In the last two weeks, I’ve had the opportunity to play around with Raise as being a bulk seller. What I’ve previously said about Raise being prohibitively expensive at a 15% commission is only applicable when you are a non bulk seller. As a bulk seller, your rates will vary. Stay tuned for a further analysis of Raise as a platform. I wanted to share my initial thoughts.
During this time of exploration on Raise, it has been quite an interesting experience. Here’s the breakdown of pricing:
- Raise charges a % commission to list your gift card. The % varies on the brand of gift card
- You determine the discount %
This is akin to eBay’s fee structure.
So far, I’ve listed 3 brands (proprietary knowledge) of gift cards. Between the commission and discount, I purposely build the discount to be fairly low. Of the three brands, one has been slow to move. The problem is, the high percentage of gift cards available on the marketplace with a deeper discount than mine. The other brands have little to none available to buy.
Gift Card Cartel
This leads me to the thoughts of a cartel, colluding on the gift card resale market. From Investopedia a cartel is:
DEFINITION OF ‘CARTEL’
An organization created from a formal agreement between a group of producers of a good or service, to regulate supply in an effort to regulate or manipulate prices. A cartel is a collection of businesses or countries that act together as a single producer and agree to influence prices for certain goods and services by controlling production and marketing. A cartel has less command over an industry than a monopoly – a situation where a single group or company owns all or nearly all of a given product or service’s market. In the United States, cartels are illegal; however, the Organization of Petroleum Exporting Countries (OPEC) – the world’s largest cartel – is protected by U.S. foreign trade laws.
So if a group of gift card churners were to band together and sell gift cards and price together on the “hot gift card brands” you could boost your profit margins. Because Raise gives you the opportunity to set the discount percentage, that group could collectively set the discount to some low discount rate just to move the brand. However, as with any cartels and the monopolies will crash and burn from competition.
Any smart customer who sees the discount as being too low, will go to competing exchanges like Giftcard Zen, Cardpool, and the likes for a cheaper gift card. Just know that cartels are illegal and protects consumers under the Sherman Act. You won’t see me partaking in any price fixing like this because I’m on the straight and narrow. I’d rather take a bigger loss than to get caught up with something serious like an antitrust law.