Dec. 23, 2021

Need a Last Minute Gift? Maybe Rethink that Gift Card

The case for cash

Gift cards may be the big winners of a holiday season plagued by supply chain issues, so Nora and Scott dive into the business behind a classic last minute gift. Bloomberg reporter Amelia Pollard discusses the economics of gift cards and her recent piece, Supply-Chain Crisis Is Bad for IPhones, Great for Gift Cards. Then, Amanda Yeo, Mashable writer and podcast host makes her case for why gift cards suck


Scott Rogowsky: Merry almost Christmas, even though neither of us celebrate.

Nora Ali: Merry Christmas to all. Happy holidays. Scott, do you give gift cards to your loved ones?

Scott Rogowsky: To my loved ones? No. Only to people that I can't stand.

Nora Ali: Oh, no.

Scott Rogowsky: Gift cards. Have I given gift cards? Yeah, I'm sure I've given gift cards. I can't quite recall specific instance. I mean, look, friends had babies and they've asked for gift cards to Grubhub or Amazon just because it's an easy way to...

Nora Ali: To ask for money.

Scott Rogowsky: Give them money. Yeah. It's basically money. I mean, when you give someone an Amazon gift card, you're...

Nora Ali: That's money.

Scott Rogowsky: ...basically giving cash.

Nora Ali: Exactly.

Scott Rogowsky: Starbucks gift cards always come in handy. I've received them.

Nora Ali: Do you use them when you get Starbucks gift cards? I always forget about them. I have maybe three just sitting in my wallet.

Scott Rogowsky: Really. Well it's funny cause I wasn't a coffee drinker, okay? For most of my life. And then I got my first Starbucks gift card. I'm like, "Well I can't let this money go to waste. I'd have to go to Starbucks. I'm going to buy some coffee and I have to start drinking coffee now." I don't know about the whole gift card thing. It seems inconvenient. What about you, Nora? Do you give people gift cards?

Nora Ali: I do gift, gift cards, but I do end up feeling a little bit of anxiety after I gift people, these gift cards, because I can't follow up with them to see if they used it. I don't want it to be wasted money, but I don't know.

Scott Rogowsky: Yeah. That's interesting. "Hey, did you spend that though? Here's a reminder."

Nora Ali: Yeah. There's no good way to do that. Well clearly it's up for debate. Love them or hate them, gift cards themselves aren't going anywhere. In fact, Scott, shoppers plan on purchasing 15 gift cards on average this winter.

Scott Rogowsky: What?

Nora Ali: That is a 50 percent increase over last year and a 200 percent increase over 2019. But that is according to estimates from branded payment service Blackhawk.

Scott Rogowsky: I need to go...

Nora Ali: Maybe it's biased, I don't know.

Scott Rogowsky: I got to start shop. I've bought zero gift card so far this season.

Nora Ali: You got to do it. And in the middle of the holidays, we are also in this episode going to check in on supply chain issues and find out whether those delays have been a boon to the gift card industry. First we'll hear from Bloomberg reporter Amelia Pollard, followed by Mashable reporter Amanda Yeo. From Morning Brew, this is Business Casual, the podcast that gives you a front row seat to candid conversations with some of the biggest names in business, asking them the questions you wish you could ask. I'm your host, Nora Ali.

Scott Rogowsky: And I'm your other host, Scott Rogowsky. Nora and I are here for your ears, bringing you stories about business shapes our lives today and into the future. Oh ho ho, now let's shimmy down the chimney to business.

Nora Ali: Amelia Pollard, we're thrilled to talk to you. You are a reporter for Bloomberg. You've been covering retail, global supply chain. You are the expert here in the midst of the holidays. At the start of the holiday season, you had reported on these supply chain issues, which all of us are now familiar with. And the fact that major retailers were predicting they would impact holiday sales. Here we are right up against Christmas. Generally have those supply chain issues materialized in the way that experts thought they would?

