Startup: Holiday season gift card boom needn’t skip small biz; this discrete digital wallet-ready option keeps giving local

Gift cards are convenient — and the No. 1 most-requested present — Nicole Glass said, but there’s frequently just something impersonal and disconnected about them that makes many people feel bad about slipping one into a card or gift box.

“It’s like, ‘I didn’t really know what you wanted. Here’s Starbucks,’” said Glass, president of Kansas City-based Gift Card Market. “We still love giving them, but it just doesn’t give you that warm and fuzzy feeling inside.”

The U.S. gift card market doubled over the past decade, according to Statista, reflecting an industry that saw $91 billion sales in 2010 and $200 billion in 2023.

Dialing gift card giving down to the local level through efforts like Gift Card Market, Glass said, helps reverse a trend that sees those purchases spent with easy-access big box and national chains.

Her newly launched company’s value: a digital wallet-ready gift card from a local restaurant, spa or salon that turns guilty pleasure gifting into a treat for the neighborhood entrepreneur too.

“People want to give local gift cards,” Glass said. “And there’s a high trust value in local gift cards. People want to support local even more since COVID.”

Click here to explore gifting opportunities at Gift Card Market.

Hoping for a gift card surge

Digital-first gift cards like those offered by Gift Card Market not only drive revenue to small business — they can help save them money, said Alan Kneeland, whose Troost Avenue restaurant is among those testing the new gifting option.

Alan Kneeland, The Combine

“Our gift card sales go up at least 40 percent around this time of year,” said Kneeland, owner of The Combine KC, a combo deli, pizzeria and taproom. 

“So, to have somebody create a platform that’s specific towards restaurants and retail spaces, it just makes things a lot more efficient for people, especially during this time of year.”

Kneeland plans to keep his options open — he’ll continue to purchase hard gift cards to offer customers, and will be watching to see what kind of revenue Gift Card Market can bring to his restaurant. 

He estimates he spends $45 per 500 hard gift cards, and that amount doesn’t account for fees associated with the transaction that occurs when the cards are loaded. Gift Card Market takes that cost off the table, and while $45 might not seem like a lot of money, it matters, he said.

“I mean our margins are very, very slim,” Kneeland explained. “So, thinking about phasing those physical cards out definitely could be an option because $45 adds up over time, especially for us. … I would love to save a little extra money at the end of the year.”

What’s at risk? The flavor of local businesses.

While some restaurants like Urban on Troost are moving into newly constructed spaces, The Combine — one of a handful of new-wave Black-owned restaurants seeking to connect with and celebrate the community’s Black and brown communities — is among those reinvigorating historic and recently renovated storefronts.  

The restaurant’s dining area brought life to a long-vacant corner of the Wonder Shops and Flats development, once a bustling Wonder Bread factory, and Kneeland has made sure to weave the Wonder building’s history and local flavor into his restaurant by including “Wonder favorite” sandwiches like PB&J, grilled cheese, turkey and cheese and fluffernutter.

Impact in numbers

Gift Card Market only launched in October but already has 5 million retailers in its database, Glass said, because it’s hurdled the hassle of having to load and manage SKUs for each business in its system by aligning with Yelp’s services.

Nicole Glass, Gift Card Market

The company licensed Yelp’s content and data — leveraging it to create a presence in their system that customers can interact with as they browse businesses in the hunt for a gift card. The process is fully digital and quick, making it easy to purchase and deliver a gift card in minutes. Gift Card Market “cards” can then be emailed or texted. 

One additional advantage is that Gift Card Market cards that are texted can appear in an already existing exchange that the purchaser has with the recipient.

Additionally, Gift Card Market gift cards can be loaded easily into a digital wallet and the restaurant doesn’t even have to know that a customer is even using a gift card. If the customer is paying via their digital wallet, the sale occurs like any other mobile pay transaction. 

That means no awkward juggling of a physical card and perhaps a secondary card in the event that the gift card’s balance is lower than the bill. 

Small biz missing the wave

Small businesses lag behind other categories when customers are deciding how to spend their gift card dollars. According to a National Retail Federation study, when given the chance to select multiple categories, gift card purchasers in 2022 reported these categories as their choices:

• Online merchant, 56 percent
• Discount store , 48 percent
• Department store, 47 percent
• Clothing/accessories store, 31 percent
• Local/small business, 24 percent
• Electronics store, 20 percent

But, even with its position in the hierarchy, small businesses can see an impactful uptick in revenue during the holiday season when gift-givers opt share local gift cards, Glass said.

Gift Card Market

Spreading the word 

Yelp’s API effectively allows Gift Card Market to help customers purchase gift cards from a business without the business even having to really be in the loop. Still, the company is spreading the word by partnering with state restaurant associations. 

“Restaurant associations look at Gift Card Market as a benefit to their members,” Glass said. “‘Here’s a way that we’re marketing your establishments, not only just on our side, but we’re going to be integrating with other big platforms that already have eyeballs.’” 

The Missouri Restaurant Association in particular has been a big advocate, she said. 

With that association and others, Glass said, Gift Card Market is seeing coverage and promotion in their newsletters, and company leaders are making time to show up at their monthly meetings.

“So far,” she said, “they’ve loved it.”

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Haines Eason is the owner of startup media agency Freelance Kansas. He went into business for himself after a stint as a managing editor on the content marketing team at A Place for Mom. Among many other roles, he has worked as a communications professional at KU and as a journalist with work in places like The Guardian, Eater and KANSAS! Magazine. Learn about him and Freelance Kansas on LinkedIn and Facebook.