Whether you feel the golden era of manufactured spending has passed or not, the fact remains that opportunities tend to close faster than new ones open up. Pure manufactured spending (Read: Introduction to Today’s Manufactured Spending) is still viable, but it certainly has gotten harder. Reselling, which I propose to be the next frontier in manufactured spending is no easier. But I would argue that if you take a higher level view, it can open far more doors. It also is your entry into becoming a Weekend Entrepreneur.
Reselling, the next frontier for Manufactured Spending
Manufactured spending at its purest is a form of arbitrage. You are effectively buying miles and points at a discount and redeeming them at a higher value than you paid for them. Reselling is no different in that regard. As we dive deeper though, there are rather pointed differences:
Reselling is a business
That means that you need to consider taxes and reporting responsibilities.
Reselling avails you the opportunity to earn miles and points at negative cost.
Choosing the right products that you can earn a profit on in their own right, means that the miles and points become pure gravy. Scale that up, and you’ll have no problem with frequent flyer program devaluations but remember, that Amazon can be just like an Airline, they make the rules.
Reselling can be riskier than pure manufactured spending
Because you are buying product, there is the risk that you might have chosen a bad product, or even if you’ve chosen the best product out there, you still have the liability of returns. Bottom line, there is more risk than just having to pay all of your expenses for a month with Visa Gift Cards (Read More: Considerations for Reselling as a Method for Manufactured Spending).
You’re still interested – what are the next steps?
The first step that I always recommend–once you’ve considered the risks—is to consider your risk tolerance and identify a seed budget. Yes, you want to generate thousands of miles and points, but you need to be reasonable as you dive into a business. You want to identify an amount of money that you are willing to lose. Reselling can be like gambling. You are making a bet that a product that you have purchased will sell. If it does sell, you are making the bet that you will make a profit or at least break even. So please, identify a budget and stick to it, as you get your feet wet in this new venture.
Once you’ve identified a budget, consider what marketplaces you want to work with. I’m a fan of Amazon. Specifically, I am a huge fan of selling via Fulfillment by Amazon. Why? Because they do most of the time sensitive work. You source, prep, pack and ship your products to Amazon in bulk. Once your products reach Amazon’s warehouses, all you have to do is tweak the prices to get the products to sell. As your products sell, Amazon pulls them from the bins in the warehouse (read: A Look inside Amazon’s Warehouses) and ships them to your customer. Amazon provides all of the customer service unless the customer intentionally reaches out to you directly—via Amazon. In short – it makes reselling as a side gig feasible.
If you’ve chosen Fulfillment by Amazon, well, you’re in luck, because I have a beginner’s guide that covers creating an Amazon Seller account, all the way through your first shipment and sourcing tips. Check out the guide below:
- Start Here
- Beginner’s Guide to Fulfillment by Amazon: Setting up an account: We’ll walk through what you need to do in order to set up an Amazon FBA Seller account.
- Beginner’s Guide to Fulfillment by Amazon: Analyzing and adding a product:Once you’ve gone and set up your account you’ll want to understand how to analyze a product to see if it makes sense to sell and if you can sell it. Then we’ll go through adding the product to your account.
- Beginner’s Guide to Fulfillment by Amazon: Shipping 101: Once you have a product to sell, you need to ship it, here are is the basic process of shipping into Amazon.
- Beginner’s Guide to Fulfillment by Amazon: Shipping 201: For those of you who want to send in more than one item type, this one’s a good read.
- Beginner’s Guide to Fulfillment by Amazon: Ungating Product Categories: Amazon restricts some categories, we’ll cover what those categories are, why it can be beneficial to get permission to sell in them, and how you can start the ungating process with Amazon.
- Beginner’s Guide to Fulfillment by Amazon: Amazon Seller App: One of the easiest (and free) tools for reselling is the Amazon Seller App, you’ll want to have this on your phone.
- Beginner’s Guide to Fulfillment by Amazon: Amazon Seller App Part 2: Diving deeper in the functionality of the Amazon Seller App. Further updates can be found here, and here
Once you’ve cut your teeth and sent a few orders, you could even apply to join the Mile High Reselling Club.
I realize that asserting that reselling as a method for manufactured spending is not a terribly popular idea within the reseller world. In truth, it increases competition, and it generally pushes down profitability in some areas. Just look at iPad or Apple Watch prices over time. That said, I don’t believe those depressed prices are primarily due to mile and point collectors. I tend to believe that anyone that gets into reselling will logically pursue profit as soon as they see how much work it is. If you think about it, Manufactured Spending is a lot of work in and of itself, and there your “profits” are usually in the single percentage range.
With that said, I still believe Reselling is the next frontier in manufactured spending. I believed this 5 years ago when I started reselling, and it is true to this day, (Read more: My evolution as a reseller). Just know that there is risk, and this is a business. What does that mean? First, always pursue profit, the points will come. Furthermore, this can become work. For me, I bound it in such a way that I enjoy doing it. That doesn’t mean it always balances out though! During busy times like the fourth quarter, I commonly finish my day job only to come home and work for another few hours on the reselling business. Weekends can easily become more time for the reselling business. But you have to have boundaries. If you do, this is an excellent side gig that can also help increase your miles and points balances, and if you do it right, you should make some money too!