Amelia Pollard: Yeah. I think by and large they have. And I've been covering this from a few different angles, as you said, I've looked into how toy companies are handling this, how apparelmakers, clothing companies are handling this. And it seems pretty much across the board. I think last year we saw this with cars and microchips and really affecting technology and major industry sectors more prominently than everything else. But now if you can see photos of the Port of Los Angeles and it's just container ships stacked on the container ship. I think the first hint of this was Black Friday, Cyber Monday, where through surveys, it looked like around 30 percent of customers noticed that the items they wanted were already out of stock. I mean, that was, I think the first red flag for a lot of consumers and retailers was, "Oh, okay, then I need to start shopping right now if I want to have gifts for the holidays." I think that some company owners, for instance, I did a piece on toy, smaller toy companies specifically, have been able to adapt and adjust. Now they're six months into this. They saw the first inklings of issues last May if not earlier. For instance, one of them, their name, the company's name is University Games. They're based in San Francisco and the CEO did a hail Mary move in mid-November where he flew out his entire sales team to Memphis, Tennessee, which is where their distribution center is and had all of them, all hands on deck, for shipping and labeling purposes. I think people have an ad hoc approach to this of just trying to get stuff on shelves by any means necessary. 

Scott Rogowsky: And that same company actually pivoted their shipping strategy, right? They moved their port, which was normally Los Angeles to Vancouver, British Columbia, which was going to add days to the shipping process from port to plant. But at least there are fewer delays up in Canada. It is interesting to see just the tactics that all these companies and executives are having to go through here. And the lengths they're going to, to try to ameliorate the situation. But what are some of the extreme shortages that you've seen firsthand? I mean, is anybody going to be able to get their hands on a Tickle Me Elmo this year, if that's even a thing?

Amelia Pollard: Yeah. I think there's one company, Basic Fun based out of Florida, and they're a smaller toy company, but they license a lot of toys that are serious household names like, Tonka trucks, Lincoln Logs, Connex, things I remember from being a kid that are still around and popular. What we're hearing with supply chain issues, I mean, originally it was all in the shipping container. It was basically company owners wanted to pack in as many high-value goods onto a shipping container as possible. It meant that bigger, lower value items like the big mighty Tonka dump truck were not really going to get onto the shipping containers or the company executive Jay Foreman said that they were moving slightly towards other toys or trying to de-emphasize the larger, lower value. They also oversee Care Bears. The largest Care Bears were not making their ways onto the trucks. I think the bigger the items, maybe there'll be fewer big gifts for kids, especially under the Christmas tree or for Hanukkah, whatever holiday this season. But that's where they're really seeing the pressure points on lower value items.

Scott Rogowsky: It is the size. The size of these items and the amount of volume they take up in the shipping tank. Wow.

Nora Ali: No big toys. It's good to know. I'll have to cancel my order for my big Teddy bear, I'm sending to Scott. Sorry, Scott.

Scott Rogowsky: I want the big piano like Tom Hanks has it big so I can dance along on it.

Nora Ali: Yes, exactly. Amelia, you mentioned there's an ad-hoc approach. Different companies and suppliers are handling these supply chain issues differently, but give us some context on just how big the toy industry is, how important the last few months just our overall for sales and for manufacturing for these companies?

Amelia Pollard: Yeah. For toy companies, I heard from a few CEOs that Q4 is everything. I mean, it really is. I think consumers are in buying mode, post-Thanksgiving, and those toy companies really harness that. And so it's close to a $30 billion industry in the US, which is massive. And I think that what I heard were the big three in the industry are Mattel, Hasbro, and Lego, and they really dominate the space. And even during their earnings calls, those companies were saying, a couple of them, were able to use the supply chain issues to their advantage. They already had the clout and relationships and capital to make what they wanted to happen, getting a container from point A to point B and smaller toy companies are not able to do that as frequently.

