EcommerceBytes-NewsFlash, Number 1687 - December 18, 2007     3 of 4

Economist Studies the Resale Value of Gift Cards on eBay

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An economics professor at Loyola Marymount University analyzed auctions of gift cards on eBay and found that gift cards from certain stores fetched consistently lower sale prices than others. Professor Jennifer Pate's research suggests gift cards are less valuable to recipients when given for stores that offer less product variety and fewer locations.

The study, which was published in the Journal of Economic Perspectives, also revealed that the average gift card is resold with a 15% discount. "In other words, people who receive gift cards are willing to accept around $85 in cash in exchange for a $100 gift card. For many gift givers, this means that a $100 cash gift will go much farther than a $100 gift card," said Pate.

Ranked according to their resale value, the ten "best" gift cards are Home Depot, Lowe's, Office Max, Circuit City, Starbucks, Old Navy, Wal-Mart, Target, Staples and Best Buy, all selling for above 86% of their original value (a 14% maximum discount). The five "worst" gift cards are Tiffany & Co, Victoria's Secret, Abercrombie & Fitch, American Eagle, with Express coming in last at 74% (a 26% discount).


About the author:

Ina Steiner is co-founder and Editor of EcommerceBytes and has been reporting on ecommerce since 1999. She's a widely cited authority on marketplace selling and is author of "Turn eBay Data Into Dollars" (McGraw-Hill 2006). Her blog was featured in the book, "Blogging Heroes" (Wiley 2008). Follow her on Twitter at @ecommercebytes and send news tips to ina@ecommercebytes.com.


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