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Profiting from expired gift cards

Posted by Michael Bloch in ecommerce (Monday April 19, 2010 )

A new service where consumers can cash in their gift cards reveals some very interesting (and potentially profitable) data for online merchants still considering whether to offer gift cards or gift certificates – and a little inspiration as a side point.

Founded by Australian entrepreneurs Lachy Groom and Josh Davies, Cardnap aims to provide shoppers with a service that turns their gift cards into cash or allows them to buy store credit at a price less than it’s face value.

Cardnap offers discounts of up to 30% on gift cards buys unwanted gift cards for as much as 90% of the face value.

It’s a clever idea, but here’s the very interesting bit and what spurred on the creation of the service. According Choice (Australian Consumers’ Association) up to 33% of gift card vouchers in Australia expire without being used.

This makes another great reason for online merchants to offer gift cards and certificates. Let’s say you sell a thousand bucks work of gift cards; those Choice statistics indicate up to $333 of that value may be pure profit for you as the value won’t be redeemed! Of course, your expired gift card profit mileage may vary.

Most good shopping cart software packages offer gift certificate functionality. They are easy to set up and administer. Additionally, recipients will sometimes buy more than the gift card value. Lazy gift or not, gift cards and certificates are gaining in popularity as a gift choice, so why not try tapping into that demand? After all, it’s a new product for your store without having to having to “carry” an actual product.

Oh, before I forget, where does the inspiration aspect of this Cardnap service come in? Cardnap wasn’t started by a bunch of middle-aged online executives or even a crew of 20-somethings. Lachy Groom is just 15 years old.

Thinking outside the box doesn’t seem to have an age limit.

Related:

A guide to choosing shopping cart software



 

 
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