What started out as a class assignment in sustainable supply-chain management is turning the $81-billion market for plastic gift cards upside down. With some 17 billion plastic — and, yes, toxic — cards in circulation each year, Michigan State University MBA student Sam Hogg launched a Web site that provides a direct link to e-gift card programs from major retailers.
“When you think about all the gift cards that eventually go into landfills, and then the associated carbon footprint of people driving around picking up all those cards or cashing them in, it really screamed for a better solution,” says Hogg, 26, CEO of GiftZip.com in East Lansing.
After launching late last year, GiftZip has drawn more than 50,000 visitors. Already, 125 retailer e-card programs are being offered on the site, including Disney, Callaway Golf, NASCAR, and Amazon.com. Closer to home, merchant listings include Fathead, Zingerman’s, and Moosejaw.
While his site is free to consumers, Hogg generates revenue via retailer subscription and affiliate fees. “Where we’re different from a site like Expedia.com is that we don’t charge a fee that eventually gets paid by the consumer,” says Hogg, who completed his MBA last year. “Plus, we offer people the ability to print out the bar code to receive their gift, or they can have an electronic image sent to their PDA.
Todd Lunsford, president of Fathead in Livonia, which sells large wall graphics of sports and entertainment stars, as well as monogrammed home and office furnishings, says GiftZip offers another avenue to generate sales leads. “Being a Michigan-based company ourselves, it’s great to see entrepreneurial companies growing in our back yard and reaching out to future customers,” Lunsford says. Fathead’s investors include Dan Gilbert, chairman of Livonia-based Quicken Loans.
According to Plenty magazine (incorporated earlier this year into the Mother Nature Network), plastic cards contribute 75 million pounds of toxic PVC (polyvinyl chloride) to America’s waste streams each year. “People don’t really need the cards,” Hogg says. “What’s really required is the digital code to activate the gift.”
With five employees and an annual sales projection of nearly $1 million next year, Hogg has several growth outlets in the pipeline, including a wedding registry, a restaurant-supported portal categorized by ZIP code, and overseas expansion.
The company plans to open an office in downtown Detroit, as well. “Our mantra is selection and speed,” Hogg says. “When you click on a link to a specific retailer, we take you right to the gift-card registry so you don’t have to navigate that yourself. It’s a very transparent business. We have to earn our business every day, or a retailer will get rid of me. That’s as clear-cut as it gets.”