Scott Rogowsky: Can you walk us through the journey of, let's take that Tonka dump truck, for example, just so our listeners can really understand the supply chain. Cause it's one of those things we've heard so much you about, but this is a great microcosm and a very targeted example here, holiday season, you want the toy in America, it's being made in a factory in Asia, right? But where are the delays and extra costs occurring and can you break it down for us step by step here?

Amelia Pollard: They move from China to the Port of Los Angeles. And from then there, they're moved to distribution centers across the US and Jay Forman, the CEO, has been able to move those trucks from point A to point B, but at a huge cost. When those trucks are coming, that's how the inflation is tied in supply chain issues here is that the Mighty dump truck was typically, in a normal year pre-COVID, moved from China to LA to the distribution centers for a total of $2 for a $25 item. This year, it's costing the company $12. That's half of the retail value of the dump truck and that is just in transporting and not in manufacturing costs. Just in moving it from point A to point B to point C ideally. Those costs are being eaten up largely by retailers. We've seen that truck increase by around $5. Now it's selling for around $30 this year, but that's not making up that $7 difference for Basic Fun. And I think that's being seen across the board for other different toy companies, toy and otherwise. And I think just as you said, Scott, those granular numbers really bring to life how the supply chain issue is tied into inflation and why consumers are seeing the prices rise across the board and tied to that sticker shock. Everything really is descending in this three-month period on the fourth quarter ahead of the holidays.

Nora Ali: Yeah. And with these challenges, we're seeing consumers trying to find alternatives, which we'll talk about after we take a very quick break. And we're back with Amelia, we've talked about shortage, delays. There are also predictions as a result of all of this in part that gift cards would be the number one gift this holiday season, what's the status of gift cards right now? Are people buying them up? Is there more demand than normal times?

Amelia Pollard: Yeah, there is. And I think there's been a steady growth in demand for gift cards in last few years and we were seeing that, from my reporting, it seemed like gift cards were being largely driven by Gen Z and millennials. One source described me gift cards as the Goldilocks present. It wasn't as crude as just handing someone a lot of cash. But you had some safety net and not buying someone a T-shirt or whatever item that they were never going to wear or didn't want. And then they didn't have to deal with the return hassle, whatever. I think I looked into gift cards as this potential solve in looking at who are the winners of the supply chain issue. And there are some major gift card companies like the Blackhawk network is one of them, Square even is moving into gift cards, more readily along with other major credit card companies. I think that companies are identifying gift cards as a potential win this holiday season. And one reason for that is, if you can't find the gift that you so badly need to buy for said loved one or a colleague or whatever on the shelves, then you can give them a gift card and they can get it in January. And that's really connected the supply chain issues and that for the first time ever, there's this prediction of a glut of items on shelves in January, that all those shipments that they're ramping up right now and trying to get through the port so desperately might come in two weeks and then there will be all these items that everyone wanted so badly this week or last week that will be there.

Nora Ali: On sale probably. With promotions discounts.

Amelia Pollard: Yeah, probably on sale. And so, yeah the gift cards a major win this year and I think the Blackhawk network is one major gift card company. And they estimate from consumers surveyed this year, that 41 percent of their budgets is devoted to gift cards. That's a pretty exorbitant amount of money. That's a big slice of consumers budgets.

Scott Rogowsky: Yeah. And again I'm seeing these delays happening in real time. A wedding present I ordered back in August, I just got the notification it was shipped this week. And a friend of mine had a Halloween costume arrive this week.

Amelia Pollard: No. 

Nora Ali: No.

Scott Rogowsky: I'm not even kidding, but yeah, that gift card there's no supply chain with the gift card really. How popular are these gift cards with younger generations of shoppers? I grew up with gift cards in the 90s being fairly common at that point. Are they still common? Are they more popular now?

