

Gift Cards Are Worth Less Than You Think [data viz] - kapilkale
http://www.giftrocket.com/your-gift-card-worth

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scott_s
A gift card's value on the open market is not necessarily the same as its
value as a _gift_.

We respond differently to cash than to gift cards. If I receive cash, I tend
to treat it the same as all other money I receive. Mentally, it goes into my
"income" pile and I'm just as conservative with it as I am with all of my
other income.

On the other hand, if someone gave me, say, a Best Buy gift card, I _have_ to
spend it at Best Buy. The giver is saying "I want you to have a fun electronic
something, but I want you to pick which one." I'm going to use it to splurge
on something I _want_ as opposed to something I _need_. (With that in mind, I
find grocery store gift cards odd.)

It also wasn't obvious to me until the end that this was put together by
people who have a product that compete with gift cards.

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ROFISH
Grocery store giftcards aren't really for presents, they're more for
situations like parents ensuring a college student is spending money on food.

~~~
fennecfoxen
Ah, college kids. Say... do they sell beer at that grocery store?

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machrider
Is this where I bitch about those "cash" gift Visa and Mastercards? (The ones
that are essentially a prepaid credit card with a fixed balance.) I've
received a couple of them and they're so bizarre to me. First of all, they
apparently cost $3.95, which is a 15.8% fee on a $25 card. (You would think
Visa and Mastercard would be so happy to have more cards out there causing 3%
transaction fees to happen that they'd give the cards away at face value).

Then they're actually less practical than cash. You have to spend _exactly_
the card balance to use them effectively. So if I swipe it at Starbucks a few
times until it's down to $1.49, the next transaction will simply be declined!
I'd have to ask the barista ahead of time to split the transaction and charge
exactly $1.49 to the card (so I have to mentally track the balance or call
Visa/MC every time I use it). I'm guessing it's more likely that people reach
the point where the card is declined and then throw it away, with Visa/MC
pocketing the remains.

If you want to use it online, you have to go to the Visa/MC web site and
register it (provide your personal details) so that the card is associated
with billing details. Lovely side effect: they get your personal contact
information to spam you with.

For the love of all that is rational, please don't give me these cards, I'd
much rather have $28.95 cash than $25 + extra hassles. The best use of these
cards I could come up with is converting them to a gift card at a particular
store you actually like. Store gift cards have correct overflow semantics -
the full balance of the card will be used and the register will ask you to
come up with the difference.

~~~
kapilkale
Amen!

There are a lot of niche use cases for them which most people don't see. For
example, businesses use them to pay contractors when they owe more than a
certain amount in order to avoid tax liability / paperwork.

We didn't pull much data on them, but I think you can buy them at a discount
as well.

~~~
dhyasama
Hey Kapil, This is a tangent, but who designed your site? It's gorgeous.

~~~
kapilkale
Thanks for the compliment. Mike Kus designed it, though things like this
content piece we did ourselves.

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georgemcbay
The value I place on a gift card bought online has to be adjusted for trust
and convenience.

If I'm buying an Amazon gift card online from Amazon, I will happily pay $100
to get a $100 gift card. If I'm buying an Amazon gift card from someone on
ebay, of course I'm not going to pay $100 for it. Why would I when buying the
same card from Amazon would be far more convenient and Amazon has proven
itself far more trustworthy to me than any random ebayer?

However, this reduction in value due to a decrease in trust & convenience says
nothing about the actual value of that gift card to me or the receiver. I'm
simply trading some increased risk of being ripped off for some of the cash
value of the card.

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antoncohen
Their data gathering and thesis are flawed. Online selling price has little to
do with value. If people were selling cash online they would not get 100% of
the value.

Gift cards sold online could have been bought with stolen credit cards
(seriously, watch out!). The person selling the cards will take well below the
value because they didn't pay anything. The person buying the card is assuming
a huge risk, the card may be with nothing.

The true value of a gift card lies in the eyes of the receiver. And like any
gift you have to know the person you are giving it to. A $400 gift card for
Agent Provocateur is worth a lot to a girl who loves lingerie and appreciates
$200 bras, but it's not worth much to someone who only likes functional cotton
underwear. I like computers, but a $400 gift card to the Apple Store would be
useless to me because I don't want to spend the extra $800 it would take to
get a computer. Even a $10 Starbucks card is worth nothing to someone who only
drinks Diet Coke, but worth a full $10 to someone who drinks Starbucks every
day.

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LogicX
I was intrigued -- until I tried to send one - and paypal auth page showed a
higher amount than my gift card amount -- FAQ says $1 + 5%. Get real.

