Thoughts on Manufactured Spending, Reselling Gift Cards, and Reselling Products





Caution - Sunday 7-13-2014

Earlier this week, I read through Chasing the Points’ post about how its been a bad month. As a small business owner, I commiserate with him, there have been times when I’ve bought products where I’ve lost, heck, there have been some products where my only recourse was to donate. But, I don’t believe I’ve ever lost as much as Chasing the Points has, in a single month In his post, he states:

I went in hard with a gift card deal and this one went bad, fast. I’m looking at a loss of $2000.

The lesson Chasing the Points learned is meaningful — that being, keep trying the things that work, perhaps not at such a scale, but just to know they work. I know that to this day, I still buy a Kohls Gift Card through a portal just to see whether I get points… At this point its more speculative but, I still feel like something positive might happen as I prepare for one of their big sales.

But what really struck me was how different gift card reselling is.

Warning: Pure opinion, any facts are unintended

Chatting with my friend @Saianel (and if you don’t follow him, you should, he’s a kick!) a couple of nights ago, it occurred to me that I see gift card reselling as: “mitigating losses” whereas I see product reselling as “the pursuit of profit.” Now, don’t get me wrong, if you’re really on top of things, you can get ahead of the game, if you decrement your costs by the value of your points, although, I prefer not to do things that way. In fact, whenever I analyze a product for resale, I will consider it before shopping portals, credit card rewards, and any store loyalty programs (like Staples Rewards), and only then, will I make the value judgement, if it makes sense to take a risk, because those three components could ultimately lead to a net profit.

A time and place for everything – Reselling and Manufactured Spending included

Now, don’t get me wrong, I’ve dabbled in gift card reselling. Dabble being the key word here. Back when I spent more time chasing AMEX Sync offers, I would cash many offers out through purchasing gift cards, and resell them… Of course, like any risk you take, sometimes you get burned. There were some gift cards to certain retail stores (of things I wouldn’t resell) that I couldn’t make work, and rather than taking a loss, I just gave to my wife, who was more than happy to buy something nice. I suppose that’s a silver lining.

So what’s the point?

I think Chasing the Points highlights publicly (I actually did a search and I don’t think I’ve talked enough about my losses, call it a character flaw), the pitfalls that we run into. I know I’ve highlighted the pitfalls of MS and Reselling, and in fact, if you really wanted to go crazy, you could totally leverage Chasing the Point’s Gift Card Churning approach to increase your margin on reselling, but that may come down to a question of how complexity vs. simplicity of such systems.

At the end of the day, I think the message is clear, whether it is Manufactured Spending, Gift Card or Product Reselling, you should only do what you are comfortable with.

9 thoughts on “Thoughts on Manufactured Spending, Reselling Gift Cards, and Reselling Products

  1. Well put, I don’t think enough bloggers (myself included) talk about the risk involved in most of the MS/reselling articles, but it’s always a factor. Your method of analyzing profits before the rebates (portal, cc, store bucks) is definitely a smart way to mitigate risk, but do you think it limits your opportunities too much?

    My current rule of thumb for gift card churning is to only buy cards I can make a profit (however small) on before considering credit card points/miles/cash. I do include the shopping portal and store bucks though because otherwise I think I’d be severely limited in opportunities.

    I’d also be curious to hear about your Amex offer gone wrong. What stopped your plan from working?

    • Thanks! As far as the AMEX Offer that didn’t work – we bought Soma GCs, but the resale value dropped between when I purchased and received the physical gift cards (I had selected them because of a few percentage point higher value). But, my wife was able to put them to use, so not horrible, but I certainly wouldn’t want to be in that situation with thousands.

  2. Thanks Trevor! Gift card churning isn’t always peaches and cream! I’ve had the rates drop on me like that with the Soma when I first started. The floor just came out from beneath me and that hurt too, but it was a few $ and not hundreds, or in my last case, thousands.

  3. Most people would never start the hacking game if they knew in advance what a constant pain in the neck it is. Between deals dying, methods dying, account closures and general techniques that are fubar due to technical or human error, it’s a wonder why so many continue the game.

    I’ve tried to simplify – stick to things I can do an autopilot on a repeated basis and in volume. Having to play the reselling game requires constant attention and too many working parts to scale reliably.

    Bloggers chronically overhype the benefits and rarely mention the pitfalls and aggravation – but that’s because most of them are nothing but shills hawking credit cards masquerading as “travel experts” to entice the gullible and lazy to click on their affiliate links.

    • @Paul, you’re right, but for those enterprising folks, there’s definitely a place. As far as folks not talking enough about the risks, I know I try hard to write about the risks, as well as the rewards.

      • I am new and don’t churn GCs, because I think the golden age is gone and I don’t have a very versiltile liquidation set up, and all the things that was mentioned. I would rather the slower/smaller methods in volume. Relate to me here or in private your slower/smaller methods autopilot ways, I would appreciate it. Thanks in advance.

          • I have studied those, and the latest is only AMEX CCs can loaded on to them, unless you have a sofe serve or another bank issues the AMEX CC. I attended my first travel conf in August and have been reading like a mad man since Sept. Since like 90% of MS was killed by just plain lack of common sense. Reselling may have more moving parts, but I think that’s what makes it a winner to me now, not at first. So I am researching more on that for now, but not the only way.

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