Gift Card Reselling Primer
Right now is a great time to learn about reselling gift cards because retailers tend to go crazy with deals this time of year. Additionally American Express releases a ton of valuable Amex Offers which can often be taken advantage of. So how do you get on board and start doing it? Well, let’s take a look.
The Basics
First off, I think it is important to understand what gift card arbitrage is. Thankfully we have covered it before on the site. I highly recommend reading the following:
- Gift Card Arbitrage – Guaranteed Money Makers & Big Credit Card Rewards
- Advanced Gift Card Arbitrage & Reselling – Bulk Accounts & Finding the Best Deal
Basically the idea is to buy gift cards at a discounted cost and sell them at or above what you pay plus earn some credit card rewards. But why would large gift card resellers pay you a premium for your card? Why not go buy them directly? Well there are a few reasons.
Limits – Many stores have a per person limit. Resellers can’t buy unlimited quantities of the best deals. They need you for this.
Float – By paying you for the cards and having you get the deals, they have less risk and less overall float. They can buy cards when they are ready to sell them and avoid getting stuck with too many of one brand.
Regional Sales – Some opportunities are highly regional. They may not have access to the deal, but you do!
5 Things You Must Know
Ok so you are ready to purchase your first gift card that can be resold. Here is what you need to know before beginning.
- Only buy cards from the store directly or an authorized seller – For example, cards purchased from PayPal Digital Gifts on eBay are first hand since you are buying from an authorized seller. Cards from Card Cash on eBay are not first hand since Card Cash is a reseller. They buy cards from others and re-sell them. You never want to buy and sell third hand cards.
- Have a good tracking system in place – As you scale up it can be so easy to misplace cards or lose track if/when you sold a card. Have a spreadsheet and log all of your purchases and sales.
- Get to know the resellers – If you are going to sell gift cards you need to sell them to someone. Gift Card Wiki has a list of all resellers and their public rates for specific brands. Keep in mind that most resellers will only buy limited amounts of cards from you until you establish a relationship with them. Its best to reach out to do this sooner rather than later.
- Mistakes are costly – While tracking cards is important, mistakes at point of sale happen too. Always check your card numbers against the receipt and verify everything is as it should be.
- Prepare for the float – When buying gift cards sometimes it can take time to sell them and then depending on who you sell them to, it can take a couple of weeks to get paid. As with anything, be prepared for the float and don’t float more money than you are comfortable with. There is always the off chance that something catastrophic could happen and you could be stuck with those cards for awhile.
Finding the Best Deals
Ah. The magic is in the deals. It isn’t always easy to find deals that can be re-sold, but that doesn’t mean it is impossible. Here is what to look for.
Amex Offers – See if the discount offered by Amex is enough that the card can be re-sold at a profit. Also look to see if portals will work to buy gift cards online.
Office Supply/Grocery Stores – Combine digital coupons and instant discounts with 5-6X rewards on certain cards and you are winning.
eBay – This was once better with portals and eBay Bucks, but occasionally you can find a great deal and earn 5X Ultimate Rewards when buying cards from PayPal Digital Gifts with a Chase Ink Plus/Cash card.
Think outside of the box – Sure blogs like this one cover the most popular national deals, but there are so many local/regional offers available as well. Think outside of the box when looking for deals and always keep your eyes open.
It’s About the Brand
Some brands are better than others. Some stores are in better financial conditions than others. If a company constantly discounts their gift cards then you will need to get a STEEP discount in order to do well. Chances are if they have to discount their cards that much, then they aren’t very popular either. They might also be desperate for cash which means holding their cards can be a gamble. *Cough Sears/Kmart *Cough
On the flip side, look for companies with HUGE demand. For example iTunes is a hot card because millions and millions of people have iPhones. Yes they do discount cards, but there is so much demand that the resale values are pretty good. Build a Bear Workshop on the other hand……well….no.
Approaching Resellers
I have bulk relationships with several resellers. Unfortunately due to high demand whenever I write about them, I have been asked not to. 🙁 With that said, Gift Card Wiki has comparison rates for all of the major resellers. That will give you a list of companies to research and approach. Don’t just blindly do business with a company. Look at their financial position and their customer reviews.
Companies like Gift Card Zen and SaveYa are backed by huge money. Other companies are small, but well run and thus I feel comfortable selling to them. It takes time to research and build relationships in order to feel comfortable with this. Always start small and see how they do. If they seem to struggle to pay (like Gift Card Rescue) then that is a red flag.
Why Resell Gift Cards – Secret Sauce
I put this at the end because I want to reward you for reading this. The truth is that opportunities with gift card reselling come and go, but there are a ton of them right now. Between iTunes deals and other sales people are racking up huge spend and credit card rewards. Some people racked up hundreds of thousands of Ultimate Rewards points during a recent Staples gift card sale of a particular brand.
Conclusion
I have been buying and reselling gift cards for years and thus it feels very comfortable for me. I have a tracking system down, have relationships with companies I can sell to and know which brands I want to buy and which ones I want to avoid. Additionally I am comfortable with my float and have contingency plans if things were to go wrong. If you are in the same position or feel you could be, then perhaps this thing is for you.
Feel free to share any questions or experiences you have with gift card reselling in the comments!
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How much do you think one could make doing this like a full time job?
Would love a discussion of your contingency plan in case something were to happen to a company.
It is like anything else you are assuming some risk. Look for trouble signs and don’t overexpose yourself. There is always risk but getting to know the people at the companies and building a relationship can help. There are also companies like SaveYa and GiftCardZen which are backed by huge corporations which can help build a better safety net.
[…] There are still a number of great gift card deals on eBay including discounted card for: iTunes, Cabela’s, Sears, Southwest Airlines, Hotels.com, Xbox Live & more. Many of these can be resold for a profit. […]
Shawn, can you post a template of the spreadsheet you use to keep track of your GC purchases & sales?
I’ve been in the game for a few weeks, and already am starting to lose track of what I’ve received, sold, received payment for, etc.
Thank you.
I second “Miles”. A sample spreadsheet which is simple enough but comprehensive eonough to cover all the lose ends will be highly appreciated. Thanks
completely agree, I would love to see what you use!
I’ll see if I can make a copy and put up a prototype.
[…] card deal. Once again you can purchase $150 Lowe’s gift cards for $130. Depending on your reselling relationships you might be able to make a small profit and earn 5X Ultimate Rewards by paying with a Chase […]
Were some of the bulk sellers getting a good price on the GAP cards?
A particular one was giving 81% on them. This was so good.