Today, the demand for gift cards shows no sign of slowing down. The gift card market was valued at $835.2 billion in 2022 by Allied Market Research, with projections that it will increase by about 5x times in size to reach $4.2 trillion by 2032. This large and growing industry provides immense revenue opportunities for businesses big and small.
One of the unique appeals of the gift cards industry is how it is being driven by both consumer and business demand.
Consumers who don’t want to bother about what gifts to buy for friends and families choose gift cards instead. Businesses also use gift card programs as a reward and incentive system to improve demand and also encourage employees towards higher productivity.
as the research quoted above and many others suggest.
The more important question: how can your business benefit from this trend? One option is to build a gift card reseller program and resell gift cards, thus connecting retailers and other issuers of gift cards with buyers.
But how do you go about doing that? Don’t worry, that is exactly what we will discuss in this article. We’ll cover:
- Why are gift card resellers needed?
- How do gift card resellers make money?
- How to become a gift card retailer
- Benefits of being a gift card reseller
[Looking to open a new revenue stream by becoming a gift card reseller? Register on Reloadly to start sourcing gift cards and reselling them on a single platform in the most time and cost efficient way possible. Or send us a message to get answers to all your questions about gift card reselling.]
1. Why are gift card resellers needed?
Buying multiple retailers’ cards
Consider a medium-sized company that wants to reward its 100 employees with gift cards. Suppose the company just buys 100 units of $100 Amazon gift cards.
What if there are some employees who are not fans of buying things from Amazon (maybe they prefer eBay or buying in-store at Target or Walmart, for example)? Or what if some employees already have their eyes on products from a retailer (say Best Buy) and would be happier if they got a gift card from that retailer?
In these scenarios, the company, to really make its employees happy and avoid unwanted gift cards, may need to buy gift cards from many retailers rather than just Amazon. But that can be stressful and inconvenient compared to buying from a single retailer.
Well, what if they can buy all the different gift cards they need from a single point even if they have to buy gift cards issued by a 100 retailers? That is the solution that gift card distributors or resellers provide.
They buy gift cards in bulk through retailers’ gift card reseller programs and sell to individuals and businesses who need different types of cards from different retailers.
Customization
Also, gift card resellers can help businesses and other brands to customize their chosen gift cards before delivering them to the intended recipients.
Even individuals who want to send personalized messages can customize gift cards from resellers to include such messages.
The personalization that this affords can strengthen relationships at the individual and corporate level.
Below is an example of how a virtual gift card (digital gift card or egift card) can be customized to the recipient by adding a message:
Source: WooCommerce
Fulfillment
Gift card resellers also take away the stress of fulfillment (or delivery) from buyers. Instead of buying from retailers and then incurring extra costs (for physical gift cards) and spending time (for both virtual and physical gift cards) delivering, both individuals and sellers can save that time.
Reporting
Gift card resellers also provide reports that can help buyers understand their gift card purchases. This can be important for budgeting and financial reporting. Businesses can also use these reports to identify the cost of their marketing efforts and compare it with the benefits.
Quality control
Gift card distributors also perform quality control to ensure that all the cards they are reselling are valid. (And in the case that they fail, the customer can always get a replacement.) This can go a long way in fighting gift card scams.
Discounts
Most customers of gift card resellers buy in bulk. In view of this, resellers often offer discounted gift cards.
Source: CNBC
2. How do gift card resellers make money?
Gift card reselling is necessary, given all the above, but is it profitable?
The simple answer? Yes.
Gift card resellers make money by buying gift cards in bulk from various retailers at a discount to the face value (buying a $100 card for $90, for example) and then reselling to customers at a higher price.
Yes, distributors also sell to some buyers at discounted prices (for bulk orders), but there is still a premium or margin on this selling price that constitutes their profit.
But why can’t these bulk buyers purchase gift cards directly from retailers? Well, as we have seen, they often need a few cards from multiple retailers rather than a large number of cards from a single retailer. This makes it difficult for them to get the discounts that a reseller, who needs a large number of cards from multiple retailers, can get.
In essence, as long as gift card resellers continue to provide multiple retailers’ cards, customization, fulfillment, reporting, quality control, and discounts, they will always have opportunities to turn a profit.
According to Cardtonic, a gift card exchange or marketplace serving Ghana and Nigeria, resellers can make up to an average of 10% profit on every gift card sale. Financial Wolves, a personal finance website, also proposes that resellers can make up to $2-$3 on every sale.
Different websites give different numbers for the potential payout. The main point here is that it is a profitable business model, though one that depends mainly on volume.
3. How to become a gift card retailer?
First, who can become a gift card reseller?
Anyone can become a gift card reseller, including individuals and existing businesses.
As we will see, any existing business (even small businesses) with a website or app can decide to venture into the business and create new revenue streams. Such businesses can even sell at discounted prices to customers from their main line of business.
But how can one start the gift card distribution business?
There are two broad ways to go about it: independently and through a third-party integration.
How to start a gift card business independently
Here, the business goes about the whole process of becoming a gift card distributor independently, without tapping into the resources of any third party.
