Unwanted gift cards? They Can Be Avoided!

Since the passage of the Card Act in August of last year we’ve seen many articles on how to sell your unwanted gift cards for cash.  Today we found nine of these companies who purchase unwanted cards online and even one website that compared pricing on the top four companies. 

The concept is simple.  You tell them the value on the card you have and they will quote you a price to purchase your card.  Each company has different terms and the price will usually fluctuate based on the popularity or availability of the card.  They will ask you to send in your card, and recommend that you send it insured First Class (a cost you need to consider as decreasing your card value).  They then resell the card at a higher price.   

Most of these companies sprung up over the last year or two and do nothing more than implement a form of arbitrage…buying a product low and selling it high.  With the explosion of gift cards in the consumer market, having these types of companies was inevitable, and they actually do some gift card award companies a big favor.   

Gift cards became the unquestioned #1 employee award for several reasons:  easy to use, tremendous choice, dollar for dollar value, etc.  But, they never totally eliminated the problem of gift or award giving and not knowing what kind of gift to give.  To give or reward the right gift card does require a little thought and understanding of the recipient.  When you just purchase a card without knowing anything about the person you’re giving it to, the above mentioned companies come into play and the when the recipient doesn’t want the card they simply turn it in for discounted cash.  The same holds true for all those companies who don’t know what to give their employees, but think that one or two cards with general appeal will suffice.  They don’t.  You won’t hit the hot button of all your employees with one or two cards and some will be disgruntled and resort to turning it into discounted cash. 

When you give a card like the Award of Choice that is redeemable for just about every popular merchant, restaurant or service company in the country, you practically guarantee that the recipient will get what they want.  Our lives change daily, one day we may want a Best Buy card to help get that DVD player, the next it might be one to a spa to give ourselves a mini-vacation day, or on another a restaurant card to take the family out to a memorable dinner.   

Gift Cards for the Christmas Stocking!

Consumer surveys conducted by Goldman Sachs for the International Council of Shopping centers point out that gift cards will be the most popular choice among shoppers this year. 

The ICSC released their list of top holiday gifts for the 2011 season as part of the ICSC’s holiday spending forecast, which includes predictions for Black Friday.  The items that consumers plan to purchase this year is: 

·         Gift cards – 14.2% compared to 11.2% in 2010

·         Clothing – 12.8% compared to 11.9% in 2010

·         Toys or Games – 11.2% compared to 8% in 2010

·         Music, CDs of DVDs – 9.2% compared to 8.6% in 2010

·         Cash – 8.4% compared to 8.1% in 2010

·         Electronics – 7.9% compared to 7.7% in 2010 

Did we ever think that gift cards, used as holiday gifts would be more than 70% higher than cash?

Gift Cards Most Used Incentive Award…More than Merchandise

There is some interesting data that has come out of the 2011 gift card survey of subscribers to Incentive magazine.  We’re sure this data did not please the traditional merchandise award companies who have been fighting the use of gift cards for years.  But, such is life.   

First, the number of responses from large budget incentive users has nearly doubled over 2010 figures.  Traditionally companies with these large programs who have used other forms of awards for their programs now seem to be embracing gift cards as their award of choice.  One reason we believe is the value and choice given by gift cards that was not readily apparent in the traditional merchandise awards.  This trend has been increasing for several years, but 2011 seemed to be a peak.  According to the survey:

“Of special note to gift card suppliers are the survey responses that place more value on gift cards than merchandise – gift cards are overwhelmingly seen as a more influential incentive or reward than other options.  Since 57 % of respondents said their budgets were untouched for 2001, the outlook for gift card suppliers is even brighter this year.” 

A significant survey question was:

How gift cards compared to traditional merchandise awards? 

o   59.6 % said more effective

o   27.6% said equally effective

o   5.7% said less effective

o   7% didn’t use merchandise. 

These types of responses would have been unheard of twenty years ago.  Traditional merchandise awards had been the backbone of the incentive awards industry because they drove all the profit.  There was only a small handful of suppliers selling gift cards and only to a limited market.  Today gift cards are very well accepted as an award that will drive performance.  They no longer have that “impersonal” label that was given to them by all the traditional merchandise suppliers when faced with them as competition. 

The Good News about Gift Cards this Holiday Season

Every time I see a positive article about gift cards I think about all the folks who work for those traditional merchandise incentive award companies who must be grinding their teeth over it.  For years they have taken gift cards to task…they are too impersonal, they are too much like cash, they don’t provide the same kind of motivation that their high cost silver bowls do, yada, yada, yada.  But try as they may, they just can’t keep gift cards down.  It’s what employees want; it’s been that way for years.  About the only reason I can think of that these companies don’t embrace gift cards as a viable award is….PROFIT!   They just don’t make much of it compared to the toasters and TVs they sell. 

 According to CeridianStored Value Solutions Inc., the holiday season promises to be robust and outlines optimistic expectations for gift card sales throughout the upcoming winter holidays. 

They report that retail buying patterns show consumers continuing to purchase gift cards for their flexibility, while the business embrace them as a way to increase sales.   

The article goes on to say that:  

·         “Nearly 60 percent of consumers say gift cards are the #1 item they plan to give this year. 

·         Consumers named gift cards as the most desired gift to receive this year (5 years in a row) 

·         Consumers spend an average of 80-90% more than the face value of the gift cards 

·         Over 50% of US employers use gift cards to recognize employee’s contributions 

·         Use of gift cards as employee incentives is forecast to increase 23% by 2012 

·         15% of U.S. corporations have annual gift card budgets of more than $100K”

The Award of Choice, with its extreme flexibility and choice is ideally suited to take advantage of this market need.  Take a look at our merchant list to see the vast selection that we have, much more than other gift card fulfillment companies.