Manufactured Spending Archives

Reselling, the next frontier for Manufactured Spending

July 18, 2017 By Trevor 2 Comments

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.

Wrapping Up

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!

Priority Pass cards, United Devaluation, Wrong Journalists, 5/24 Rule

July 7, 2017 By Trevor Leave a Comment

The Weekly Travel News Roundup is a collection of headlines from around the internet that caught the attention of the Tagging Miles team. Content on these blogs do not necessarily reflect the positions of Tagging Miles, and should not be considered endorsements. Have a great story we should read? Contact us now and let us know.

Travel:

Doctor of Credit has a quick tip for differentiating Priority Pass cards that come with different benefits.
On July 4th this happened… At the time when I read in real time on twitter I was going through a variety of emotions, now I just shake my head.
Too Little Too Late from American for elite members… Gary received an offer, though I didn’t. I suspect that might be because I’ve had a total of 4 revenue segments on American this year as an Executive Platinum.
United announced another devaluation. It’s not horrible but it’s certainly not good news. I still need to dig deeper myself, but Gary has a good overview.

Miles and Points:

Matt shares Manufactured Spending at Sea, an interesting perspective if you’re going to spend a week or so on a ship and don’t want to let your manufactured spending drop off. It also sounds easier than going to Walmart.
Ariana shares why the 5/24 Rule is no longer relevant.

Tagging Miles:

Introduction to Today’s Manufactured Spending
Do this now if you have the Chase Fairmont Visa
Resellers: Long Term Storage Fees hit 15 August!
Observation Deck: 2017 Skytrax Airline Awards
Are Skytrax Awards Perception over Reality?
No more Electronics Ban for Abu Dhabi

Introduction to Today’s Manufactured Spending

June 28, 2017 By Trevor 15 Comments

Many credit cards offer opportunities to earn miles and points from signups and putting spend on your credit card. So you put your regular—or organic—purchases on your miles and points earning credit card, but if you’re like me, you find that the miles just don’t add up quickly enough for that next planned trip! So what other options do you have? More credit card applications? Paying cash—the terror! Or, you could add non-organic or manufactured spending to your credit card.

What is Manufactured Spending?

By its very definition, manufactured spending is creating spending, generally on a miles or points earning card for the purposes of generating miles and points at little or no cost.

Manufactured spending has taken on many forms over the past decade or so. In the beginning it meant buying $1 coins from the US Mint, where you bought them at face value, but the US Mint picked up the shipping. Since you were literally buying money, it was as simple as depositing those pristine $1 coins at your bank of choice. Now this wasn’t the US Mint’s intent with offering free shipping, and ultimately the Mint decided to discontinue that practice, thus killing the opportunity.

Since the US Mint, manufactured spending has taken on many forms. The method that propelled Frequent Miler to worldwide fame were with prepaid debit cards. You see we had this trifecta of Birds—well, two birds and a Serve—which history tells us, was a failed attempt of American Express to expand into a new market. First there was Bluebird, a partnership with Walmart, whereby one could load their Bluebird prepaid debit card at any Walmart cashier, or, in some cases, at a Kiosk at the Entrance (otherwise known as Kate). Many miles and point folks loved Kate. You might say that Kate was the girlfriend that helped us turn left when we boarded the plane, to settle into our comfy Lufthansa First Class seat with a nice glass of Champagne.

Thanks Kate!

Then there came Serve, to lesser fanfare, but still very lucrative as you could load Serve online. That’s right, you didn’t need to go to Walmart!. That helped. There were other benefits of Serve too.

Finally, the trifecta of the “Birds,” The Target Redbird. If Greg the Frequent Miler was not a household name before, this certainly changed that. You see, the Target Redbird was everything anyone could have ever wanted in a prepaid card. You could load it at Target with first a Credit Card, then a prepaid Visa Gift Card. It gave you a 5% discount if you used it to purchase things at Target—including Starbucks! You could transfer the balance to a bank account or directly pay a credit card! There were even some other cool, yet shorter lived features. This was the pinnacle of easy, low hanging fruit manufactured spending. Yes you were limited to $5,000 per month per card, but you were only limited by your imagination as to how many redbirds you could get!

Then, one day, Redbird died. I opined that there was still life in Manufactured Spending (read: Redbird is Dead, Back to Basics), which unfortunately is where we are now.

You can still generate many thousands of miles and points by purchasing Visa Gift Cards and other similar instruments. You just have to work harder in liquidating or converting those Visa Gift Cards into cold hard cash. The costs to achieving that liquidation have also increased over and above the prepaid Redbird cost.

Is it still achievable? Of course, but it takes time, patience, and in some cases, a lot of experimenting and trial and error.

