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Pick a Card, Any Card: Web Sites Serve As Swap Meets for Gift Cards

Posted on: Sunday, 19 February 2006, 18:00 CST

By Monique Curet, The Columbus Dispatch, Ohio

Feb. 19--Christmas is long gone, but some of the gift cards you found in your stocking might not be. If you're still holding on to that Circuit City card because of your aversion to electronics, consider the alternative: Log on and cash in. Several Web sites offer a secondary market for gift cards, where customers can trade or sell cards they don't want to use. Three of the sites are based in central Ohio. Most of them were started by people who received cards they didn't want.

Charles Barclay, who lives in Granville, got the idea for his site, TheGiftCardTrader.com, a few years ago when he received Lazarus cards. What he really wanted was a Best Buy card, which one of his friends happened to have. He and his friend traded, and Barclay began researching his idea for a Web site that would allow similar transactions on a larger scale. He likens his site to an online dating service, because of the matches that are made. It allows even exchanges only.

"It gets people what they really want," he said.

Gift cards have become a major part of the retail landscape, especially during the holiday season.

The percentage of people who plan a gift-card purchase from the time they draw up their holiday gift lists increased from 65 percent in 2003 to 84 percent in 2005, according to an annual survey by Stored Value Systems.

The results also showed that, on average, the number of cards purchased rose from 4.5 in 2004 to 6.5 in 2005.

But results of a different survey suggest that many gift-card recipients might not realize that a secondary market exists. Only 13 percent of respondents in a recent Accenture survey said they knew it was possible to purchase so-called pre-owned gift cards at a discount. And just 9 percent knew they could sell gift cards for cash.

SwapAGift.com is one site that will buy cards, and it also allows users to sell their own cards or swap them. Mary Jane Kelly co-founded the site with her husband after they received cards as gifts for their 2002 wedding.

Kelly, whose business is based in Pennsylvania, said that people use the site for different reasons. Some use it "almost like a coupon." For example, one man wanted to buy a TV or a camera, so he bought a Best Buy gift card for less than its face value, and then used it to buy the item he was seeking.

She cites flexibility as one of her site's key traits, because swaps don't have to be one-forone. She said the site has close to 18,000 users and is profitable.

Bob Butler set out to create a site where people could get the most for their money. He's the founder and chief executive of CardAvenue.com, based in St. Louis and in operation for about three years.

His motivation was familiar: He had received gift cards to stores where he doesn't shop, and they were for significant amounts of money, "not chump change."

The cards offered on his site typically sell for less than face value, he said, because if a consumer wanted to pay face value he likely would just buy a gift card directly from the retailer.

"There's some really good deals out there," he said.

GiftCardBuyBack.com and GiftCardsAgain.com, companion sites, are trying to sell savings, said Jeff Kister, president of the Reynoldsburg company.

The buy-back site pays customers 60 percent to 80 percent of cards' face value. The company then sells those cards on GiftCards Again, where customers can buy gift cards and merchandise credits for 10 percent to 20 percent off face value.

"It is a startup industry," Kister said. "The opportunity is huge."

No one loses when gift cards are sold or traded in the secondary market, said Phil Rist, vice president of strategy for BIGresearch, a Worthington consulting firm.

Retailers cannot record a gift card as revenue until it has been redeemed, he said, so getting a card into the hands of someone who wants to use it right away is beneficial to businesses.

mcuret@dispatch.com

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Source: The Columbus Dispatch, Ohio

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