The Gift-Card Economy

With the end of the Christmas shopping season - and merchants becoming thinner for another year - a small group of online entrepreneurs is setting up shop around the only bright spot in retail: gift cards.

Yes, the gift of "I make almost no effort" has turned into a $ 90 billion dollar industry, according to Towergroup, a Massachusetts research and consulting firm. Sales of gift cards - that is, merchandise for goods and services - increased from 57 billion dollars in 2005 to $ 97 billion in 2007. While dollar data dropped in 2008, the first reported data, retail tracking service, found that buyers actually purchased more gift cards than in the first year. They just keep less money on them.


"When the dust settles, we will see that the value of the gift card is over $ 100 billion by 1," said Brian Riley, director of research at Tower Group. Entrepreneurs rely on nonlinear entrepreneurs, who have built a business around this event. How to deal with plastic fever:

GiftZip.com
What it is: Gift cards without cards. Buyers select the merchant "card" and an e-gift card is displayed in the recipient's inbox, which can be redeemed in store or rede online. "My goal was to put this model of department store kiosks online," says founder Sam Hogg, who took a sustainable supply chain course at Michigan State University.

Who's: Mass (Forever 21, goal) and dark special (culinary tea, shiny pet ornament)

That's why it's worth it: Traders pay a percentage of their sales or drive traffic to East Lansing, Michigan, the company, or put their logo next to a larger company like Target. GiftZip debuted in June; Pigs are likely to be separated early next year.

PlasticJungle.com
What it is: A trading post for new and used gift cards. Consumers can buy, sell and trade - but there is a liquidation of sweet spot cards through the plastic jungle, where users receive 65% to 85% of the card value depending on the merchant's popularity. Plastic Jungle will return the card at a discount (10% to 15% off face value). "We provide people with the opportunity to live in forgiveness," says Tina Hanson, founder and executive vice president of strategy.

Who's Who: A smorgasbord of 140 retailers including Old Navy, Sears, CVS and Cheesecake Factory.

How it pays: Since its start in Mountain View, California in 2006, the company has grown 60% since quarter, but this has not been profitable. Nevertheless, Hanson jumped into venture capital in March and has a new CEO - former eBay marketing chief Gary Briggs.

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