Magnify Your Margins With Gift Cards

by Intrepid Payment Processing
The gift card industry is huge. According to a recent study, you’re probably going to both give and receive a gift card this holiday season. We give them for all the obvious reasons: they’re super convenient, easy to mail, easy to budget and perhaps most importantly, everyone loves getting gift cards.
But even when combined, the gifter and the giftee only make up half the equation. What about the seller? Yes, the retailer. They probably make out the best of anyone.
How so?

For starters, people don’t use them! CardHub estimated that from 2008 to 2014, Americans generated $44 billion in unredeemed gift card value . This suggests that the average American has over $100 in gift cards that they haven’t used. Whoa.

This is a best-case scenario for a retailer, right? They generate revenue without losing any product. Brilliant! Their economics professors would be so proud!

But it gets better because even the consumers to do use their gift cards may very well spend more than the actual value of the card once they’re in the store. It happens all the time, doesn’t it?

You need a TV…you get a $100 gift card from Best Buy as a birthday present… and BAM! You just saved a hundred bucks on your TV while Best Buy just made a high-margin sale. You may have normally purchased that same TV from Amazon or Walmart, but since you had that $100 card from Best Buy that was the best play.

You can trickle this down to retailers with a much smaller sales funnel, too. If we talk in terms of growing your customer base, offering gift cards makes a ton of sense. It’s been found that 72 percent of consumers who visit a business for the first time simply because they received a gift card to that business end up returning to that business. Again, this happens every day.

 So, if I’m a retailer, I’m not only going to offer gift cards…I’m going to promote the heck out of them. There is a lot of margin to be made!

Copyright 2015 Intrepid Payment Processing