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theinvestor
12-27-2011, 07:27 PM
Gift cards are a multi-billion dollar industry in Canada, but for some, the cards are never used.

Some people simply forget they have them or they're just not suitable.

Consumer Reports Magazine reported that in 2009 Canadians spent about 6 billion dollars on gift cards.
Brent Tkachuk manages a Boston Pizza in Regina.

He said gift cards make for big sales during the holidays.

"Our store does about 500 dollars a day in sales."

But the magazine also said that about one out of four gift cards go unused.

That's about a billion dollars wasted every year.

A new Canadian company lets people trade their gift cards for cash — and then sells them to others at a discounted price.

It's all done on the company's website called cardswap.ca (http://cardswap.ca).

Krista Stevens checks the site everyday.

"I'm a new mom at home and so any way we can save money is good."

People just have to type in the store the gift card is from and its balance and site will give them a quote.

If the quote is accepted the website sends a cheque to the seller.

The gift card can then be bought by other Canadians.


http://www.cbc.ca/news/canada/saskatchewan/story/2011/12/27/sk-gift-cards.html

FYI for those who do not know. This company was featured on Dragon's Den and there was a deal made.
The site makes over 1M in revenue but only gets about 10% of that in profit.

wzhxvy
12-27-2011, 08:41 PM
I wonder if this will last...and if so...if these guys have the scale to compete. But I do like some elements of this...there is quite a bit of fraud in gift cards as well so I guess that is also the "unspoken" about this business and why their margings are 10% and not 30 or 40%.

canuck
12-27-2011, 10:07 PM
Here's the pitch from Dragon's Den
http://www.youtube.com/watch?v=F3RKV6qd4T4

While I'm not a big fan of gift cards, I can see this site filling a need for those stuck with cards they're not going to use. But how hard would it be to cut out the middleman and just sell your card through Kijiji or Craigslist?

From a consumer perspective, I personally think gift-cards make people lazy and completely monetizes gift-giving. I went xmas shopping with a friend a few weekends ago, and he bought every single person on his list a gift-card, and saying that he expected to break even because he was expecting gift cards from everyone too. What's the point?

Plus, it's not a secret the industry actually factors into their profit projections a specific percentage of people who they count on to forget, lose, or don't use their gift cards. And up until a few years ago, before the government stepped in, companies were robbing people through monthly dormancy fees until the gift cards reached a zero balance. I believe this is now an illegal practice in most provinces.

wzhxvy
12-27-2011, 10:35 PM
Just saw the video...interesting. I think they are overpaying for gift cards personally. I would pay 75% on average. I also do not like the cash flow model...as I said before you need serious scale for this.

canuck
12-27-2011, 11:27 PM
I don't think 75% is going to cut it for the customer. Losing $25 on a $100 gift card is too big to stomach even on a card you'll never use. Everyone has a different sweet spot for which it may seem attractive, and for me, I may be willing to lose a max of 15%.

wzhxvy
12-28-2011, 08:15 AM
Yes from a customer point of view it might be too much but as these guys get bigger, they will be floating a large amount of cash, and their returns will end up being not sufficient. However, when I say this, they maybe not floating much if they are cutting checks and getting paid online but still the cash flow element of this cant be ignored.

theinvestor
01-01-2012, 09:04 PM
good time for this site now.. I am sure plenty try to sell their gift cards after Christmas.

Twister
01-01-2012, 10:23 PM
I have sold gift cards on cardswap.ca and my experience with the site was ok. I sold all my cards at a 10% loss plus fees and shipping. Its convienient.

wzhxvy
01-02-2012, 10:11 AM
For people who get a ton of gift cards, then yes this makes sense.