BigHabitat
Level 2 Member
Today there was a Best Buy flash sale which offered $100 off 64gb and 128gb Ipad Air 2s. Since I only received the email about the flash sale at 2:12 pm CST when the sale ends at 3:00 pm CST, I tweeted the deal instead of making a post in case anybody was interested
Fellow blogger and usually reserved Milesabound took a look at that and asked how could I make money on it?
Well, first, let’s do a quick calc of expected profit per tablet. Amazon pricing on the 64gb is about $578. My net from recent sales is about $545 less about $530 cost ($499 plus tax) so $15 net cost per tablet. Note I forget shipping costs in that quick calc, but its at most $2-$3 per tablet if I shipped just those two items, probably less. But let’s continue…
On two $500 tablets I make about $30 in cash profit, $25 in BBY rewards, 2000 SW points, progress towards Southwest companion pass, 1000 Membership rewards points, and progress towards my $20,000 min spend requirement on my spanking new Amex Business Platinum.
So let’s stop here for a sec… for many people, Milesabound included, there is just not enough juice in this deal.
His comment: “you are making my case for me… $55 in cash and points worth maybe $40 on over $1k at risk”
Well $95 on $1000 is 9.5% in a world where 2% cards rule and an extra 0.25% from TopCashBack on Amex gift cards might crash the site, so it’s clearly not the absolute percentage return that is the problem; it’s either the risk or effort required relative to earning that return are too high.
So what could go wrong?
- Lost shipment to Amazon – It’s never happened to me. All shipments are through UPS where I get a drop off receipt. I assume that there is some sort of insurance on shipments to Amazon provided by UPS, but have never confirmed it.
- Amazon loses it. This actually happens on occasion. In this case, Amazon reimburses you. They determine the reimbursement value, in my experience its been close enough to what you would have sold it for that it’s not been an issue
- You don’t get your assumed price. This is more significant than the other two. However the great thing about Ipads is that Amazon doesn’t sell them directly, nobody can really buy them in huge quantities to sell below MSRP, and they sell extremely fast. So most sellers send a few in at a time, they sell in a day or two at the prevailing price, and no one needs to drop their price to move product
- Risk of customer returns. Another real risk, but overblown in many cases. Most returned items are fine, the customer found a better price, had buyer’s remorse, etc. I looked at 45 ipad sales; I searched and 4 were returned. Of the four, 2 were sellable as is (i.e., unopened) and returned back into inventory. The other 2 were sold as Used-Like New which on a hot item like an ipad usually translates to a 10% discount. So even assuming a 10% return rate and a 10% loss on the return, the net returns would cost around 1% over time. Now occasionally someone will damage a product and you might have to accept a lower price on the relisting, but over time it should work out. On one tablet it may not
Hey, I get it. It’s not for everyone. Look, I’m all for buying $600 worth of Visa cards at OfficeMax for $580. I would do it all day if they let me, even though now each transaction takes 10 minutes since the only store nearby with any left insists on calling the credit card company. I liked working that stop into my morning commute. But when I went this morning, they were sold out. And I struck out at Kroger earlier too. So much for efficiency.
Yes, I could go to Simon Mall and buy $10k or $25k or whatever of gift cards. But my nearest Walmart doesn’t have a Kate, and somehow my risk tolerance thinks that running that sort of volume through Walmart and money orders to banks is more risky than an occasional return. And after a 4-month ordeal getting $500 back from Incomm on a failed money order purchase at Meijer, I just couldn’t imagine that happening to a stack of VGCs.
Could we have made that deal better?
Yes! that Best Buy deal was hardly optimized. It could have been so much better…
Part of my frustration was hearing about the deal at 3:12 EST when the deal ends at 4:00. This means I have little opportunity to juice up the deal. Here are some ways it could have been better with a little more time:
- Easiest way would be to go to Kroger and use an Old Blue Cash card to get 5% back plus 2x fuel points. On $1000 this would have been an additional $50 cash back, plus 2000 fuel points which you could use for $1 off up to 70 gallons. So that’s another $100-$120 points right there
- If you didn’t have the Old Blue Cash, you could have used an Amex Everyday card, Personal Gold card, or lots of other cards with grocery bonus plus still get the gas points
- I could have bought Best Buy gift cards from Paypal Digital gifts to get 5x on a Chase Ink card, they usually email right after the purchase. That would have been an extra 5000 points on the purchase (5k instead of 1k)
- One twitter follower suggested using Best Buy Mover’s coupons. I haven’t tried it on the ipads, but if it works it’s another 10% off.
OK, what’s the point?
The point is, everybody has different circumstances and manufactured spending avenues that work for them. I’m not going to try to convince someone to do reselling, I have no idea if it’s right for them or not. I will highlight deals that I see, and try to help if people have questions.
My favorite aspect of blogging and attending Saverocity DOs and such is to hear what others are doing and learn from them. I’ve been blown away by the speakers and attendees discussing MS techniques, their volumes, card offers, loyalty programs, redemptions, reselling, etc.
So since I don’t think we’ll ever agree on whether pure MS or reselling is right for every single person in this game, I think we should agree that everybody should pester Matt about having another DO….
What about that picture you said I didn’t want to see?
Oh, man, you are a glutton for punishment. Don’t say I didn’t warn you. This was clearly the best rebuttal to Milesabound from our friend Saianel. I don’t want this image in my blog media library so I’m going to link to the tweet..
“He actually likes to see this at Walmart”
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