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.
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!)