A word of warning with Manufactured Spending

While manufactured spending is completely legal, there are some aspects that can put you in the gray area. One area in specific is how you deposit those money orders into your bank account. Structuring those deposits to avoid federal reporting requirements, should be avoided at all costs. Structuring is the practice of intentionally depositing less than $10,000 in monetary instruments or cash, in a reporting period or single transaction. There are varying interpretations of what constitutes structuring. Some will argue that depositing Money Orders doesn’t result in required federal reporting. I won’t argue the point, I will just say this: Don’t Structure.

Wrapping Up

Manufactured Spending is a great way to increase your miles and points balances. It takes work, don’t think that it doesn’t. Is it worth the time? I tend to think so. Consider it this way, miles and points are essentially a discount. They still have a cost. Visa Gift Cards have an activation fee cost (e.g. $6.95), Money Orders have a cost, your time has a cost. So consider all of those factors, and decide for yourself if its worth it. Often times, if you are traveling in premium cabins, that cost is worthwhile. Why? Because the marginal cost between an premium cabin cost on miles as compared to paying outright for that premium cabin ticket can often be very significant.

Hyatt Takes Suite Upgrades seriously, United Airlines Prepaid Card

May 26, 2017 By Trevor Leave a Comment

Travel:

Hyatt takes Suite Upgrades seriously, generally speaking the representative will put you on hold so they can confirm with the hotel. In the off chance that the hotel does not honor that upgrade upon check-in, good things can still happen, just see FQF’s account.

Miles, Points, and Credit Cards:

Doctor of Credit reports that MSing is now causing shutdowns for other US Bank cards, not just the brand new Altitude.
Don’t try maximizing your Discover 5x at Costco.com – apparently it’s not showing as a warehouse club.
If you’re available in early June, why not fly the new Qatar Airways Q Suites between London and Doha. Gary Leff reports that it’ll be available starting 10 June.

Miles and Points:

Frequent Miler and a whole slew of others are covering a United Airlines Prepaid Card. It will be a partnership with Netspend, which gives us an idea of how it will play with manufacturing spend. But there is so much more that is still unclear.

Tagging Miles:

PSA: Cancel, don’t change Southwest Flights
Observation Deck: Frustrating Customers or Frustrating Customer Service?
Credit Card Primary Car Insurance is not Equal

Did you maximize your Q1 5x for Chase Freedom, Discover, Citi Preferred?

March 14, 2017 By Trevor 4 Comments

We’re just about halfway through March, which means that time is dwindling down to maximize your Q1 5x points for the various quarterly 5x cards from Chase, Discover and Citi. So consider this a reminder to get out there and maximize your points and cashback.

Maximize your Q1 5x – Chase Freedom

Chase Freedom’s First Quarter 5x is for Gas Stations and Local Commuter Transportation, but note that this does not include parking, tolls, or Amtrak purchases. What does that mean? Find a gas station that has some Visa Gift Cards, or other gift cards that you think you can use in the near term.

Maximize your Q1 5x – Discover

Wholesale Clubs, Gas Stations and Ground Transportation. This isn’t nearly as valuable, because Costco doesn’t accept Discover card, but I think BJ’s and Sams Club do. For resellers; remember that Sams Club and BJ’s both sell a variety of gift cards, so if you can’t find products for resale, you could at least maximize your 5x by getting gift cards for stores that you can find products for resale.

Maximize your Q1 5x – Citi Dividend

Citi Dividend mixes things up, in that they are giving 5x on Home Depot and home furnishing stores. There are a variety of good things you can get at Home Depot, like batteries, as we recently changed our clocks for daylight savings time–and would be good to check those smoke detectors!–as well as lightbulbs, and other things for those “honey do” projects as we get into the spring.

Conclusion

As we near the end of March, its a great time to make sure that you are maximizing your rotating category bonus rewards. Historically, I’ve found the first quarter to be the hardest to maximize, as I don’t do a lot with gas stations–and in fact, I utilize Costco gas for most of my refueling needs). That said, it is a good time to look back and see whether there are ways to maximize your bonuses in the final ~2 weeks of the quarter.

Have you already maximized all of your 5x? If so, how did you do it, manufactured spending? Reselling? Organic Spend?

The Plastic Merchant – A Great Way to Resell Gift Cards

October 13, 2016 By Trevor 44 Comments

I realize that I may be a bit late to the party, but I’ve only recently dipped my toes into Gift Card Reselling. I only do a little at the moment, and I am very opportunistic. I don’t work with any of the more popular portals, only one that a friend of mine runs – The Plastic Merchant (TPM). For those of you attending the Chicago Seminars 14-16 October 2016, you’ll get to meet the team, as they are a sponsor. For those of you who attended ResellingDO 3, Mike Dean, the founder, was a speaker.

The Plastic Merchant

I think the description on The Plastic Merchant’s home page pretty much explains why it’s a perfect fit for the miles and point community:

“A bulk gift card selling platform built for and by point, miles, and arbitrage enthusiasts.”

