Multimillion-Dollar Idea: Ellicott City Business Buys, Sells Unwanted Gift Cards
By LIZZY MCLELLAN
The Daily Record
ELLICOTT CITY, Md. (AP) — It’s the less heartwarming holiday ritual: shoppers flooding the stores, redeeming their gift cards for enviable goods of their choosing.
They return home with bags of beloved purchases fitting their own picky preferences, all at no expense of their own. It’s the holiday spirit in full bloom.
But until 2008, a whole group of gift card recipients missed out on the fun — the ones who got cards they would never use.
Kwame Kuadey, founder and CEO of Ellicott City-based GiftCardRescue.com, took their plight and turned it into a multimillion-dollar business.
Its busy season began this week. After Dec. 25, the gift cards pour in, and in the weeks that follow, revenue doubles.
“The idea for GiftCardRescue came about from a friend of mine,” Kuadey said. “He had a bunch of gift cards that he didn’t know what to do with.”
At that time, statistics showed that about 10 percent of gift cards were going unused. As an MBA student at Johns Hopkins University, Kuadey saw this as a business opportunity.
He searched around and saw that no one else had implemented his simple idea: buy unwanted gift cards for less than they’re worth and sell them back to consumers for a profit — but still less than their face value.
The vehicle for these transactions would be GiftCardRescue.com.
The site went live in July 2008, initially funded by Kuadey’s family and friends. A few months later, he was laid off from his position at Citigroup, so the website became his full-time job.
In 2009, the company got its big break when Kuadey appeared on the ABC reality show “Shark Tank.” He eventually turned down an offer from one of the investors on the show because the television exposure led to even more publicity and an influx of business.
“That was pretty much when we really took off,” said Kuadey.
Since its inception, GiftCardRescue has grown from a one-man basement operation to a 10-person business carrying gift cards from more than 450 merchants.
It relies mostly on word of mouth for advertising, including its relationships with bloggers.
“It’s a way to kind of niche down on your marketing,” said Alex Gould, business development manager. “If you can target blogs and other avenues that focus on saving people money, those are people that are already aligned with what you’re doing.”
It seems to be working well enough.
GiftCardRescue made its way onto the Inc. 500 list in 2013, ranked the 151st fastest-growing company in the United States. Its revenue was $6.6 million in 2012 compared with $250,830 in 2009 — a growth rate of 2,518 percent.
For 2013, GiftCardRescue is projecting $10 million in revenue.
The workload has almost quadrupled in the past three years, said Natalyn Obey, operations manager.
“I remember celebrating making $100,000 a month,” she said. “We’re now looking at a goal of $1 million a month in gift card value.”
Because the company is exclusively online, it’s been able to have a wide reach, she said. Its largest markets are in New York, New Jersey and the West Coast. Its most popular gift cards are for Wal-Mart, Target, Visa, American Express and Home Depot.
Kuadey’s goal is to double revenue each year for the next three years.
Beginning Dec. 26, the site’s traffic jumps by about 50 percent, he said. That is followed by an increase in sales that runs through the end of January. This coming January, he is confident that the company will bring $2 million in revenue.
“We have about one more month of these 12-hour days where all of these cards people were given for Christmas are sold back to us,” said Obey. “It’s just beginning.”
(Copyright 2013 by The Associated Press. All Rights Reserved.)