CashStar: Digital gifting nearly doubled in 2013
The Portland-based digital gifting company CashStar reported merchants in 2013 sold more than $500 million in digital gift cards using the company’s software, an increase of 92% from 2012.
President and CEO Ben Kaplan told Mainebiz the sharp increase is in line with a national growth in digital gift cards, projected at 250% to 300% from 2012 to 2015. That’s compared with growth in traditional gift cards, projected at 5% for the same period, according to the consulting firm CEB TowerGroup.
“The market opportunity for CashStar is significantly greater than I thought it was just six months ago,” said Kaplan, who took the helm at CashStar in October 2013.
From 2013 to 2016, TowerGroup estimates the whole U.S. market for gift cards will rise from $120 billion to around $140 billion, with digital gifting making up just under 3% of the 2013 total. By 2016, it projects digital gift cards will make up about twice as much of total U.S. gift card spending, at 7.2%
CashStar, which collects its revenues from percentage fees or per-card transaction fees, did not report its share of revenue from merchant sales in 2013. In 2012, it reported $9.7 million in revenue to Inc. magazine on approximately $260 million in gross merchant sales. The company ranked 103rd on Inc.’s list of the country’s fastest growing companies.
Kaplan attributed CashStar’s growth in the last year to a variety of factors, reflecting what he said is his company’s advantage in the market and the digital gift card market’s growth overall. The company was awarded two patents last year and Kaplan said it has many more pending.
CashStar started 2013 with around 75 employees and added another 5,000-square-foot office by year’s end to accommodate more than 100 workers, but Kaplan declined to specify what 2014 will hold for hiring.
“What I can say is that the company is growing and we're going to continue to hire to support our innovation,” Kaplan said.
Around half of the company’s employees are focused on various aspects of developing and implementing the company’s digital gifting platform for its clients, Kaplan said, a group that in 2013 added national retailers like Dunkin’ Donuts, Brookstone, Office Depot, Landry’s and Vans and international clients like Dorchester Collection, Golf Town Canada and Super Retail Group. The company also forged a non-exclusive partnership with Facebook last year, providing connections for around 55 clients to the social networking giant’s online gifting features.
Kaplan said new gifting platforms like Facebook’s could increase digital gifting’s share of the overall gift card market, where CashStar has been a leader.
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