Is Gift Card Reselling the Dud of Manufactured Spending?
One of the biggest constants in the miles & points game is change. Back when I first started, the main way to earn huge amounts of so called free travel was to sign up for a lot of credit cards. Then Bluebird and Vanilla Reloads at Office Depot came along and suddenly it made sense to pay attention to this thing called manufactured spending.
Of course that is a massive oversimplification of the journey, but somewhere along the line the category known as manufactured spending or MS grew from a casual pastime to a giant behemoth. I am not saying it never existed before (it definitely did), but the focus wasn’t as vast and the opportunities seemingly weren’t as abundant.
The Bluebird Era
So here we are several years into the “Bluebird Era” and more people are doing this than ever before. This has lead to a shorter cycle between the discovery of deals and their death, but it also has brought fresh blood and fresh ideas into the game.
Among these ideas are new and innovative ways to manufacture spend. Instead of just buying reloads or Visa gift cards, you can buy and sell merchandise, tickets and yes even merchant gift cards. To be fair, all three are pretty much the same thing, although they tend to involve different processes.
Gift Card Reselling Is Risky & Unprofitable for Most
Over the past few months I have really embraced gift card reselling in an effort to understand it. As a result of that, you may have noticed more articles about it on Miles to Memories. I try to understand as many methods as possible so that I can share them with you, but also so I know how to pursue the right course of action for myself. Today, after having done this for awhile, I am ready to declare my verdict on gift card reselling. It is more trouble than it is worth in most cases and for most people.
Don’t get me wrong, I believe there is value in buying and selling gift cards, I am just not sure it is worth the time it takes to achieve any sort of significant spend. Gift card reselling is a great opportunity to make a few bucks during great deals, but it is not a great way to manufacture spend. (At least in the quantities needed to generate huge amounts of points.)
Consulting the Experts
Don’t believe me? Well lets take a look at data presented by some of the experts. Noah at Money Metagame recently completed his debriefing of the 20K Amex Business Platinum Challenge. To reach $20K in spend, he sold 70 different brands of merchant gift cards and spent a total of about 16 hours. Once everything pans out, he should make a profit of about 5%.
So on the surface that doesn’t seem bad, but in reality he only made about $70 per hour. I only use Noah as an example, because I consider him to be an expert. For the average person to achieve $20K in spend, it would take a significantly higher amount of time and would generate a lot less profit if any at all.
Then we have Chasing the Points who only made about $105 on his $20K in spend and just today announced he is going to shift to merchandise reselling. The truth is that merchandise reselling carries about the same amount of risk, but has the potential for a significantly greater upside. That conversation is for another post though.
Maybe I’m Just Tired
One of the things you get here on Miles to Memories is my honest opinion from the trenches. I am not trying to convince someone who is doing well at selling gift cards to stop. Instead, I am trying to present a real view of what is involved so people understand the true risks of this stuff. It can be a time suck yes, but you are also “playing” with real money.
Yesterday I wrote about a company called Gift Card Rescue who seems to be giving a bunch of people (myself included) a run around about the status of their checks. A few weeks ago it was Gift Card Zen who decided they would cancel a bunch of sales because they had promised to buy cards at too high a price. There are of course many more stories like this. The entire space is overexposed which means more risk, less opportunity and more frustration.
Profit vs. Simplicity
I know a lot of you would just prefer to pay $4-$5 for a $500 Visa gift card which can be liquidated to Bluebird or REDbird. For this challenge it would have cost $160-$200 to generate $20K in spend that way. Not bad overall and I could argue that you would spend about the same amount of time as Noah in liquidating it. So he made $700 while you would lose $160-$200. Spending ~$200 to earn 150K points sounds good, but so does making $700, which means there is no right or wrong answer.
I’ll Still Cover Good Deals
Miles to Memories is really a blog about all sorts of deals and thus I will still write about good gift card reselling opportunities when I see them. I have never really delved too deep into the more complicated stuff and for now will continue on the same path. I’ll let you know when something is a killer deal, but will try not to waste your time with the stuff that I deem not to be worth it. In other words, business as usual.
With all of the problems we have seen lately with gift card resellers changing offers and not sending checks, I now believe most people will probably want to avoid gift card reselling for the most part. Like with anything there will be low hanging fruit type offers that just about anyone could have some fun with, but floating thousands of dollars in inventory just to manufacture spend probably won’t make a lot of sense for most of you.