Dec 10, 2009

Gift Certificates: The Good, the Bad, and the Ugly


So I thought about offering Gift Certificates in my Etsy shop but after reading threads and articles in The Storque I decided it may not be a good idea.

  • First there is the concern of whether or not you are following all laws regarding Gift Certificates in your state. I only have so much mental capacity and I don't think I could retain whatever book of laws there is on Gift Certificates. Second is the issue there seems to be with Etsy getting paid double for (1) the redemption of the Gift Certificate and (2) the sale of the item(s).
  • You have instances where the recipient may want to purchase one item for less than the value of the Gift Certificate and while it may be easy to adjust the listing price, now you have to create a "credit" for that individual to use the remaining amount. To much keeping track of to many redemption codes etc. 
  • If you set up a Gift Certificate to instruct the purchaser to e-mail you with their selection. You can remove the listing(s) and send them an invoice via PayPal but now you are sacrificing possible feedback.
  • Some states do not allow an expiration date or expiration period on Gift Certificates.
  • Some states may or may not allow an annual fee which would allow you to charge x amount per year that it is not used thereby reducing the value of the Gift Certificate. Again, to much information to log and keep up with and state specific laws to abide by.
  • One Etsian commented: "They're actually an accounting nightmare, too. You show the cash as income for tax purposes, but the gift cert is a liability that just hangs around forever and ever .... or until it's redeemed. And since in my state they never expire, I have some liabilities on my biz books that will never die. (outstanding for eight years now, I don't think I'll ever hear from the holders.)
    On the other hand I have read good stories regarding Gift Certificates and I do believe they are good marketing.

    • If you have ever received a Gift Certificate you well know that you end up spending more than it is worth because you figure that item that would have cost you $30.00 now cost you $15.00 so why not spend the $15.00 you "saved" and get more items? 
    • Return business to a newly exposed customer.
    • In providing Gift Certificates during the holiday and gift seasons you may increase your usual profit margin thanks to shoppers who aren't familiar with a persons specific taste.

    In looking at the pros and cons, I feel that the costs far out way the benefits. But I would love any comments, stories, or suggestions you may have. Do you think it is worth it, or not, to offer a Gift Certificate through Etsy or even Artfire?

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