The key reason that I even got into this, was because of how easy TPM makes it.

Once you have an account, you can log-in and see at a glance what kind of payout rates are by the various brands and gift card options. A key difference between TPM and other sites is that, TPM buys specific denominations of gift cards, represented by their SKUs.

As you can tell, it’s a pretty exhaustive list of options (469 different SKUs at last check!). Of course, the real benefit to me, is that I know, before I even buy a gift card, what I can sell it at, and the rough margin (though of course rates are subject to change). More importantly, TPM also allows sellers to ‘reserve’ capacity so you know you’ll be able to sell your cards, even if the gift cards are being shipped to you later (like we see with physical gift cards). Bulk sellers are also able to view how long prices will be honored and exactly how much they’re willing to buy.

Valuable Resources

The Plastic Merchant also has a variety of additional resources that really shine. One of those resources is the portal lab, which is very similar to FrequentMiler’s Lab, but, only available to registered bulk sellers.

In addition, TPM sends out e-mails every so often when there’s a particularly good deal to leverage, and even provides the TPM price, so you don’t have to go to multiple places to decide whether you want to jump on a particular deal or not.

Example E-mail from The Plastic Merchant.

Conclusion

All in all, I think The Plastic Merchant is a great place to start, if you are looking to get into Gift Card Reselling. This is definitely one of those areas,where you can increase your manufactured spending. You still have the potential to generate a profit, but without incurring as much overhead or risk as reselling products.

Have you signed up The Plastic Merchant?

Cuba’s hot now, is Pacific travel the next thing? Plus more on the Chase Sapphire Reserve!

August 5, 2016 By Trevor Leave a Comment

The Weekly News Roundup is a collection of headlines from around the internet that caught the attention of the Tagging Miles team. Content on these blogs do not necessarily reflect the positions of Tagging Miles, and should not be considered endorsements. Have a great story we should read? Contact us now and let us know.

Travel:

You can now fly to Cuba on US flagged carriers without going on an out of the way path. But, is Cuba really ready? All indications point to the answer being “no.”
Southwest has extended their schedule to April, 2017. A word of warning though – increasingly lately, I’ve been noticing Southwest is 2x the price, so definitely cost compare. That said, lower fares are usually available when the schedule first opens.
It is possible to get the illustrious American Airlines Gold Status (pretty much bottom tier) through Credit Card spend. Just not in the US. No word on how easy MS is though.
Is the Pacific the next big thing for the Miles and Points community?

Miles and Points:

Doctor of Credit has even more intel on the Chase Sapphire Reserve!
Miles to Memories has a new cheaper way to get 5x at Office Depot. I’m also part of the Travel Hacking 101 group that this came out of – if you’re not in that group, you should be.
United has long been known for having very relaxed routing rules. Unfortunately, as One Mile at a Time reports, this appears to be changing. Things are still a little murky, and, rules are usually enforced via IT, and well, we know, IT is hard. More to come, but, at a minimum, book any awards you know about, before October 6!
Travel Codex has a guide on searching for award travel on Air France.
Gary has a great post on Korean Air SkyPass.

Tagging Miles:

Where should you credit your miles and points.
Diamonde the Giraffe visits the Grand Hyatt Dubai
Increased TopCashback Payout if taken as an AMEX Reward Card
A look at how Amazon Fulfillment Centers Operate
My Disappointing experience at the Grand Hyatt Dubai

Maximize your Chase Freedom 5x at Costco

June 13, 2016 By Trevor 9 Comments

Update: Chase has extended Freedom 5x through the end of the year, so now instead of 6,000 points, you have the potential for 18,000 points per Freedom, just from shopping at Costco, BJ’s Wholesale, and others!

Its mid-June, and if you are like me, your Chase Freedoms have gathered dust. I didn’t bother to do much with them this month, what with the other options available like Grocery Stores. In case you aren’t familiar with the Chase Freedom 5x, this is what I refer to the quarterly bonus. You earn 5x Ultimate Rewards points, per dollar spent, up to $1500 spend, per card, in the quarter. See below for the line-up:

Chase Freedom 5x Calendar 2016

I mean, you totally could have used your Freedom at a grocery store, to buy, you know, groceries, or, other less edible–cough; plastic–things that you can buy at a grocery store. Or, you could be the ultimate procrastinator and have gotten to mid-June and realized that you have let your Freedom(s) sit in your credit card drawer–since lets be honest; there are more credit cards than socks in there now–and now you’ve got to find a way to maximize, and quick!

The answer: Costco!

What to Buy?

First and foremost – if you normally go to Costco and fill up your Mini Cooper (like me), then that’s a great start. Of course, if you are spending $1500 at Costco just to feed a family, you either have these guys for a family:

New Zealand’s All Blacks Rugby Team, they clearly need a lot of protein, easy to maximize Freedom 5x with these guys!

