This transcript was generated from the episode audio and may contain minor errors.
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Is reselling gift cards a viable idea? We're gonna hear from a listener today. They've been thinking about buying and reselling unused gift cards. Now this is a really big market actually. There are so many gift cards out there that go unused.
Gift cards actually make me mad in some ways because companies, big companies, benefit from them to a huge degree. There's so many gift cards that are issued and then given away and then just never used. So a huge amount of breakage. And eventually after a couple of years, the company's usually able to write off the liability on their books and it's just all profit for them. Maybe that's a little bit of a side note or a tangent, but it's also directly related to the caller's idea.
So I suppose it's not too unrelated because he's like, hey, can I go out and buy some of these gift cards that are not used and then sell them to somebody who presumably would use them? Obviously there's gonna be a difference in price. He's hoping to profit from that difference, that arbitrage in essence. Let's hear what he specifically wants to do and I'll share a couple of comments. Hopefully it'll be helpful to him and to other people out there who are thinking about their business ideas, your side hustle ideas, something you can do to make extra money.
Let's talk about it. Detailed question and my answer coming right up. [Music]
Hey Chris, this is Nick from St. Louis. I recently found your show on Spotify.
I have an idea to go door to door, buying unused gift cards and then reselling them. At first I was thinking of making this as a school fundraiser for my son, but now I'm thinking that it could be more. What do you think? Am I missing something obvious? Thanks and keep up the great work.
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While working on this episode, reminded me of a new story I recently read about this ring that's basically a criminal ring in Texas that actually made millions of dollars by going around to stores and taking gift cards because they're basically free at stores until they have value added to them, right? So they would take them home and find a way to uncover the numbers. Sometimes they're like scratch off numbers or there's a sticker. They found a way to uncover those numbers, document them without actually damaging the gift cards and they would kind of package them up somehow to where there was no obvious interference, put them back at the store. Then they also wrote an app to where whenever the gift card was activated, whenever a real customer would buy it and load value, they would automatically transfer that value to themselves through some complicated process.
So it was quite a complex operation and they actually made millions of dollars from it. Now, just to be perfectly clear, I'm not endorsing this. In fact, they're going to prison. So the long-term sustainability of the idea is not great, but I was impressed for lack of a better word with the scale of it and just how much they were able to do. And I think it points to the fact that gift cards are just this huge, huge market.
So when it comes to Nick's idea, which is not criminal, to be clear, I think it's potentially a good one. He actually doesn't have to do it door-to-door. If you think about going door-to-door virtually, what does that look like? Even in your neighborhood using the Nextdoor app or Facebook Marketplace or similar, you're probably gonna find a lot of people with gift cards, they're just sitting around in a drawer. Like I've got gift cards in my drawer right now.
I would imagine a lot of people do. So what you need to consider though is both the supply side and the demand side, since this is again an arbitrage play in essence. Do you feel confident you can find enough sellers and buyers to make it worthwhile? I think that is an open question that is hard to resolve without some more data, but it's also true that the cost of trying this out is very low. So if it doesn't work out, then you've got some gift cards, which basically have a cash value.
And of course, gift cards can be sold on eBay and other platforms. So it sounds to me like it is worth trying at least. Let us know how it goes. Listeners, let me know what you're working on, your ideas, your attempts, your side hustles, sidehustleschool.com. You can ask a question there.
You can access resources and notes pages for every single episode over the years, nine plus years so far. And I'm excited to bring you much more 'cause we're not done. Seven days a week, there's a new episode in your feed. Subscribe, follow wherever you get your shows. My name's Chris Guillebeau.
You are listening to Side Hustle School. [Music]
