Trade you a J. Crew for latte at Starbucks

The Star-Ledger, December 30th, 2005

The Star-Ledger Archive COPYRIGHT © The Star-Ledger 2005

Date: 2005/12/30 Friday Page: 001 Section: NEWS Edition: FINAL Size: 922 words

E-sites help unload unwanted gift cards

By SAM ALI STAR-LEDGER STAFF

Gift cards may seem like a perfect gift - until, of course, you get a bunch that are really, really off the mark: a $50 Toys "R" Us gift card when you have no kids, for example, or a $30 one from counterculture clothing retailer Hot Topic even though you're clearly a Banana Republic or J. Crew kind of guy.

Unlike that cashmere reindeer sweater you plan on returning first thing tomorrow morning, unwanted gift cards can't be exchanged for anything else.

And up until recently, there wasn't a darn thing you could do about it.

But now, a vibrant secondary gift card market has emerged at sites like SwapAGift.com and CardAvenue.com, which allow the recipients of unwanted gift cards to trade them among themselves or buy them outright for cash, often at deep discounts.

On Cardavenue.com yesterday, a $20 Best Buy gift card was going for $15.75 cash with three hours left to bid. Meanwhile, a user on SwapAGift.com was looking to trade a $100 Tiffany card for $90 cash or another gift card of comparable value from Macy's.

Gift cards also are popping up at mainstream online marketplaces like eBay, which had more than 5,000 listings for gift cards yesterday, many posted after Christmas. One enterprising poster from Middlesex on Craigslist was hoping to swap $400 in gift cards from Lowe's for carpentry work.

Asked why he was willing to part with his $50 J. Crew gift card on eBay even if it meant selling it for less than face value, Brian Elias, a 35-year-old Morris Plains resident, said he's not a big fan of the retailer's polished, preppy look. He sold the card Wednesday for $41.01 - an 18 percent discount.

"It was given to me as a birthday present and they have nothing at J. Crew that I would want," said Elias, who describes himself as a T-shirt and jeans kind of guy. "J. Crew is not my style, so it didn't do me any good."

No doubt, gift cards are growing in popularity - one reason consumers are swarming to sites that help them dispose of the ones they don't like or no longer need.

Although there is the occasional oddball story of a $20 Starbucks gift card selling for $20.25 (not including shipping costs), for the most part these sites present an opportunity for buyers to pick up gift cards at huge savings.

Most cards sell for 10 to 15 percent off their full value, sometimes more.

The National Retail Federation, an industry trade group, estimated that gift card sales this holiday season hit more than $18 billion, a 6.6 percent increase over last year's record high, with the average shopper spending about $88, or 15.6 percent of his or her holiday budget, on gift cards.

Total gift card sales this year are expected to surpass $65 billion, according to Tower Group. And some studies estimate that up to 10 percent of the dollars on those cards - or $6.5 billion - goes unspent.

That was one of the factors that prompted 35-year-old Mary Jane Kelly, who has a master's degree in finance, and her husband, Michael, 42, a former securities trader on Wall Street, to open SwapAGift.com two years ago.

"This really started as a way for us to solve a problem," Kelly said. "We had all these gift cards we weren't going to use. They weren't stores we shopped at, and we thought there has got to be a way to trade this with someone else."

Now the site boasts 15,000 registered users and employs 10 people. Kelly said about half of all transactions occur from November until the end of January.

Over the past two days alone, 700 people have registered on the site, she said.

Although the cards range from luxury retailers like Barneys New York to video stores like Blockbuster, Kelly said gift cards from hot merchants including retailers like Home Depot, Lowe's, Wal-Mart and Target, typically have a shelf life of zero.

The day after Christmas, five $500 Home Depot gift cards were posted on the site.

"They were all gone the next morning," Kelly said.

SwapAGift.com also buys gift cards directly from individuals for cash at a discounted rate of 70 cents on the dollar.

"We buy low and sell high and make money off the spread," she said.

Typically, sellers pay a transaction fee of $3.99.

Although it's always a good idea for buyers and sellers to keep their guard up, a number of sites, including SwapAGift.com, have built in checks to verify the gift cards being bought and sold are fully loaded.

For example, Robert Butler, the head of St. Louis-based Cardavenue.com, said he validates cards listed at more than $100. If a sale goes bad, his site will cover the value up to $100.

Butler said his site used to charge a fee, but now consumers can buy, sell or trade gift cards on his site for free.

For its part, eBay caps the value of gift cards that can be auctioned at $500. It also limits transactions to one per week for each seller, as a way to prevent the sale of stolen cards, according to the company.

Other Web sites offering similar card swapping services include Giftcardbuyback.com, Giftcardsagain.com and Certificateswap.com.

"The gift card market is a $65 billion-a-year market," Kelly said. "Of course, that's not our market. We're in the secondary market, but I always tell people that even if we take a small percentage of that $65 billion, it isn't bad. The gift card market will continue to grow and so too will this secondary market."

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