Ever since the death of AMEX prepaids, reselling has become the new manufactured spending. People are calling it the future of MS, while others are lamenting that it’s going to burned before we know it like many other aspects of this game. So of course, being so hip to the things of today, we had to discuss reselling with Oren from Oren’s Money Saver on Episode 21 of the Saverocity Observation Deck podcast.
Oren will be back for Episode 24 as you may have heard from him and Trevor. We’ll be recording and it should drop on Tuesday or Wednesday. In the weeks between podcasts, I’ve been asking myself the question, is reselling for me? The answer to that question has been an emphatic no – and here are some reasons why.
I can conceive no possible scenario in which it is “easy”
My main issue with Matt’s post about reselling the other day is this – I don’t think reselling is cut out for lazy people like me. Redbird got killed because it was too easy – I mean you just had to go to customer service at Target and swipe your credit card for a few months there! Are people with dead Redbirds naturally going to look into reselling as the next best thing? I’m sure they are.
But I’m sure they will bail. As far as I can tell, reselling involves:
1 – finding a product below market price
2 – figuring out what earns you the most points off purchasing that (portals, type of card, etc.)
3 – purchasing that product
4 – listing that product on Ebay or FBA or some equivalent
5 – finding people to buy that product without getting undersold by competitors
6 – packaging the product to ship it out
7 – dealing with any returns/defects/hassles associated with the product
8 – figuring out all the taxes you owe Uncle Sam due to the sales of your product, including figuring out what you bought that is eligible to be a business expense and who knows what else taxes taxes taxes OR
9 – dealing with the IRS for tax evasion
I mean, I am a neophyte, but that seems to me like the bare minimum of work you have to do to make a profit (in both cash and points) from reselling. If you are reselling at a loss consistently you probably are doing it wrong. Absolutely zero of that seems easy to me nor is it in the least way appealing. I’m not sure why the masses moving from Redbird would think this is a viable “easy” replacement either.
Reselling seems a lot riskier to me
OK, so Tahsir had to talk to the cops and buying money orders looks shady, but in general the majority (but not all) of risk in manufactured spending is all tied up in your float. And if you have $3000 tied up in some credit union because they’re mad at you or you lose a $500 gift card that is going to be a big punch in the face (don’t lose gift cards).
Reselling still feels way riskier to me than that. Let’s say I get $3000 tied up in some account that’s under review. I might have to wait, which sucks, or might have to fight for it, which sucks even more. But I don’t have 200 Furbys sitting in my living room and witnessing steam wife come out of my ears because of it! The physical space it takes to resell makes it feel riskier to me.
Even more so, reselling is subject to market fluctuations. Gift card and money order risk is mostly limited to my organization system and how many red flags I’ve raised for the banks. But reselling involves an understanding of the products you are buying – the supply and demand of them, who your competitors are, and probably a bunch of other things I can’t think of. There’s always a risk I can only sell my $3000 worth of Furbys for $2800. I can always redeem $3000 of money orders for $3000 – provided I don’t lose them.
Points are a means to an end for me – but in reselling points are a byproduct
I’m on record – we are lucky enough to have two stable jobs we enjoy (which is important here I think) and the ability to travel whether miles and points existed or not. To be a good reseller, you should be making money – straight cash, homey. The miles and points you generate are a byproduct of all the purchases you make, but you should be making money from the sales, or at least breaking even. That’s after taxes, fees, shipping costs, etc. etc.
You know what makes money? Jobs. And as Matt alluded to in his post, reselling is essentially a job. I don’t want a second job. This blog is a hobby – I don’t expect to make money from it (not even beer money like PF Digest!) and I just do it because I enjoy writing, helping out here and there, and documenting my travels. If only my mom read this my world would not end – though I am pretty sure she doesn’t.
So in some senses, for reselling to work for me, I’d have to be gaining something out of the very act of reselling itself. I mean if I’m going to take on a second job, it better be a job I love. Except I already have a job I love so I don’t really need a second one of those.
Which brings me back to my end: my end is to travel more comfortably with my family and spend more time with my family. Adding a second “job” in reselling would end up working counter to that goal in my personal situation. I need hobbies to stay sane, but I also need balance – a second job wouldn’t help with that.
Final Thoughts
I’ve outlined why reselling isn’t for me, but maybe it is for you. For me, there are too many barriers to entry, too many risks. I’m sure that makes the old guard of resellers happy to hear. I’m also sure they’re willing to welcome in newcomers who are willing to put in the work.
For those of you who are willing to do the work, we’re taking questions for the next Reselling based podcast with Oren and Trevor. Head on over to Oren’s post and drop us a line – we’ll do our best to get to as many possible (or maybe plan to record a third!)
Resale is a pain. The customer service element of it can lead to a lot of unneeded stress. Sad that this is where it’s all going.
Great post. Reselling is for me, but it’s a business with all yhe usual headaches of any one-person business including very complicated bookkeeping. It’s far easier to lose items in the maze that is FBA than to lose a gift card.