Amelia Pollard: Yeah, they're totally more popular now. I did some digging into the history of gift cards because I just became fascinated with their evolution. And so they were really pioneered by Blockbuster originally in the 90s. And obviously what preceded gift cards were gift certificates which were kind of cumbersome and if you lost them, you were screwed. Then you were out of a 100 bucks or 50 bucks or whatever it might be. The digital gift card has completely revolutionized the space. I think some consumers that I spoke to griped that it's even more impersonal to be emailed the gift card than at least handed the gift card, a little card, those cards that are designed to hold a little gift card, but they're really popular for consumers. I did some reporting on the street just going into stores in Midtown Manhattan where Bloomberg's based and speaking to young people and someone I spoke to is 24 years old, just on the cusp of Gen Z and that millennial generation, said that she had written a long list of things that she wanted from her parents for her birthday. And then she realized, "Oh, I can just, instead of doing this, I can just ask them to get me gift cards for the places that I want gift from." I think it's the ease. I think that people are tired of having to go through the return or missing the return window if they don't love the gift. They're still popular and they've become even more popular this season. I think the supply chain issues are the spark to a tinder box that was already there. And so they've just become all the more popular.

Nora Ali: Yeah. And it sounds like businesses are embracing that and perhaps using it as a tool for new customers. Do you have any reporting on how this great sticky customers, loyal customers that might not otherwise shop at a certain place?

Amelia Pollard: Yeah. I think a great example in the gift card space and one that we probably all have received gift card from is Starbucks. They have really revolutionized what it means to sell gift cards, to use gift cards. There's a lot of innovation in the gift card space. They have a gift card for every single holiday indication you could possibly imagine. And so I think that they have realized that to add a little personal touch. And so it's a little bit more curated for specific time. They have an array of the holiday gift cards and they've also done a pretty seamless transition into using their app as well. It's really plugging the gift card into this digital transaction space as well. And places like Starbucks have really harnessed that in the last few years, especially, and are ramping it up even more. And it's also just relatively contactless purchases. It's connected to COVID too. I think that these companies can hail gift cards as the solve all for supply chain issues and COVID, and I'm sure that gift card companies will be riding that for as long as possible.

Scott Rogowsky: Yeah. And they're ultimately good for these companies bottom lines. You can basically look at a gift card and these rewards programs essentially as a way to give companies access to an interest free line of credit from customers, right? I mean, they're pre-paying and it was very... again, the pandemic tying back to that, I remember it was a very popular trend early on to buy gift cards from restaurants when all the restaurants were shut down and it's like, "I'll pay you now, keep you in business now. And when things open back up again, we'll be going back to your establishment." Yeah, I mean, this is clearly something that is not going anywhere. It's only ramped up. There is a negative side to this that we're going to talk to our next guest about, but do you see any cons to the gift card con potentially?

Amelia Pollard: Yeah. I think talking to consumers, it seems the main con is, it feels a little impersonal, is it the death of the gift to the gift card. But it's an interesting point you make, Scott, about this being essentially a loan or in a just free line of credit. And I asked the retail gift card association about this, who knew there was an association devoted to gift cards, but there is. They said it's a little bit more complicated than that. And I think that is the advantage for a lot of retailers is it gives them access to liquidy now, but they don't know when that purchase is ultimately going to be made the purchase with the gift card, which is when they can count it as revenue. And so even if there's a huge surge of consumers buying gift cards this season, those companies can't declare it as revenue until that gift receiver actually purchases something with it. So it does...

Scott Rogowsky: Really?

Amelia Pollard: Yeah. Which is I think is a little bit complicated for companies and for Starbucks doesn't matter because they're making so much money anyway. And a spokesperson for them told me that the vast majority of gift cards are redeemed within one year. So they're still able to declare that it's revenue typically within that same financial calendar year. But they're relying on someone making a purchase with that card.

Scott Rogowsky: But money is being exchanged. I mean, someone's buying the gift card. They're paying that $10 to Starbucks. Starbucks gets that money, right? Or...

Amelia Pollard: They do get the money, but it is counted as revenue only when an item is purchased. I think there's some kind of transactional product that necessitates. But yeah, so it is a little bit more complicated than just a line of free credit though.

