign for gift card providers, other factors, such as growing interest rates, mean that venture capital and private equity funding are on the decline in the global market. This, coupled with the growing competition in the space, is expected to drive consolidation trends in the gift card industry over the next 12 months.
In 2022, Give InKind announced layoffs and also slashed its marketing spending to further extend the operations and avoid an unforeseen business shutdown. The acquisition deal with Wolfe will provide Give InKind the much-needed growth support, as it continues to streamline the giving process between friends and families and those that are in need of meals or other aids. Notably, the firm lets users send GrubHub deliveries, gift boxes, and more than 200 digital gift cards to recipients.
During the global pandemic outbreak, Give InKind experienced a strong growth momentum, as hundreds of hospitals and healthcare facilities started using its services to streamline meal donations. In the United States, Give InKind facilitated more than US$5 million in support to individuals as well as organizations. Before the acquisition, Give InKind also raised a total of US$3.3 million since its inception in 2019.
While the uncertain economic conditions led to the acquisition deal between Wolfe and Give InKind, the two firms complement each other’s business model. For Give InKind, the acquisition will lead to an accelerated growth path, as Wolfe can scale its services by boosting consumer awareness. For Wolfe, the addition of Give InKind will enable the firm to serve corporate clients, who are seeking to drive employee engagement. Furthermore, the acquisition will also drive the portfolio growth for Wolfe, who also operates PerfectGift.com, GiftYa.com, and GiftCardGranny. In 2016, Wolfe sold GiftCards.com for US$120 million.
From the short to medium-term perspective, PayNXT360 expects the consolidation trend to grow significantly in the United States market, owing to the macroeconomic environment and higher competition in the space. Notably, the United States gift card market has shown strong growth potential over the last few years, and the trend is projected to continue in 2023 as well. However, to capitalize on the high-growth market, even global players are eyeing a presence in the market. For instance,
In Australia, GroupTogether has amassed over one million users and facilitated A$16 million in gifts in the last financial year. The firm has garnered strong popularity among corporate employees in Australia, and it plans to execute the same strategy in the United States market. With its presence in the B2B sector, GroupTogether and Wolfe will become direct competitors.
Notably, the presence of these global players, along with well-established giants such as Blackhawk Network, is driving the competition for firms like Give InKind. Consequently, PayNXT360 expects more merger and acquisition deals to take place in the United States gift card market, as smaller firms struggle to raise funding rounds from venture capital and private equity firms amid the funding winter.
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