The novel coronavirus has shut down most of the U.S. economy, with 43 states and Washington, D.C., implementing stay-at-home orders and closing non-essential businesses. The resulting slowdown will continue for at least the next several weeks if not months.
Small businesses make up more than 99 percent of all American firms and account for nearly half of the country's GDP. Yet, more than half of U.S. small business owners say their business will not be able to continue operating more than three months due to economic strain caused by coronavirus, according to a Goldman Sachs survey of more than 1,500 small business owners conducted in mid-March.
Nift—short for "Neighborhood Gift," the digital gift card platform provider based in Boston—is working to prevent that from happening.
Last week, Nift launched an online store where users can buy $30 pre-paid digital gift cards to thousands of small businesses ranging from boutique pet treat stores to specialty salons, along with a slew of restaurants. The idea is to support the businesses now so they can weather the storm of coronavirus; then, shoppers can actually patronize them later. Nift sends the gift card amounts to businesses immediately via check or direct deposit.
"It can really jump-start economies after disaster," Nift founder and CEO Elery Pfeffer told BostInno. "It can drive, at a large scale, across the U.S., billions of dollars of renewed commerce into local businesses who are suffering. Plus, when somebody gets a $30 Nift card to spend at a local business, they end up spending $50 to $60, and they end up coming back several times a year."
For Nift, the new store is a natural extension of its existing business model. Nift works by using machine learning to match a "neighborhood gift"—the digital gift card—to the customer who's mostly likely to use it. A customer gets a Nift code, enters it on the Nift website, answers a few questions and is then presented with a choice between two gifts from local merchants.
The idea is to introduce customers to new local businesses: Nift says 86 percent of customers either hadn't been to the business before at all or hadn't visited in over a year.
As coronavirus takes its toll on small businesses, Nift is also working on partnering with local governments on municipal economic recovery programs. So far, Pfeffer said, the startup is in early conversations with a handful of municipalities, with the lofty goal of implementing the stimulus program across the nation.
There's precedent for that. After the Merrimack Valley gas explosions in September 2018, Nift partnered with Lawrence, Andover and North Andover on what it called "Rock the Register." Financed by the three cities, 8,000 Nift gift cards were distributed to Merrimack Valley residents impacted by the gas crisis to redeem at participating impacted businesses.
"From that initial investment of funding that gift card, consumers walked into businesses that had been shut down for the first time [since the gas explosions], and they spent more than the gift amount and shopped there over and over again," Pfeffer said. "For a small amount of the investment they made, they got six times the return. It immediately jump-started the economy there. That's what we're looking to do after COVID-19 is over."
Founded in 2014, Nift most recently closed $16.5 million in Series A funding from Spark Capital, Foundry Group and Accomplice in March 2018. At the time, it was operating in Boston, Providence, R.I. and Washington, D.C., with plans to expand nationally over the following year.
