2016 is the year of RESELLING or is it?

Introduction

I think the writing was on the wall this whole time; some saw it earlier than others – the death of MS.  Outside of the WF 5%, there really isn’t any meaningful card to MS on these days.  NWB is dead.  FIA is gone.  Sure, if you want a 1-2% profit, go have at it.  Others have decided it’s not worth the time (me included.)  I didn’t fully load my Serve cards for the past 3 months, ever since the death of RB.

 

The spotlight on reselling

So have I proven my point yet?  Do you guys all believe me?  When all the big boys have switched over to reselling, then maybe you should too?  Didn’t I tell you that MS is a get rich slowly scheme?   What do you think reselling is?

 

Let me throw some cold water on you

While you may have mastered travel ‘hacking’ and have millions of points, you are entering in a whole new hobby that MANY OTHERS ARE ALREADY DOING.  While you may have been in the top 0.1% in the miles and points game, in the world of reselling, you are at the bottom.  You are competing with people whose full time job (and have hired help) to help them resell.  My point is – the competition is FIERCE in reselling.  Just look at the FBA prices on the Apple Watch the past 2 months.  If you don’t know what you’re doing, you could easily lose hundreds (if not thousands) of dollars.

Remember, there is no barrier of entry to reselling.  A stay at home mom could just go out to Walmart, scan a toy, and sell it on FBA.  The only difference between you and that mom is that you know what credit card to use and know how to fly in first class.  That mom has a competitive advantage over you in that SHE IS OUT SOURCING PRODUCTS WHILE YOU ARE AT WORK.  The good news for you is that you probably have more float than her and can be a little bit more risk adverse to price drops.  Who do you think is driving those Apple Watch prices down?  It wasn’t me or you!  It was that mom who needed the cash!

 

Should you even resell?

I have a couple of travel hacking buddies who used to MS a lot, but have slowed down lately.  They despise reselling just because they value their time more than reselling.  They loved the ‘points’ because they want to fly in international premium seats, and they both have over a million points.  To them, the profit made from reselling just isn’t worth their time investment.  It’s odd because they’ll spend a similar amount of time driving to Walmart for the same profit margin.

I can’t explain it.  I guess it would be similar to you making $100/hr cleaning toilets or something.  I think everyone would rather drive to Walmart for an hour than to clean a toilet, even though you both make the same amount.  This begs the question – if you don’t like cleaning toilets or reselling and the MS Walmart equation is out of the picture, what do you do with your time?  I guess get a new hobby?  Go back to churning credit cards?  Spend more time with family?  Only you can answer that question.

 

How to get started in reselling

If you still want to get started in reselling even after I’ve thrown cold water on you, start with Trevor’s beginner’s post about FBA here.  You can read my own guide.  Oren has a great Tuesday series too.

 

What should I resell?

Someone once asked me what I resold, and I can tell you that no one will tell that to you, so don’t even ask it.  Every product that they sell is their unicorn.  At best, they’ll tell you what store and what category.  Don’t be THAT guy that puts them on the spot and asks what item it is.

My advice to you is to start small.  Pick a category that you know!  Don’t resell iPads just because everyone is selling iPads.  If you know kids’ toys, go resell that!  If you know tools, start at Sears, HD, or Lowes.  The last thing you need is to go big on an item and have Amazon lose it and you have to deal with getting reimbursed.

Also, BEWARE of Slickdeals.  Tens of thousands of people read Slickdeals,if not more.  Just because it’s a SD, you and 10K other people will drive down the price and now you’re losing money.  I found a lucrative item in Q4 by browsing a site’s clearance section for 2 hours.  It was never posted on SD.  That’s how you make money on reselling.  It’s time consuming!  You are essentially reallocating the time spent driving to Walmart with time researching stuff online.

Lastly, it’s all about experience.  I’ve been reselling for almost 20 years.  I can look at Best Buy’s daily deal emails and know which one MIGHT be promising.  I can browse the Kohl’s site and by looking at the sale %, can sorta guess what will give me good margin.  The only way that you’ll get to that point is by your own trial and error.  In the meantime, play this fun little game.  Now go out there and get them tiger!

Oh wait, one final comment.  You know how you hate bloggers for killing MS opportunities?  Well, you don’t have to worry about that for reselling since no one would blog about their fat margin reselling item!  =)

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  • craig

    Good points you make. I’m finding it takes time and experience with scanning, scouting, working spreadsheets! Best to just not get in over your head and take it slow like you stated.

    • Ken

      You will find that spreadsheets will be such a time suck that they will be the end of you, at least if you begin scaling up.

      • Miles per Day

        Yeah if you value your time more, try out Inventory Labs so you don’t have to track it all manually

  • Daniel Schwartz

    As a tax guy, I feel like I should mention that regular reselling is a trade or business and you have to report it on your tax return.

    • Miles per Day

      Yes, especially when you get a 1099 from Paypal or Amazon.

  • Daniel

    First time to your blog thanks to Oren. I think you have some valid points and I especially love that example of the APPLE watches. That was truly epic how many of us were able to sell the cheapest models for over 10% of retail and now they are so darn cheap you will sell at a loss. The loss of SERVE/BLUEBIRD was bound to happen and will result with new tactics coming out. I think we will have a lot people attempt to resell but don’t believe we will have more competition than we already do. The reason for this is because reselling requires way more work than CC churning. It will require to take on risk that can result in losses and for your average MSer and that isn’t going to fly. Look forward to reading your blogs. Cheers!

    • Miles per Day

      Ah welcome Daniel. I’ll have to buy Oren a beer if I ever see him. Just a heads up – my blog is all across the board; not just reselling. There will be a car brakes post pretty soon.

      • Wesley Murray

        That could be one I actually enjoy, I’ve changed a few sets of brakes in the day job. LMK If you have any questions on anything…..

  • Secretary_Toaster

    Prescient timing here given today’s development…

    • Miles per Day

      I was actually going to add “When Serve stops working…” but didn’t put it in. If I had, that’d be way too scary.

      • TrAAveller

        Very timely article. R.I.P. Serve. 🙁