Some of the steps to be taken by those towing this line include:
- Finding gift card retailers: Before selling gift cards, a distributor will have to own them. Consequently, the distributor will have to source for retailers and then purchase gift cards in bulk from them.
They can do this by subscribing to various gift card reseller programs: Amazon gift card reseller program, iTunes gift card reseller program, Visa gift card reseller program, Mastercard gift reseller program, Target gift card reseller program, among others.
In essence, the distributor must find ways to stock gift cards (especially digital gift cards).
- Verify cards: Before putting cards for sale, resellers must verify their authenticity. Like every business, it is important to build trust. Therefore, going the extra way to confirm the cards are still valid is a stress that is worth it.
- Create a store for them: If the business already has an online ecommerce store where they sell other physical or digital goods, they can easily create a new section for gift cards. If this is their first time, then they can subscribe to an online store provider (platform) like Shopify or WooCommerce so they can display their gift cards for sale.
- Customization and fulfillment: The distributor will also need to provide customization options so that buyers can personalize the gift cards before delivery. Delivery (fulfillment) is easy for digital or virtual cards – it is nothing more than sending a text message or email.
Physical cards will require physical delivery which will lead to extra costs that can be passed on to the buyers.
Some resellers also provide printable gift cards, offering buyers a choice between digital and physical cards.
- Payment: The online store a distributor chooses will have different payment gateway options. By selecting one of them, the reseller can start accepting payments through debit cards, credit cards, bitcoin, among others.
- Marketing: Established businesses already selling something might not have any issue cross selling gift cards to their customers. A distributor who is just starting out may need to spend some time and money marketing to consumers.
Finding a niche may be a better way to become profitable in this business, according to Ignacio Aranda Morea, Head of Growth and Partnerships at BONOXS, a game gift card seller.
Gift card resellers should therefore consider specializing in a particular type of gift cards (game gift cards, clothing stores gift cards, electronic stores gift cards, etc.) and becoming a trusted partner for retailers and final consumers.
- Reporting: For regular customers, a standard report of their buying activities can be helpful.
- Dealing with fraud: Chargebacks and fraud are the biggest danger to watch out for when reselling gift cards, according to Ignacio.
To combat this, resellers need to deploy fraud prevention strategies like multiple authentication, requiring buyers to create an account, tracking individual gift cards, among others.
How to start a gift card business through a third-party integration
Third-party platforms like Reloadly make the gift card reselling business much easier. How so?
- No need searching for retailers: Searching for retailers can be a time-consuming endeavor. A platform like Reloadly brings all the popular retailers to you such that buying gift cards is as seamless as possible.
- Ready-made store: Third-party integrations also come up with a ready-made store that will appear on your website or app. From this site, buyers can find you and create orders. If you don’t have an online store before, you won’t need to bother creating one.
- Easy payment integration: These third-party platforms also help you easily integrate with a payment gateway like Stripe, Paypal, among others.
- Fast delivery: Through these platforms, you can deliver digital gift cards in a few seconds. You can also complete bulk orders in no time.
A platform like Reloadly also provides multiple integration options depending on your development capabilities.
Those with such capabilities can easily integrate Reloadly through the Reloadly gift card reseller API while those without such capacities can use the Reloadly plugin available on WordPress.
Reloadly provides about 14,000 gift cards from over 300 brands that you can purchase at competitive prices. It also allows you to sell to over 25 countries in 4 regions, supporting over 100 local currencies.
4. Benefits of being a gift card reseller
New revenue stream
Established businesses can open a new revenue stream by selling gift cards to existing and new businesses. And completely new businesses can also build a sustainable business on the model.
Growing industry
Participating in a growing industry is a tested strategy for a business to grow. And as we have seen, the forecast is that the gift cards industry will keep growing.
As Francesca Nicasio, a retail and ecommerce expert, puts it, “gift cards are a big boon for business, which is why if you aren’t offering them at your stores, you could be missing out on a lot of sales and customers.”
Opportunities for value add
Customization and fulfillment (especially for physical cards) also provide opportunities for gift card resellers to add value and make more money.
Low overhead
If you focus only on digital cards, then your overheads are limited to the cost of maintaining an online store (if you are doing it independently) or subscribing to a third-party platform. And if you deliver physical cards, you will incur transport costs that can be passed on to buyers.
Simple when digital
When you stick to digital gift cards, delivery is as easy as sending an email or text. It’s not a business model that will stress you.
[Are you ready to sell digital cards online instantly? You can make the process as seamless and cost-effective as possible by signing up for Reloadly and integrating our API or plugin on your website or mobile app in less than a day.]
Takeaways
- The gift cards industry is booming and the expectation is that the growth will persist.
- Gift cards resellers are important to the industry and they have a viable business model.
- Individuals and businesses can enjoy a new revenue stream from reselling gift cards.
- Gift card distributors can work independently, sourcing their own supplies and building their own stores.
- Alternatively, they can integrate their websites and apps with a third party that will make the business easier and more cost-effective.
