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There is a cacophony of unused merchandise that people buy each year including gym memberships, medicine, and gift cards. With gym memberships, people often buy a long membership with the intent of going those days but never do. Billions of dollars worth of prescribed medicine just sits in many American’s cabinets as people typically take less than half the prescribed doses that they’re supposed to of their medicine. Both of these examples of unused merchandise can also be seen in the gift card industry.
Many people buy gift cards with the intention of them being used. In many cases however, the gift card goes unused as in 2006, when it was estimated that roughly 8 billion dollars worth of gift cards went unused. Many gift givers and businesses see gift cards as a good thing. For gift givers, it is a quick and easy gift that the recipient is almost guaranteed to like. For businesses, it’s an easy way to increase their profits.
Through annual gym memberships, people are able to economize. The article discussed how many people buy yearly gym memberships instead of monthly or daily ones because it is cheaper in the long run. However, over 70% of people overestimate how often they will use the gym so they would actually be better off purchasing the monthly or daily pass.
When someone decides to purchase a gift for someone, there is a cost. As discussed in the article, many people buy gift cards for others for special occasions. By buying the gift card, they are giving up other choices in gifts they could get the other person like cash, or a physical gift. Also, there is the inherent cost of actually paying for these gifts.
The incentives that come along with gift cards are huge for businesses. Many companies know that billions of dollars on gift cards is wasted by consumers each year. This creates the incentive for businesses such as Best Buy to continue pushing their gift cards. One year, Best Buy earned 16 million dollars in what is known as gift card “breakage” or a card that was bought, but never redeemed. Also, even if some customers do use their gift cards, most spend their own money to buy things that are worth more than the value of the card.
Gift cards make up a large part of the economy. Since gift cards are essentially everywhere, people have been influenced into buying more and more of them. In 2006, 2/3 of all holiday shoppers planned on giving someone a gift card. People buying more gift cards can also be seen in the roughly 80 billion dollars spent on gift cards in 2006.
The consequences of the purchase of a gift card lies in the future. As many people don’t use their gift cards, a major consequence would be the waste of the gift givers’ money. Another consequence would be adding to the profits of shareholders in many major companies. Without the gift cards that they sell, many of these companies probably wouldn’t have as high of a profit margin.
Voluntary trade creating wealth is seen through consumers buying gift cards. Searching for the perfect gift for someone can be a time consuming task. By being able to simply pick up a gift card, people are able to trade finding the perfect gift for someone for a quick and simple gift card in which the recipient can pick out their own gift. This creates a wealth of time that can be spent doing other things for the gift giver.
The author’s view on what makes a good gift is correct. Many people enjoy receiving different things like gift cards as but others may like receiving cash. This article relates to class because we have discussed the different part of the Handy Dandy Guide in depth such as cost. In the future, gift cards will most likely continue to be a popular choice for gift giving because of how fast and easy it is to obtain.
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