Two companies, Cardpool and Plastic Jungle, are competing to become the preferred way to exchange unwanted gift card for Facebook Credits. This week, both unveiled new functionality that allows users to enter a gift card’s code and have the Credits deposited in their account that same day. There is currently $30 billion in unused American gift cards waiting to be exchanged, according to literature cited by both companies, creating high stakes for this battle.
Here we’ll look at what differentiates Cardpool and Plastic Jungle, discuss how each could gain an advantage, and declare a current front runner.
Background and Similarities
Plastic Jungle was founded in 2006 and has since raised $23.4 million in funding from Shasta Ventures, First Round Captal, Bay Partners, and others. It operates a website where users can exchange gift cards for cash, PayPal funds, or Amazon gift cards, and a separate Facebook application allowing exchanges for Credits. The younger Cardpool, founded in 2009, has only raised a relatively small undisclosed seed round of funding, but that backing comes from respected super angels including Ron Conway, Jeff Fluhr of StubHub, Max Levchin of Slide and PayPal, and startup incubator YCombinator. Its website allows users to exchange cards for cash, Amazon gift cards, or Facebook Credits.
Many policies and procedures of the two companies are identical. Both offer users up to 92% of the value of their sold cards, allow cards to be purchased at up to a 30% discount, and guarantee any cards bought from them. If users want cash back for their cards, both offer free shipping and estimate the turn around time for receiving a check at two weeks. The list of merchants whose cards can be exchanged for Credits through either service is almost identical, including airlines, hotel chains, and big box retailers such as Best Buy, Target, and Walmart.
Differentiators and Opportunities
Plastic Jungle’s primary advantage is its self-contained Facebook app, allowing users to acquire Credits in the same place they’ll use them. Cardpool technically has an application, but it simply directs to its website. Plastic Jungle’s other differentiators include card value and discount percentage filtering options for finding gift cards to purchase, and the display of “Hot Card Deals” on its home page. The option to exchange for Facebook Credits on the Plastic Jungle website would be a useful addition. Kristin Donelson, the company’s VP of Marketing, says it’s looking to let users convert cards into value on other platforms. When asked about possible integration with the new Google Chrome Web Store, she replied, “you never know.”
Cardpool offers a slightly larger list of merchants whose cards can be converted into Credits. Merchants not offered by Plastic Jungle include the Apple Store, Macy’s, Urban Outfitters, and Ticketmaster. Cardpool offers a referral program where users can make $10 when a friend who uses their referral link makes a purchase. Funder Anson Tsai says Cardpool looks up to Zappos, inspiring it to offer a 100-day return policy on purchased cards, and to refuse to sell gift cards which expire or whose value deteriorates to avoid disappointing customers.
Cardpool also provides sharing buttons connected to Facebook and Twitter and an email contact importer for inviting friends. These viral mechanisms offer significant potential for growth. When we spoke with Plastic Jungle in October, CEO Bruce Bower said it was considering how to implement social features, but none have appeared yet. Users are typically eager to tell friends about ways to save money, so Plastic Jungle needs to add sharing functionality soon or it risks being outpaced by Cardpool.
Neither company allow redemption of popular gift cards for the iTunes store or Starbucks. The first to secure deals with these companies could make gains during the holiday season. To reduce sign up friction and allow for the easy transfer of Credits, both should add Facebook Connect as a registration option. Direct tie ins or becoming a payment method for social games could expose the companies to users who need Facebook Credits.
Cardpool Atop a High-Potential Industry
Currently, Cardpool is the better gift card for Facebook Credits exchange, thanks to its sharing features, customer service policies, and larger merchant list. However, with such a large market and so little penetration, there’s room for more than one company to succeed. Cardpool’s Tsai believes “the biggest issue is awareness. Most people don’t know any of us exist. If people knew about these sites, they’d be using them.”