One business research firm, TowerGroup in Massachusetts, has estimated that $7.8 billion will end up unredeemed for 2007, out of $97 billion in gift card value purchased by consumers. Dave Sievers, a consumer products and retail expert for Archstone Consulting in Stamford, Conn., believes that as many as 20 percent of gift cards could be going unused, based on his conversations with retail clients.
[From San Jose Mercury News - When you buy a gift card, it's not the retailer who's supposed to get a present]
I have always wondered about the feasibility of a secondary market for gift cards, which by every actual report and estimate are experiencing monstrous growth in the retail sector in all categories and will continue to do so. But it is no secret in retail sectors that these cards are a gold mine for retailers for another reason altogether, the number of cards that go unredeemed each year and eventually get washed off the books.
Let’s say you have a $50 gift card at Home Depot and you know you won’t be going to Home Depot any time soon, and I have a $40 gift card at The Body Shop, which I can guarantee I won’t be using. It’s worth it to you to trade your $50 card for my $40 card along with a $10 iTunes gift card I also happen to have and would probably use but am willing to trade. Perhaps we negotiate a settlement where you get my $40 card and $5 cash for your $50. Maybe each party just sells their cards in the market for best price and buys what is desired for best price.
Buying and selling gift cards on eBay is a rather obvious marketplace opportunity but many market demand specialization either because of the inefficiencies of broader markets or the specialization of the mechanics for the item category in question. The exchange of gift cards for money is already happening on Craigslist and in other places, why not a specialty market?
Gift cards, also referred to as “stored value cards”, have no expiration date in many states, including California, making them even more appealing for online trading.
Card Avenue is one such secondary market for gift cards.