I'd never heard of Wrapit until the company came unpacked this week. Running wedding gift lists sounds like the kind of business that can only exist in a society where people like to think they're too busy to do anything for themselves. Cooking? Housework?? Looking after the kids??? Malgorzata can do that! Set up my own wedding list???? Next thing you'll be suggesting I rely on the taste and generosity of my friends and family.
Even in the parallel universe where something like Wrapit can exist (I believe that universe is known as "West London"), a business like this has to be run on sound financial principles. Most importantly, the money intended by customers to be used for buying gifts has to be kept separate from the company's own operating funds. This requires the business to be properly capitalised, which Wrapit almost certainly was not, and it requires it to grow only as fast as its available capital will allow. Wrapit seems to have grown rapidly and not very sensibly: why did a web-based wedding list company need six retail outlets? Once this sort of company starts using clients' money to pay its operating expenses, it becomes not much more than a Ponzi scheme, and its eventual fate is sealed.
Wrapit's management is trying to convince the media and its customers that the company's demise is all down to the credit crunch and to HSBC in particular. Given the nature of the business, if Wrapit had been properly run and well-capitalised it would have been all but recession proof. Like Farepak before it (and on a much larger scale, Northern Rock), Wrapit is a casualty of the "get rich or die tryin'" ethos of the past decade. It's unlikely to be the last.
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