December 31, 2004
Internet Sites Allow Gift Card Exchanges
ST. LOUIS (AP) -- The gift card - often viewed as the little, plastic solution for keeping friends and family out of the return lines - doesn't always serve as the ideal present. Responding to consumers who don't want to buy themselves another sweater, or will take a pass on a fancy steak dinner, Internet businesses have sprung up allowing people to sell or swap unwanted gift cards.
"Isn't it great?" asked Mike Kelly, vice president of SwapAGift.com. "The market will create exactly the mechanism it needs to correct any problem."
He and his wife, Mary Jane, created the Langhorne, Pa.-based Web business SwapAThing, Inc. last fall, after realizing they had about a dozen gift cards they weren't using. They decided to create a place where people could trade in the cards they didn't want, or receive some cash back for them.
They're not the only ones with the idea. The online giant eBay Inc. (EBAY) had more than 7,500 gift cards and certificates listed for sale or auction during a recent check. The eBay site doesn't allow bartering.
And a new St. Louis-based business CardAvenue.com launched in October. CardAvenue's CEO Bob Butler said people need to realize that their unused gift cards amount to wasted money, but they can benefit if they sell or trade them. "Even if it's $5 or $10, they should do something with it," he said.
Kelly said he's heard from customers who were pleased to have an option to shed their cards - like the man who received a $100 card to a women's lingerie store. Another man who used the service suffered a rejected marriage proposal and ended up with store credit on a gift card for a $3,500 engagement ring.
Hugh Burgin of Denver bought a $25 Target gift card off CardAvenue for $17. He said even an $8 savings was worth it. "If you're going to spend the money, you might as well save a few dollars," he said.
While some gift cards decline in value over time, Internet businesses have measures in place to ensure that people get what's being offered. For instance, CardAvenue requires that gift card owners include the toll-free number for their card and that sellers check the balance before offering it to others.
And San Jose, Calif.-based eBay will not allow the sale of gift cards valued at more than $500; the gift card must be in the sellers' hands before it can be listed and only one gift card can be listed per seller per week, said spokesman Hani Durzy.
The Internet businesses make their money in different ways. SwapAGift charges a $3.99 flat fee to list a gift card for sale or swap. Or that business will buy a gift card from a seller for 70 percent of its face value and offer it for resale.
CardAvenue charges a 6.25 percent fee from the seller and a 50 cent closing fee only if a sale or trade is completed. If the card doesn't attract a new owner, the seller isn't out any money.
The eBay gift cards sell like other items on the Web site, with a listing fee ranging from 30 cents to $4.80 and a final value fee, based on a sliding scale from 5.25 percent to 1.50 percent.
CardAvenue and SwapAGift said interest is increasing as word spreads, and there's no question about the popularity of the gift cards. The National Retail Federation, the world's largest retail trade association, said consumers planned to spend more than $17 billion on gift cards this holiday season.
Spokeswoman Ellen Tolley said the federation didn't have a position about the Internet reselling of gift cards, but pointed out that retailers do, in fact, want customers to use their gift cards.
For one, retailers typically do not record a sale as made until the gift card is redeemed. And, she said, gift cards provide a good way for a store to introduce itself to consumers or to boost spending.
"Retailers' hope is that people will redeem the gift card, and spend a little extra," she said.
On the Net:
National Retail Federation: www.nrf.com