How Gift Cards Are Like Working Capital

In our last blog, we provided you with some reminders as to why selling gift cards is a very beneficial practice during the holiday season. To be honest, it’s a very beneficial practice for business owners at all points in the year! But is there any doubt that the holiday shopping season is the best time of year to sell gift cards? If you’re not fully convinced that you should be selling gift cards in your store, then today’s blog is for you.

According to Rocky Brody on Behalf.com, “gift cards ranked #1 of the Top Ten Holiday Gifts in 2013. On top of that, 60% of consumers noted in a 2013 Nielsen survey that they prefer receiving gift cards over any other gift.” The bottom line is that gift cards make it easy for people to shop and gift cards make it easy for people to be happy with their gifts. Think about it. There’s no reason to return a gift card!

It’s never the wrong size or the wrong colour. It’s never something that someone has already. And that’s because of the obvious reason that gift cards provide recipients opportunities to buy just about whatever they want. More importantly for you, they provide you with the opportunity to increase your sales and attract new customers among other benefits we pointed out last time. However, Brody offers up one important reason to promote gift cards that is often overlooked.

Cash flow and inventory management! Brody points out that some small business owners don’t always have the working capital to stock their stores with enough merchandise to satisfy holiday shoppers. Therefore, by selling gift cards, such store owners ensure that they don’t lose out on sales while still earning enough money to restock their stores in the new year. As Brody puts it, “it’s almost like an easy source of working capital.”

He uses the example of “Sophie” who he describes as a “local single store retailer” who encounters such a problem. He describes a hypothetical situation to unveil the ways in which gift cards can resolve this business owner’s problem of not having enough working capital. This is a situation, by the way, that isn’t hypothetical for many business owners across Canada. The scenario he writes of is, in fact, quite realistic.

“In essence, gift cards enable retailers like Sophie to spread out their cash flow and inventory management during the toughest months of the year,” Brody writes, “It’s almost like a crowdsourcing a bunch of really ‘microloans,’ without a single ounce of paperwork! Your customers give you the money now…you give them the goods later.” It makes sense doesn’t it? After all, when you sell a gift card, the real product hasn’t yet been sold.

What is factual, however, is that you will be receiving money for that unsold product upfront. Naturally, you can do with that money as you please. Reordering more inventory may be at the top of your list. And if it’s a necessity, there are ways that gift cards can help you to get there faster. “You may even be willing to sell your gift cards at a discount (let’s say a $100 gift card for $75) in order to get cash upfront,” suggests Brody.

The holiday season is practically here! There’s no more time to waste. The time is now to order gift cards to be sold in your store. As we mentioned in our last blog, Canadian POS Corporation offers gift cards that come with a complete package of marketing features such as simple administration and top-notch security. Give us a call today at 1-877-748-2884 to order your gift cards and have your best holiday season yet!