Since launching in 2015, Sydney-based e-gift card platform GroupTogether has amassed more than one million Australian users and facilitated $16 million-plus in gifts in the last financial year.
Now, founders Julie Tylman and Ali Linz are looking to bolster their presence in the US, where the duo has already lined up partnerships with retail giants such as Barnes and Noble, Forever 21 and Banana Republic.
Speaking with Business News Australia, the mothers shared their vision for the budding gift platform, which has grown in popularity amongst corporate employees working at Westpac (ASX: WBC), Optus, QBE Insurance (ASX: QBE) and more as it rolls out internationally.
From birthdays to farewells to baby showers, gifts are often used as a way to foster our connection with others, but also come with their own pitfalls.
According to the Australian Retailers Association (ARA), more than 10 per cent of Australian Christmas gifts were expected to be returned last year, amounting to between $2.5 billion to $3 billion in unwanted presents.
Looking to alleviate the pressure of finding the perfect present for your family, friends or co-workers are GroupTogether founders Ali Linz and Julie Tylman.
“We looked at the gifts that we were giving and realised [they] were a bit rubbish...in the environmental sense with lots waste and packaging, and what we could afford to give wasn't that great either,” Linz says.
“We found that group gifting is a no-brainer, but group gifting is also a nightmare. Being left short and reminding people for money is super awkward. So, we naively thought that this wouldn't be too difficult to do, and gave it a whirl together.”
Launched in 2015, GroupTogether allows users to create a link that can be shared as a way to collect funds for a digital gift card, which can be signed or personalised with photos or a graphics interchange format (GIF) by each person.
Once the money is collected, the present can either be sent in the form of an e-gift card or as an AnyCard – an option that allows the receiver to split funds between major retailers such as Myer (ASX: MYR), Adore Beauty (ASX: ABY), Apple, Bonds, Amazon, Priceline, Hoyts, Woolworths (ASX: WOW) and more in Australia.
But as Linz points out, the journey to getting those retail juggernauts on board was far from seamless.
“We were tiny and no one knew us…there was just not a chance in hell that a big renowned retailer was going to agree to a deal with us. We realised that really quickly,” Linz says.
“So, we did what startups do and we hustled. We put a couple of huge brands in Australia on our website - we didn't take a margin - and just bought the gift cards retail and passed them on to the customer until we knew that it was working.
“Then we approached their competitors and said: 'Hey, look, all of these big guys on our website - surely you want to be too.' Of course, they all rushed to join because no one wants to be left out.”
Currently, 70 per cent of GroupTogether’s one million Australian users are from New South Wales, with 30 per cent signing up from Victoria.
“We've barely scratched the surface of the potential in Australia...there's just so much growth to be had - especially in the corporate market, which really exploded for us with COVID,” ex-Merrill Lynch equity analyst Tylman says.
GroupTogether’s corporate market, referring to employees collecting funds for farewell parties and staff gift packages, accounts for 50 per cent of the platform’s userbase. To date, the e-gift card provider has seen roughly 4,500 employees sign up from Westpac alone, with the user tally growing by 20 per cent each quarter.
Tylman and Linz are looking to replicate this momentum in the US market, where GroupTogether was quietly released late last year and has already garnered 250,000 users.
Off the back of GroupTogether's established partnerships in Australia, the founders were able to quickly connect with 150 US retailers to offer e-gift cards, flowers, plants and gourmet food to their newest users.
“Obviously the US market is much larger - we estimated about 10 times as large as Australia. We expect that we will exceed the Australian user base within three to four years,” Tylman says.
“In the US, where you've got someone like Deloitte with 70,000 employees across the country, people are more transitory. We imagine that we will see that same scenario played out there as we have here in Australia,” adds Linz, who is currently on the ground in the US overseeing the company's expansion.
“Our plan is to just make sure that our hypotheses of the two markets being similar are right, and we’ll hop back and forward as need be. But as the business in the US grows, we will have to spend more time here and also employ people here.”
The founders will also bolster GroupTogether's marketing spend in the US, where it is currently growing by 10,000 users per month.
When asked about the potential of raising capital, Linz says the possibility is not off the table.
“We've got committed investors in Australia we’re just tying up a deal with but we still want to raise a little bit more. We really like US investment at a strategic level,” Linz says.
But until further funding is secured, the duo is focused on providing the ideal user experience.
“We're constantly getting feedback,” Tylman says.
“It really is all about giving a gift and wanting the person who's receiving it to feel special themselves.”
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