Yougotagift, an online mall for digital gift cards, more than tripled growth in its employee gifting segment and plans to raise financing for expansion as more companies digitise their employee rewards systems - a market worth more than $300 billion (Dh1.1tn) globally.
The Dubai-based start-up recorded a 225 per cent increase in the number of companies signing up for its employee reward cards over the last 12 months, Husain Makiya, co-founder of Yougotagift.com, said in an interview. It will seek a round of funding in the first half of next year to bolster its presence in existing markets and expand into new ones.
"In the last 12 months, the employee rewards space has seen a substantial uptick, we're growing that very fast, supporting with the right teams and products, and accelerating that across the Gulf," Mr Makiya said.
Mr Makiya said Yougotagift.com is particularly focused on growing its business in Saudi Arabia and expects to sign up "a few new large corporates" in the fourth quarter.
The company is also eyeing new markets such as Egypt and countries in Scandinavia, though it continues to focus on the Middle East, where there's still more room to grow.
To fuel its expansion across new and existing markets, boost its sales and marketing, add more brands and product features to its portfolio, the company is planning its third round of financing in 2020, Mr Makiya said, declining to specify the amount.
"We are targeting doubling the business [in sales] year-on-year, the market is there, it depends on how fast you can execute and how fast you can cover the region," he said.
The start-up, which turned a profit in 2018, also expects to be profitable this year, he said.
"Employee rewards is witnessing a big growth story," he said. "The growth of gift cards is largely fuelled by B2B cards, but employee rewards specifically."
It is estimated the gift card industry will double in size to be worth $698 billion globally by 2024, according to Persistence Market Research. Growth is expected to come from digital channels, as more and more people favour shopping online than battling crowds at malls and shopping centres. In the US, the digital gift card industry is growing at around 200 per cent annually, compared to 26 per cent a few years ago, says Persistence.
Companies ranging from small businesses to large corporations are increasingly signing up for the digital service as they seek efficient ways to minimise staff turnover and motivate employees.
"What we came to realise is that there's a big opportunity in employee rewards and, more importantly, that it's the digital approach that's seeing the fastest traction," Mr Makiya said.
Aramex was one of the first companies to use the service to provide gift cards for its employees. Emirates Nuclear Energy Corporation (Enec) and Smart Dubai have also signed up, joining clients in telecoms companies, airlines, banks and more.
Driving that growth is the convenience, speed and customisation of digital gift cards for employees that cuts down the paperwork and effort for companies to reward staff. Some companies also said the flexibility of selecting an amount to gift in cash or an experience, such as shopping or entertainment, was a more affordable option during tougher economic conditions when bonuses or salary increases were less feasible.
"It's an important part of the employee retention approach which many companies look to do, losing employees is expensive," Mr Makiya said. "It's a product for the good times and the tough times."
Dnata, which manages the employee rewards voucher payments for pharmaceutical company Astrazeneca using Yougotagift.com's cards, issues vouchers for shopping malls.
"Going digital is much better and there’s a human touch," Mona Manik, an events manager at Dnata said. "It's faster, it's in your control, you receive a barcode and get the voucher on your phone."