Nora Ali: Amelia, it's been so great to have you with us. Amelia Pollard is a reporter at Bloomberg. Thanks again, Amelia.

Amelia Pollard: Thanks for having me.

Nora Ali: All right, Amanda. You've got some feelings on gift cards.

Amanda Yeo: Yes. I do.

Nora Ali: Strong feelings.

Amanda Yeo: Yes.

Nora Ali: You've called it an inherently flawed proposition, a failure of society in all levels, a controlling evil, and must be abolished. Why, Amanda, when did gift cards ever hurt you?

Scott Rogowsky: Tell them why you mad? Tell them why you mad son.

Nora Ali: What did you mean, Amanda?

Amanda Yeo: Gift cards, they've got no redeeming qualities. Why would you buy a gift card? Why ever? I don't understand it.

Scott Rogowsky: Wait, I'm going to stop you right there. I'm going to start right there. It's literally the definition of redeeming. You redeemed the gift card for goods. There is a redeeming quality. You can't say there are no redeeming qualities. 

Amanda Yeo: Okay. Yes, technically, if we're talking about language and stuff, you are correct.

Scott Rogowsky: You're technically redeeming the gift card. Yeah.

Amanda Yeo: Yeah. But redeeming them, it's such a pain. Now, gift cards are literally giving someone a deadline for Christmas. It's like, "I couldn't think of what to get you. I vaguely know what you maybe like. Here's a responsibility that you have to take care of." You can't just put it in a drawer and not think about it. It's always on your mind once you get one. You're like, "How am I going to use this? How are am I going to make sure I get the most out of this." And you tend to end up buying something that you don't even really want anyway. You're just buying it because you have this gift card to use up. It just becomes extra clutter or a stress that you have to deal with. And you don't want the thing anyway. It's not useful. It is there because you had something to redeem.

Nora Ali: In your article in Mashable, you also pointed out that oftentimes people have to spend more than the gift card amount to get the thing they actually want. It's not actually free money, right? You end up having to spend.

Amanda Yeo: It's not free money at all. It's just, oh I just hate them. Gift card users apparently they spend around 40 percent more than the value of the card. It's not a gift. It's a subsidy. A subsidy for something they didn't even want in the first place.

Scott Rogowsky: Wow. A sucker's game. You make a good point because it does add anxiety, right? It's like a little burden that you're putting on someone, you're gifting someone with, yeah a bit of a homework assignment, but also just another thing to clutter your brain, to have on the back of your mind at all times, I got this gift card, it's going to expire at some point. I understand where you're coming from there.

Amanda Yeo: Exactly. It's like, I've got to figure out a time I can run down to this specific store and find something that I actually want and then pay extra for it because it's not going to be full within the gift card value.

Scott Rogowsky: So you made your case. I buy it. I'm with you. You sold me, Amanda. Now what are some alternatives? What are some better gifts? Is cash, just paper cash a better alternative than the plastic gift card?

Amanda Yeo: Cash is so much better than a gift card. Just give cash. I don't understand why people don't just give cash. It's more versatile. It's always appreciated. Who doesn't love a crisp $50 bill? I mean, no one.

Scott Rogowsky: Maybe the argument it's just not as thoughtful.

Amanda Yeo: You can make it thoughtful. Put it in a nice envelope. Write a little note, draw picture on the envelope. 

Nora Ali: In some cases, in which I've gotten people gift cards is when I don't have time to mail them something in actual gift, or I'm not going to see them in person to hand them cash. It's a lazy thing, but it's very efficient from my perspective. I go to and buy a gift card for something that I think they marginally like at least. What would you propose in that case where you're time crunched, you're not going to see the person. What should you send them? Maybe just a selfie of yourself and saying, Hey, here's cash that I'm holding that I'll give you later at some point.

Amanda Yeo: I don't know Venmo them something. That's a thing in the U.S. right?

Nora Ali: Good point.

Scott Rogowsky: I have Venmoed wedding presents. I have Venmoed wedding cash. I've done them.

