Plastic Jungle, a company that allows gift card holders to sell their cards on the Internet, announced earlier this week that Citi Ventures, an investment division of Citigroup, has invested an undisclosed amount in the company.
Banking giant Citi has used its investment arm to take a strategic stake in Plastic Jungle, an online exchange for gift cards. Terms of the deal were not disclosed.
Founded in 2006, California-based Plastic Jungle provides an online market for people to sell, buy, exchange and donate gift cards. Users can sell unwanted cards for up to 92% of the value as well as buy them for up to 35% off.
Sites like Plastic Jungle operate outside of the issuer’s business. This means that the discount on the cards that are resold is borne by the cardholder. The advantage is that this opens up a new distribution channel that is otherwise unavailable to retailers. Instead of cards languishing in the pockets of uninterested gift recipients, they can end up in the hands of motivated shoppers. The issues for retailers revolve around whether or not enough buyers find cards on the site and whether deep discounts on their gift cards could hurt a retailers’ brand. Either way, retailers should pay attention to these gift card secondary markets and see whether that data might not become a proxy measure of the perception of the store and its gift cards.
