Claire Morris and Matt Hoggett founded their Prezzee app after seeing an opportunity to eliminate the hassle of hard-copy gift cards in an age of mobile commerce.
The app, which allows consumers to buy and send gift cards from a range of Australian retailers, and to store the cards in a digital wallet instead of ending up at the bottom of a handbag, now turns over in excess of $1 million a year. The business got support from Rich Listers early in its life, with property developer Shaun Bonett’s Precision Group taking a 40% stake in the company at the end of 2015.
Now the founders have big plans to consolidate Prezzee’s hold on a local gift card market they say is worth $4.5 billion. As they work towards this goal, they’ve chosen to open the platform up to business customers, expanding the offering to allow companies to buy hundreds of gift cards to distribute to loyalty customers, as staff gifts and for special events.
SmartCompany spoke to Claire Morris about why the corporate world presents a “massive opportunity” for the company.
I am from a design background. I was an art director at Moon Designs [before] I went to Marie Claire as an art director. Matt, my co-founder, was a photographer, so we’re both from a commercial background in a creative field.
The gift card market was a new space that we hadn’t played in before, so we spent a good six months researching before we even developed the product. I think it’s really important to do that.
I guess there’s a very very few stats in Australia about the gift card market, and to see how it works, it was quite tricky to research. Plenty of the stats we had were in terms of what the market is in the US, and we were using that to start with.
But I think the pain points of plastic are universal. That’s why Prezzee was born — to address the problem of losing a plastic card, of never having it with you.
Basically the business model is like any product that you sell: you take a commission off the sale of the gift card. And say someone buys 100 gift cards, then they can get a discount. Then retailers, even though they might be giving away discounts to sell their gift cards, are also getting [potential] up-spend.
I think flexibility with the cards is key. On all of our real time activating gift cards we have balance updates, so consumers can review and update their balances in real time. A lot of the time with plastic cards, you might have no idea what the proportion of it is that’s left. Also, with plastic gift cards, if they get lost, well, you can’t replace them.
When we launched, we literally had five retailers on board. Now we have over 40.
Myer was the first on board, and they were really supportive of us. JB Hi-Fi was next.
You don’t get a lot of time when you’re pitching, but we engaged [in the pitch meeting] with the retailers quite quickly, like after the first five minutes. I think there was a real need from the retailer’s point of view, and basically, people just want to see that you’re across the brand and across the product.
In the early days, we had a lot to do with the design of the company. As the product has developed we [now] have a wonderful team, and our developers have really taken it on as their own.
I think that’s the key — to have everyone collaborate. We’ve been in the industry for quite a while and know how valuable it is to have staff that really know what they’re doing.
So far, we’ve mostly found our staff through word-of-mouth. We are growing, we’re approaching a team of 10 now, we have an office in Melbourne and Sydney, and the business-to-business part of Prezzee is really going to accelerate that growth.
There is not one staff member at Prezzee that doesn’t play an integral part in the way we work.
We have a wall of quotes that lines a large wall in our office. Everyone at work is asked to contribute a quote that inspires them, [such as]: “Wisdom is the ability to learn from change”, and “If you desire to make a difference in the world, you must be different from the world”.
We inspire each other, we learn from each other and these are the qualities we look for in any new candidate wishing to join the team.
We do have mentors and look for outside advice, but we mostly listen to our own team and the board.
We have our investors at Precision Group, they sit on the board with Matt and I as directors, and they have a lot of input into Prezzee. I know we founded it, but I also know there is not one of us [individually] that can take credit for what we’ve done.
I think that relationships are key to the business, and all our retailers have been so supportive. I think regular catch-ups are key, and it’s great just to have a coffee with people. You really need to be able to take a step back and work out how you can work well with your retail clients.
Essentially, the gift card market is a $4.5 billion industry, and we would like to see Prezzee activate that. [We’re] aiming to capture 1% of that $4.5 billion within the next three years. I think that’s where business-to-business plays a huge role for us.
I understand how the corporate world works and always knew it would be a massive opportunity — and I think loyalty, promotions and corporate gifting are huge opportunities in the business-to-business market — I just didn’t expect to be launching a second product within six to eight months [of launching our first one].
I guess because we’re a tech business, we are agile. And we see the business-to-business platform as complementary to our business-to-customer one.
Awareness and brand loyalty of course takes time to build, but it is the ultimate goal for the business. We want Australians to think of Prezzee when they need to send a gift card, whether they want to send a gift card to their best friend for a birthday or send 10,000 gift cards to a member program.