Or maybe you are getting fully stocked up for the impending Hurricane Season.

But, I don’t have a Rugby Team to feed, what should I buy?

Ok, so you don’t want to fill your basement with water and toilet paper, or throw a barbecue for the whole town. So what else can you buy?

Gift Cards! Costco generally is very good at selling Gift Cards. They might not have the widest variety of gift cards, but they do have a bunch, here is a brief list:

iTunes (not pictured, but trust me, they’re there)
Ruth Chris
McCormick and Schmick’s (note, this is DC regional – you’ll see different ones)
Regal Cinema
Other Movie Theaters
United States Postal Service (USPS) Stamps
Spafinder
Costco Gift Cards

Costco Gift Cards

Chase Freedom 5x – Wrapping Up

I think there’s plenty of opportunity to spend $1500 at Costco in the final days of June. You’ve got plenty of options when it comes to great products, stocking up, or grabbing gift cards. I personally will be doing something slightly different, in line with my reselling business. What will I be buying? Well, I’ll know it when I see it. But you can be certain that I’ll be walking through Costco with my FBA Seller App (and Part 2) open. Either way. If you haven’t maximized your Chase Freedom 5x for 2nd quarter, Costco has you covered, assuming your a member. And if you’re not, and you have a wife, family, or rugby team, I think you’ll find great values there, so its worth checking it out.

Free, isn’t really ever free, in Manufactured Spending

June 8, 2016 By Trevor 6 Comments

A couple of days ago I had an interesting conversation that turned toward manufactured spending, with my friend, who runs the Facebook Group Travel Hacking 101.

He had shared the news about the AAdvantage program changes and asked the group whether that would lead to loyalty changes. He then followed up to say that he’ll continue to not pay for flights (I suspect, through using miles/points and cash back).

Always a cost to Manufactured Spending

My response was something to the point that there is always a cost. He ultimately responded that his only true cost was time. Time is definitely not free. There is always an opportunity cost. You could be out on the golf course, but instead you’re standing in line at Walmart. You could be working, and earning a higher per-hour rate, than you can generate via miles and points.

In Program Management, we generally measure three key programmatic metrics:
– Cost: how much did we think a program was going to cost, and how much it is trending to cost–although that may be overly simplistic.
– Schedule: how long did we think the program would take, and how long is the program trending toward taking based on delays and early completed tasks.
– Performance: is the program doing what we said it would do, is it meeting the desired goals at the start of the program.

Relationship between Cost, Schedule, and Performance

To draw the corollary to the manufactured spending points and miles game:
– Cost = out of pocket cost + time (aka how much you value your time)
– Schedule = how long do you think it will take for you to do all the steps necessary to manufactured spending, and how long did it really take you (because there is a cost to that time)
– Performance = the result of those points and miles you generated, this is impacted by internal (ability to maximize/utilize the points), and external (devaluations, award space limitations) factors.

Wrapping Up

Really my basic point is – despite all the discussions of free, nothing truly is. Normally we talk about opportunity costs, but if you just take the basic view that your time is worth some amount of money–e.g. your hourly rate, or salary broken down to an hourly rate–then manufacturing spending in turn has a cost, even if you pay yourself back with cashback; unless you’re generating so much cashback, that you can replace your hourly rate, in which case, maybe you should just manufacture spend for a living.

Black Friday Deals, More Devaluations, SWOTs and alternative Manufactured Spending strategies

November 27, 2015 By Trevor Leave a Comment

Black Friday Deals:

Mommy Points is keeping an updated post with Travel related Black Friday Deals. Worth checking back on, so far the most interested one I’m seeing is 20% bonus on Fairmont hotels gift cards.
Ed Pizzarello highlights some good Black Friday deals at Amazon. Not really opportunities to resell, but I picked up an Echo for myself, figured, why not give it a try.
Also, if you had your heart set on a doorbuster deal from a brick and mortar store, Trent reminds us, check to see if Amazon has matched it. They’ve matched a ton!

Amazon today has price-matched a sampling of 29 out of 30 “doorbuster” skus across 4 sites .@OrensMoneySaver
— Trent Swanson (@trentswanson) November 27, 2015

Travel:

The First Boeing 757 landed on a Blue-Ice Runway in Antarctica – Seems like this could bring the ability to get to Antarctica closer..!
From Vinh (and one I found from the below Chasing the Points post), using the AMEX Platinum Concierge for travel planning. Incredible! Get the most out of your $450 annual fee!

Miles and Points:

Scott asks: Are airlines becoming more reliant on selling miles? Sure seems like it!
Air Canada’s Altitude frequent flyer program ties status to spend… I dare say that the Altitude has Attitude!