Nora Ali: What about gift cards for activities like a basketball game or a concert? Because it's something that the other person might not necessarily splurge on, but it's better than having something that's going to expire in a product that they're not going to use. What do you think about event gift cards?

Amanda Yeo: So by event gift cards, do you mean like a specific concert? Because...

Nora Ali: Like a voucher. I've gifted vouchers before where you can redeem this to go see the Rockettes or something like that, which is a big thing here in New York.

Amanda Yeo: I think my philosophy still holds there. I don't see the difference in terms of events. Maybe you really want to give a gift card because you're like, "Oh." But they're not going to spend it on something that they'll enjoy. Okay, A if you give them a gift card, they're probably not going to spend it on something they'd enjoy anyway. So yeah. And B money is just more versatile. Yes, maybe they don't spend it on splurging or some little luxury, but also that's on them. That's you can't deal with that. They've got to learn to love themselves and you can't solve that for them. 

Scott Rogowsky:There's no gift card. Big enough to fill the holes inside. Yeah, to fill the void.

Amanda Yeo: But maybe they don't want to spend it on something like that. Maybe they would like to spend it on groceries or have a little bit more room in the budget. I'm just thinking how utterly soul breaking it would be, if you were $50 behind on rent and someone gave you a $50 gift card. That would break someone.

Scott Rogowsky: To Best Buy. Yeah, can't pay your rent with Fast and Furious DVDs. Well, Amanda, I don't know. I think you've made a convincing case here. Our listeners will be the ultimate judge and jury on this because we have a pro and a con on this business of gift cards. But it does sound like the real winners here are the businesses issuing these gift cards.

Amanda Yeo: And a survey actually found that gift cards are only the third most desired gift for Americans. The top positions, which are equal are a surprise gift and money.

Scott Rogowsky: So surprisable money.

Nora Ali: Surprise money is the best.

Scott Rogowsky: Surprise someone with money this holiday season, Nora. That's the lesson we're taking away here.

Nora Ali: With cold hard cash. All right, Amanda, it's been great talking to you. We love your hot take. Maybe not a hot take anymore. Because Scott and I agree with you. It's an agreeable upon take.

Amanda Yeo: My work here is done.

Nora Ali: Yes. Amanda, thanks again for joining us in Business Casual. We appreciate it.

Amanda Yeo: Thanks so much for having me.

Scott Rogowsky: And now BC listeners. We want to hear from you. We are breaking down the wellness industry in an upcoming episode and we want to hear your thoughts. How much money do you budget towards wellness products, talking vitamins, skincare, serums, oils, masks, ointments, liniments, mists, you name it. There's a product for it. Also what is your skincare routine? I want to know, cause I don't have one and I need one. We love to hear from you. So send us an email at or DM us on Twitter @bizcasualpod. That's B-I-Z casual Pod with your thoughts.

Nora Ali: You can also leave us a voice memo on our website days, or give us a ring and leave us an old fashioned voicemail. Our number is 8 6 2 2 9 5 1 1 3 5. As Business Casual grows. We are excited to get to know our listeners old and new. Drop us a line and don't forget to leave your name and where you're calling or writing from. So we can hear from you in a future episode.

Scott Rogowsky: Business Casual is produced by Katherine Milsop and Bella Hutchins. Additional production sound design and mixing by Daniel Markus. Alan Haburchak is the director of audio morning group. Sarah Singer is our VP of multimedia and Jessica Cohen is our chief content officer. Music in this episode from Daniel Markus in the mysterious Breakmaster Cylinder. If you like what you heard, please follow Business Casual on Spotify, Apple Podcasts, or wherever you go for ear candy. And we’d love it if you would give us a great rating and a review.

Nora Ali: Thanks for listening to Business Casual. I'm Nora Ali.

Scott Rogowsky: And I'm Scott Rogowsky.

Nora Ali: Keep it business.

Scott Rogowsky: And keep it casual.