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Comment by seanos | Hacker News Reader

"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..."

"...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."

What is the twist?

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great question, the techcrunch article needs to be updated. but basically, we strive to have the simplest, most hassle-free solution, at the best prices.

all our gift cards have no fees and never expire and we offer a 100-day return policy, something no one else can claim. and since we are a small and lean startup, we can afford to focus purely on the consumer while offering the best prices. all of these features are unique to our startup and are the result of listening to what they want.

I think you will be genuinely surprised how little customers care about price relative to other things, even in a market where one suspects that price would be the only differentiator. (I mean, come on, if you're shopping around for an N% discount at Best Buy "clearly" you want the best N, right? Three years ago I thought that teachers were "clearly" universally as stingy as their reputation suggested.)

Trying to differentiate yourself primarily on price will give you ulcers because you'll always be one basis point away from losing to the next guy with more stupid money to burn (e.g. a funded competitor who can afford to have their spread go negative to gain market share, because their objective isn't to run profitably but rather to goose metrics then flip), and you'll attract disproportionately pathological customers who will be loyal to you only as long as no one else offers a better deal. Pathological customers will find every possible way to botch the transaction and blame you for it. (I tried using your Apple B's card to buy an iPod and it didn't work!! YOU THIEF!!!)

Article: "CardPool makes money off the spread between buying and selling cards."

Forgive me for my ignorance, but how does end up making you money? The way I see it, you can't sell more cards than you buy, and if you pay more to get the cards (90%) than you sell them for (70%) then aren't you facing a net loss overall?

Not sure where you're getting those numbers from. The article talks about paying 90% for a Best Buy card and selling it for 95%, while 1800 Flowers sell for about 70% (no CardPool purchase noted).

Ah, I guess I skimmed over the middle of the paragraph, and just saw the 1-800 Flowers at 30% off. So, I guess they're hoping to sell a whole lot more cards at 1-9% off than 10-30% off. I knew I was missing something obvious.

I assume the "up to" applies to both the selling and buying. Not all cards will fetch 90% of the face value. Simple arbitrage.

Ah, yes, the web site makes that more clear.

They set the buy and sell price, so there is no auction component.

Plastic Jungle seem to sell them at fixed prices too, although the price is set by the seller. Why is having a third party, CardPool, set the price an advantage? Surely they are going to have to price them at the market value anyway?

http://www.giftcardrescue.com/

was one of the sharktank companies, meaning they got national tv promotion as well.

The thing I can see cardpool executing on better is user-experience, but is that enough?

This reminds me of companies like ebay, godaddy, and cashforgold. It's ridiculous to see how spammy and ui-horrific these sites/models are... but they are huge companies nonetheless.

Warning: avatar audio starts without warning at that link.

Having a disinterested party set the prices seems unlikely to work (sustainably/scale-ably). A bid/ask system (like the stock market) seems like a decent model, although it might be difficult to present in a way that is easy for most users to understand.

Just like in the real markets there would room for a market-maker to make money on the bid-ask spread, while providing liquidity... if the service had an API, this could be a third party, although the more obvious scenario is that CardPool itself would be the market maker.

None of the parties is disinterested.

If I purchase £50 GBP giftcard, then my friend wants to swap that in for 80% of the value, they get £40 to spend elsewhere. Now if CardPool sell the card back to the company for £45 they're both splitting the remaining £10. CardPool don't need the customer buyers in order to buy cards. They could presumably also deal with the companies to buy cards direct at a discount (as if they were an affiliate).

CardPool then have a few options. If they lower the swap value of company A then I'm more likely to use my money there. This can actually be bad for company A as whilst they can negotiate a potentially larger amount of the difference of a buy-back they also risk the customer keeping the card and actually using it. Which is a transactional loss for them but a potential win if they can gain repeat custom.

It's really quite interesting to consider the back room deals that might go on over this.

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