They're absolutely right: CASH gets you more!

~~~
kapilkale
Like any other payments company, we face transaction fees.

We're pushing a bunch of changes tonight since we're migrating to a new
payments system, but afterwards I'll pass you information that should let you
purchase without fee.

Thanks for the feedback regardless.

Kapil

~~~
dantheman
Don't most gift cards their money on the interest the money earns while the
company holds it (iirc float)? and then on the unclaimed cards, if they're
allowed to expire?

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GregBuchholz
Who is going to be giving used gift cards this year?

But more seriously, someone needs to make a firefox plug-in or app that
automatically searches for discounted gift cards when I happen to be browsing
Amazon, etc..

And there needs to be a search engine for these gift cards, because I want to
buy the 40% off Harbor Freight variety.

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bnewbold
What about Amazon? Seems to approach cash value. Can somebody explain what's
happening here: [http://www.ebay.com/itm/Amazon-Gift-Card-50-Fifty-FREE-
SHIPP...](http://www.ebay.com/itm/Amazon-Gift-Card-50-Fifty-FREE-SHIPPING-No-
expiration-amazon-
com-/290641980801?pt=US_Gift_Certificates&hash=item43ab9cad81)

~~~
CaveTech
I know a few cases where people have sold gift cards above market value.
Mostly it's because the purchaser is unable to buy from the shop because of
their location, credit card brand or other enforced block.

Many online games for instance block purchases from Israel due to the large
amount of fraud. Israels will then purchase game cards on ebay (often above
market value) from people who bought them in North America.

~~~
patio11
For similar reasons, I once paid a store in California $90 to open a box that
you could buy in the store for $50 and read me 15 digits.

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frossie
C'mon Uncle Patio, tell us what was in the box....

~~~
patio11
A bunch of stuff I didn't care about plus a CD key for WoW, on release day.

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leot
I thought the uptake was going to be that the whole concept of a gift card is
ludicrous. Instead I'm sold on using a _different_ kind of gift card.

Don't get me wrong -- I often prefer getting gift cards to getting something
useless, but they just seem like a cover for not knowing me very well. I
suppose they make sense when there's likely to be an asymmetry in charity. But
if you're going to give cash, why give at all? What use is it to exchange $50
bills?

~~~
RodgerTheGreat
The best explanation I've ever heard for gift cards is that they force the
recipient to spend money on "something fun" rather than being strictly
practical. Some gift givers would rather know you went out for a nice meal or
bought a new tie or something than that you used their gift to buy gas or
everyday groceries. I'm not sure I agree with this sentiment, but I can see
where it's coming from.

~~~
kapilkale
The big thing that flies in the face of this is that people spend tons of
money on gas, grocery, and Wal-Mart cards. Some of those might be for
underbanked people, but many aren't. With Amazon, for example, I'd guess most
people just instantly apply the credit to their account and don't think about
it after that.

There's a thoughtfulness treat-yourself aspect to them, and there's a
practical make-sure-this-can-be-used aspect. The data seemed to point that the
practical aspect is missing, the gift cards are valued less in secondary
markets than their more practical counterparts.

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jc4p
While I love the interactive infographic my favorite part of this is referring
to Frederick's of Hollywood as a place "no one has heard of". My girlfriend
sends me at least 4-5 links to items on that website every few weeks. Where
can I get one of those gift cards for 50% off?!

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joshu
Big box stores give gift cards in return for falsely returned items (get a
receipt, walk out with the same thing twice; this is why the guy at the door
wants to mark your receipt with a market.)

So of COURSE people are willing to take a lower price for their $100 gift
cards - they paid less than $100.

My theory is that the gift card economy is a shadow economy for people who
need to use plastic for whatever reason but are unable to open accounts (lack
of documentation I guess?)

~~~
joshu
Why the downvote? I should have said hypothesis instead of theory.

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jrockway
So, who wants to sell me a $100 Whole Foods gift card for $91?

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wtvanhest
I actually went looking.

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aaronjg
I really like the scatter plots. Are you using a plotting library to do it, or
do you have your own code?

~~~
kapilkale
We used Moocharts, but Jonathan, my cofounder had to modify some of the source
to edit stuff that was hardcoded like axis titles and popup stuff.

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tycho77
I've found that prepaid credit cards work well as gift cards without the
restrictions.

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tkahn6
So am I to understand that GiftRocket's whole business model is predicated on
the belief that giving cash is rude?

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usaar333
Yup.

"GiftRocket combines the thoughtfulness of a gift certificate with the
flexibility of cash."

Gift certificates are an $80B market in the United States, with a business
model more or less based on the same belief.

~~~
sethg
I have a whole pile of certificates like that in my desk. I call them
“checks”.

