Gift cards can be a double edged sword. I recently got married and received a number of gift cards to stores where I never shop. But at the same time, I don’t want the value of the card to go to waste. There have been a number of auction-like marketplaces, such as Plastic Jungle and Rackup, that have popped up to allow users can buy and sell their gift cards to each other in an eBay like interface (you can also do this eBay itself). Y Combinator startup CardPool is entering the space but with a slightly different twist to its model. Card Pool allows users to both buy and sell gift cards.
CardPool buys people’s unwanted gift cards, and sells gift cards at large discounts. Though the idea isn’t new, Card Pool has an attractive and fair pricing model. They judge the buyback and selling amount by how desirable the cards are. For example, you can sell a BestBuy’s gift card, which is highly desirable, to CardPool for 90 percent of its value. And on CardPool’s site, you can find a Best Buy gift card for 5 percent off its original value. On the other hand, 1-800-Flowers’ gift cards, which are not as popular as Best Buy’s cards, are discounted by 30 percent on the site.
I’m a fan of the site for a few reasons. The plus about CardPool is that it allows returns for cards for up to 100 days, and many of its competitors don;t have an expansive of a return period. Also, CardPool won’t sell gift cards that have expirations or fees. CardPool makes money off the spread between buying and selling cards. The startup is lean, with its two co-founders running the site, keeping overhead low. The company is also looking into forging partnerships with retailers like Barnes and Noble, Best Buy and others to sell their gift cards at discounted prices from CardPool.
CardPool also has talent on its side. Co-founder Anson Tsai developed online music player Anywhere.com, which was acquired by Imeem in 2008.