I’m glad that both you and Matt posted what you did, Joe.
I have been reselling, and SLOWLY ramping up for about 15 months now, to where it’s ready to grow enough to provide some real income. And it’s a learning curve that I don’t think is for everyone.
I’ve been an entrepreneur for a long time. So, some of this is just taking existing skills and modifying them. But none of those skills involve working with any birds, or their cousins who serve. Those skills are basically rote. Being an entrepreneur requires a whole different mindset, one that many who, frankly, blow me out of the water in MS, don’t possess. Each to his/her own area of expertise! I’m fine with not MSing millions a year.
But I like seeing a profit, especially when that profit is growing. Really? My goal is to grow the reselling to the point where I can say goodbye to Kate, goodbye to MOs, because I’m getting points/miles/cashback in the same numbers from my business that I was from them–along with an excellent income.
Your wordplay is brilliant 🙂 Sounds like you’re well on your way!
Ok, I’ve had about enough of these resellers trying to be high and mighty and talking crap about MS as if reselling is some highly intellectual activity. Get over yourself, you’re just a common peddler providing zero value to society and doing nothing of any intellectual value as well.
Reselling is exactly like MS, and is exactly like day trading. It’s shuffling papers / products around hoping to profit from disparity in prices.
The only difference is large scale MS makes me $200+ per hour and I can do close to $10k profit per month with the right cards, while I highly doubt any average reseller even begins to approach that.
And on the topic of having business and entrepreneur skills…that BS too. Try doing $200k+ volume of MS per month, keeping track of dozens of batches of cards, multiple WMs/grocery stores and their individual policies and limits, dealing with the managers and sweet talking your way into allowing higher volume, etc.. It’s in many ways much more intricate than staring at the screen looking for underpriced products.
Wow. I never said that people who MS at a high level are NOT highly skilled, but most are not. They take a relatively easy task: birds, serves, whatever, and do it to a certain level of spend per month that seems safe to them.
Frankly, that’s what I do. And at that level, it’s not, at least in its present form, a particularly strong way to make money.
For those people, who are MSing around their jobs–which they either like, or trust, or both–reselling IS too much work, and it IS too much of a learning curve. And, as I see some complaining in various threads, it has a bigger downside, if you aren’t careful.
I’m happy for you that you have managed to make MS into a profitable endeavor, both with points and cash. I haven’t, and don’t really want to spend the time doing so. I don’t enjoy dealing with WM or figuring out where to deposit multiple MOs safely.
The key here is “the average” person. An AVERAGE MSer doesn’t do the volume, nor make the profit that you do. An AVERAGE reseller will lose money, because they’ll put as much effort into it as they do with their MS, and that could be disastrous.
I’m sure, if you watch any of the reselling threads, that you know this. Neither reselling nor MS is a highly intellectual pursuit, and I’ve never claimed that it adds value to the universe. It adds value to MY bottom line, in a way that MS does not. To add value to the universe, I volunteer and donate money and time.
Matt is constantly talking about the cost/benefit of what we do to get miles/points/cash. For those who want a little more, a little MS is fine. For you, clearly, it’s a business. The difference between MS and reselling, though, is that you can treat MS like a hobby, and still gain. If you treat reselling like a hobby, you’ll lose.
Great post, welcome to TBB! It should help some readers rethink about this reselling JOB!
I considered reselling merchandise for a quick minute. I was already reselling tickets; however, reselling merchandise just takes too much time and effort while tickets are quick, considering tickets are electronic.
When starting on this points game a couple years ago, I was eager to get in on any deal that would give me a few extra points. Now, I’ve shifted my focus on working on my current skill set and making myself more marketable. So, to those who want to dip into the reselling pool, sure go ahead and try it out. But also look at what else you can do that you will find more worth your time.
yeah a buddy of mine resells tickets (and enjoys going to the games too). I think working with your other hobbies really helps too
I’m with you on this. I dipped into reselling a couple of years ago when Staples was sending out $100 off computer coupons. I was getting some laptops below market value and selling them one-off on FBA (to get the buy box). After fees, I was breaking even, but I was only in it for the 5X UR I was earning on these at Staples. I figured if I enjoyed doing it or it came easy, I would scale up. I never got motivated enough to do it.
Until I find another MS method that works well for me, I’m back to the old fashioned way – churning. I realized the other day that I’m up near 1M points, only 80k of which are of the “low value” variety (HHonors, Marriott, basically the under 1 cent valuation crowd). It doesn’t make sense for me to get more aggressive for the sake of points earning since I’m not burning as fast as I earn, so reselling would need to be far more profitable – and I’m way too lazy!
I tried going slowly with reselling. I bought one item and sold it pretty quickly on fba, but it was returned. Then, I had to request it back from Amazon plus I’m out a bunch of fees for this. Now, the item has been shipped at least five times and the box is looking worse for wear. I have a $200 retail item that I have no idea what to do with. (Probably sell for about $100 on ebay and lose a bunch of money in the process.) I know this is a small sample size, but no thanks.