Walmart pilots gift card trade-in service

Discussion
Dec 30, 2014

As a holiday present, the increasingly popular gift card is a double-edged sword — it gives recipients the freedom to buy whatever they want at a given retailer, but can also leave people stuck with credit at retailers where they would never shop. Generally these unwanted cards are filed away in a drawer, leaving the funds on the card in limbo.

But the more ubiquitous gift cards become, the more options displeased recipients have for getting rid of them. The secondhand gift card market is gaining steam all around, but one of the biggest companies in the game may have blown by the competition this holiday season. On Christmas Day this year, CardCash.com went live with a Walmart-branded microsite that allows users to exchange gift cards from over 200 other retailers for Walmart e-gift cards.

CardCash.com first opened its market for buying and selling secondhand gift cards in 2006. The company purchases unwanted or partially-used gift cards for a percentage of the card’s total value and then resells those gift cards on the site.

Walmart is currently considering its relationship with CardCash.com a test run, but the retailer may turn the program into a permanent fixture if it proves to be a success.

CardCash.com already has a prominent spot on another major retailer’s site. When users sell a gift card, they can opt to receive their payment either in the form of a check, a direct deposit or an Amazon gift card.

Meanwhile on the Walmart side of the relationship, walmart.cardcash.com is, according to a TechCrunch article, currently offering a 95 percent trade-in value for Amazon gift cards, one of the best trade-in deals offered. Cardcash.com calculates a gift card’s trade-in value on the basis of market conditions, and the values are subject to change based on market fluctuations.

Secondhand gift cards could very well be a boon to retailers, both because of the psychology of using them to shop and the dollars purported to be tied up in cards that never get used or fully zeroed out.

A Time.com article states that "shoppers are likely to overspend when given what seems like fake money … [and] researchers have found that consumers buy items they don’t need when they use a stored-value certificate …"

The article goes on to state that, according to a study by CEB TowerGroup, over $1 billion on gift cards went unused this year.

Do you expect Walmart’s pilot program with CardCash.com to be a success and to be rolled out as a permanent program? In what ways might other retailers get into the secondhand gift card game?

Join the Discussion!

11 Comments on "Walmart pilots gift card trade-in service"

Notify of

Sort by:   newest | oldest | most voted
Ken Lonyai
BrainTrust

It’s hard to predict whether Walmart will see success with this, much has to do with how it’s marketed and if they really give higher valuations for trade-in cards than others. There’s also a question of demographics: Are Macy’s, Apple, Nordstrom shoppers, etc., going to trade-down to a lower-tiered retailer? Probably not.

I think it would be really interesting to see them pay something like face value plus a percentage (maybe 5 percent) as a promotion or to especially to target arch-rivals like Amazon. A small loss-leader could in fact drive more sales and be a worthwhile coup.

Max Goldberg
BrainTrust

Leave it to Walmart to break new ground in the field of gift cards. They have the financial muscle and number of stores necessary to pull off a massive gift card swap. Giving 95 percent of the value of an Amazon gift card escalates the fight with their biggest competitor. Whether the program is or is not a financial success, it sends an important message to consumers and competitors. And with so many gift cards sitting in consumers’ wallets and drawers, Walmart may succeed in shaking up the market.

Bill Davis
Guest

Yes. The only downside is, do consumers want to trade in a gift card for a percentage of its current value? As long as Walmart/CardCash doesn’t drop the value of the existing card by too much, 20 percent or greater, this seems like a no-brainer for Walmart.

And if the all the value on the gift card doesn’t get used, then that’s the consumer’s issue. If you’ve got it, why wouldn’t you spend it?

Lee Kent
BrainTrust

I love the concept offered by CardCash but not sure of the Walmart connection. I can go to the site and buy any card I want or sell any card for cash. So, I’m not sure why I would opt for the Walmart micro-site.

Do I think there is a market for this for Walmart? Yes, if it is marketed right by Walmart and if Walmart offers better percent trade-ins…maybe?

For my 2 cents….

Craig Sundstrom
Guest

The success, obviously, will be dependent on the discount offered and the willingness of the (would be) trader to shop at Walmart (presumably a general merchandiser like WM would be of more use than say, PetSmart, but why anyone would trade in Amazon for WM is beyond me).

And of course—for the Nth time—this points out the inanity of gift cards in general: cash, the “the freedom to buy whatever they want at a(ny)…retailer.”

Kai Clarke
BrainTrust

No. This is pawning your gift card for a discounted value and even then, brings serious questions about the ethical intentions that a retailer has by accepting other retailers’ gift cards. This is not Walmart’s business, nor should it be.

Larry Negrich
BrainTrust

Good initiative. But why penalize a shopper with a 5% surcharge on the card exchange when they have shown their loyalty and intention to spend their money at Walmart? A 1 for 1 exchange would be more successful and would build some loyalty.

Mike B
Guest
Mike B
2 years 9 months ago

Safeway already does this. Customers will feel cheated unless it is a 1 for 1 exchange. Telling me I can have $95 for a $100 Amazon gift card won’t leave a great taste in my mouth.

I love the law in California that requires the retailer to cash out all gift cards under $10.

I expect the cash out (at less than face value) to create more negative consumer perception of Walmart.

Christina Ellwood
Guest
Christina Ellwood
2 years 9 months ago

The Walmart program fills a need especially for low income shoppers for whom the cash trade value has added meaning. It’s nice to receive a gift card and select one’s own gift but may be even nicer to pay a bill or combine the cash of several cards to buy a more expensive item. This program could be a great success.

Dan Frechtling
BrainTrust

I love this. Walmart captures business that would have gone to a competing retailer, such as Amazon. Amazon has already been paid, of course, but Walmart receives the recovery value of the card and provides the goods.

Walmart benefits. It entices the card recipient to spend card value, and then some. CEB TowerGroup estimated 65% of gift card users overspend the face value of the card, on average 38%

Amazon may or may not benefit. Amazon ultimately provides goods to the customer who bought the trade-in card. However, in a marketplace like CardCash.com, that may be an existing Amazon customer hunting for deals on the purchase they already planned.

As Ken and Larry say, Walmart may be willing to pay a premium to get this business, but that premium may be based on secondary market value. After this pilot, Walmart can see how much overspend it earns from this diverted customer and decide if it wants to go big—and pay over card face value.

J. Kent Smith
BrainTrust

I’ll let you know soon as I gather up the few dozen partially used largely forgotten and painful to use gift cards in my house. πŸ™‚

wpDiscuz

Take Our Instant Poll

How appealing do you think a gift card swap program such as Walmart’s Cardcash is for consumers?

View Results

Loading ... Loading ...