By Felicia Lee
A $10 nylon bag from Sports Authority gave Edward Lavagnino the inspiration for Gift Certificates and More – an online program that’s like free money.
At the time, he was a serial entrepreneur living in Gainesville and planning his next move – he had just closed down his second business and it looked like his next step would be graduate school in engineering or a job working for someone else. He spent his days job-hunting and working out, which kept him busy (and resulted in an admirable weight loss) but didn’t bring in any money.
So when he received a $10 gift certificate from Sports Authority in the mail, he decided to treat himself to a rare shopping spree – even though he didn’t expect much to come of it.
“I was really skeptical going in there,” Lavagnino said. “I was thinking, ‘there’s got to be a catch.’”
This is where the bag comes in.
Upon arriving at Sports Authority, Lavagnino focused on items in the $10-and-under range. He had decided on some sensible socks – but then the bag caught his eye. It was a simple black nylon affair, and just under $10.
“I swim every night, and I was thinking it would be a good place to put a wet suit after my workout,” he said. “So I picked it up and brought it to the counter. Then I gave them the gift certificate. I was thinking ‘this will never work; it’s got to be some kind of scam.’ I was totally expecting a hassle.”
Instead, the cashier just smiled, scanned the certificate and handed Lavagnino his change and his new bag.
“And I said, ‘Wait, I don’t have to pay anything?’ and she said, ‘No, it’s under $10.’ And I thought, wow, this is a really cool feeling – I just got this thing for free! And the store got a customer who otherwise wouldn’t have walked in the door. Then I thought it would be great if I could sell this feeling.”
The entrepreneur in him kicked back in, and on the way home, he thought about how to turn that good feeling into a business. “I thought about an online business – a place where people could go to download gift certificates. I ran this idea past a bunch of friends, and they thought it was great.”
But when researching his plan, he found there were already several other sites doing similar things – Living Social and Groupon, for instance. Lavagnino knew right away that he did not want his site to be like these – as a former retail business owner himself, he wanted his site to be as advantageous to businesses offering the certificates as to end users.
“Groupon and Living Social take a huge bite out of what sellers make from them – I used to own a restaurant; I know a business will never make any money from a deal like that,” Lavagnino said. “So I came up with a model that costs retailers nothing up front.”
Instead, he devised a model in which participating businesses can offer modest gift certificates with fixed-dollar rates at no charge. The site is monetized by ad sales – companies, both those offering gift certificates and those that don’t, can buy space on the site to increase their visibility. Site users sign up for free memberships and can download and redeem as many certificates as they please. (The only limitation is that users can download any given certificate only once per month.)
This model, Lavagnino said, is a win-win for both businesses and consumers. “The retailers don’t pay anything to me – their only cost is the discount they give when the customer actually uses the certificate,” he said. (Certificates are typically in the $2.50 to $5.00 range.) “And someone using the site now can potentially save over $1000 a month.”
Making this plan a reality, thought, was an uphill battle. “I didn’t have a web site when I started out. I didn’t even have business cards – just a piece of paper,” Lavagnino said.
He started out by contacting local businesses to gauge their interest. Meanwhile, he also joined Santa Fe College’s new-business incubator, the Center for Innovation and Economic Development (CIED). At the CIED, he made use of the incubator’s services and mentoring and persisted at his efforts to recruit both potential vendors and site users. He has also built relationships with both potential participating businesses and clients through his active memberships in the Gainesville Chamber of Commerce and a local chapter of Business Network International (more commonly known by its acronym, BNI).
His efforts are starting to pay off. The Gift Certificates and More website underwent a major overhaul in June 2012 to accommodate the increase in both vendors and users. The site now offers over 200 certificates a month, and some vendors specializing in big-ticket products or services offer certificates for as much as $100. Participating vendors now include such well-known businesses as Ballyhoo’s, Adam’s Rib, Central Florida Office Plus and the Ironwood Golf Course.
Another recent innovation is the Gift Certificates and More app, which allows smartphone users to sign up for membership and download certificates onto their phones – to redeem the certificates, all they have to do is present the certificate number at checkout. “This way, you don’t have to print out a bunch of certificates if you don’t want to,” Lavagnino said.
To spread that good feeling of getting free stuff even further, Lavagnino partners with local businesses to offer actual paper gift certificates to non-profits. For instance, Life South Blood Centers, with Lavagnino’s help, has been able to give its blood donors $5.00 gift certificates to popular restaurants including the Ale House, Texas Road House and Pomodoro. He also raised $5610 for the 2013 UF Dance Marathon, a fundraiser benefitting the Children’s Miracle Network, by providing them with gift cards to sell. The cards containing $78 worth of savings to local businesses, and were offered to Dance Marathon participants for $10 each.
Gift Certificates and More continues to grow. Eventually, Lavagnino would like to expand the site to other cities (so far, it includes only businesses in Gainesville and surrounding areas). But he emphasizes that the business is not about him – it’s about giving consumers a good deal while bringing retailers new customers. “I don’t want my face to be all over the place and I don’t want people to think about me when they go to the site – I want them to think of the value they’re getting.”
