Giftcertificates.com Mounts A Comeback - InformationWeek

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Giftcertificates.com Mounts A Comeback

Here's one dot-com that might be a survivor.

At least one dot-com appears to have switched from business-to-consumer to business-to-business just in time. Giftcertificates.com, which sells (what else?) gift certificates online, has gotten a fifth round of venture capital--$21 million.

Giftcertificates has attracted more than $100 million since its founding in 1997 as a seller of gift certificates for consumers. About a year ago, though, the outfit started focusing on employee rewards and customer incentives. Accordingly, revenue has spiked--from $18 million in 1999 to $65 million in fiscal 2000. Businesses accounted for two-thirds of sales in 2000, up from about 15% the year before.

The company buys the certificates from merchants at a discount, generally of 15% to 20%, and sells them at face value. "Whenever anyone hears 'dot-com,' they're skeptical," and they're surprised not to find "a funky business model," says CEO Michael Ahern.

Giftcertificates will use its latest cash infusion to, among other things, improve how customers can personalize certificates. One thing Ahern can't change, however, is how many people actually use the certificates they receive. "People sit on them for a while. Almost everyone I talk with says they have a sock drawer at home with a couple of gift certificates in it," says Ahern. "People tend to hoard them for a rainy day and sometimes they expire."

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