For you super savvy travel hackers, this one may be a little boring. I am going to discuss my first big swing at ‘reselling’. Reselling is a rather simple concept, you buy items and sell them on eBay or Amazon for a profit. Earning points comes into play by using shopping portals when you are purchasing your products to resell. Did you know you can earn points for normal purchases online?
Most hotels and airlines have shopping portals that reward you for shopping online. Each store earns a different amount of points per dollar spent, and each airline/hotel offers their own bonus per store. The important thing to note is that you MUST follow the link from the shopping portal before making your purchase on, let’s say, Best Buy or Staples. Additionally, you must read the fine print of the bonus points for things like; ‘only promo codes found on this site may be used’. If you don’t read the fine print you could risk not earning any portal bonus points.
Let me quickly jump to an overview of my recent reselling sprint:
• I purchased 19 iPad Mini 3’s 64gb WiFi + LTE on Groupon for $255 each, out the door. That is the total price with tax and shipping. Groupon was running a promo code which allowed me to save 10% and I was able to use that promo code since it was posted on their site.
• I broke up my spending since I needed to spend an extra $2,000 on my Amex Starwood (SPG) Business credit card to meet my $5,000 minimum spend. (this is a great way to meet your minimum spend and make money!) I put about $2,000 on my SPG credit card and about on my $2,800 Chase Ink, which also earns UR points.
• I earned 4x Chase Ultimate Reward (UR) points through Groupon using the UR shopping portal which netted me 11,400 UR points by spending $2,800 in purchases through their portal link. I used the 3x Southwest shopping portal bonus on $1,000 in purchases so I earned 3,000 Southwest points which DO count towards Companion Pass. Ultimate Reward transfers to Southwest from Chase DO NOT count towards Companion Pass.
• I spent the remaining $1,064 through Ebates shopping portal which earned me $63 in straight cash back. You currently earn 6% back on Groupon purchases through Ebates.
• Keep in mind you are earning points from your base credit card spending IN ADDITION to the shopping portal bonuses, so I earned 2,000 SPG points and 2,800 Ultimate Reward points from Chase since you get 1 point per dollar spent on those credit cards.
14,000 Ultimate Reward points in total, according to TPG‘s valuations, are worth 2.1 cents a piece = $294 in value
3,000 Southwest points in total, worth 1.5 cents a piece = $45 in value
2,000 Starwood SPG points in total, worth 2.5 cents a piece = $50 in value
Ebates cashback from 6% Groupon bonus = $63 in value
I earned $452 in points “value” by using my credit cards and shopping portal bonuses to buy $4,864 in iPads. We have not even begun to discuss my profits from reselling the iPads, which is more than $452 earned in just points. Think of the points as “front-end” profit and the reselling cash as “back-end” profit.
If the points to dollar conversion is confusing let me try to make it a little easier to digest. I can transfer Chase Ultimate Reward points to Hyatt Hotels at a 1:1 ratio. If I transferred 12,000 of my 14,000 UR points (which I just earned) to Hyatt I could stay one free night at the Hyatt Regency in Vancouver, B.C, it runs 12,000 points per free night. The cash price for a night at the same Hyatt Regency is $262 before taxes, keep in mind you don’t pay taxes when you use points so that is an even bigger savings. If you divide $262 by 12,000 points you get .0218, or roughly 2.1 cents per points (2.1% in other words). That is how a dollar value is put on a ‘point’. And no, not all points are created equal so make sure to reference the TPG link above if you aren’t sure what your points are worth. This is why I try my best to explain to folks that their 1.5% cash back card may not be the best option.
Okay, now to the reselling and back-end profits, cha-ching! I sold the iPads on eBay for anywhere between $300-$335. Remember, my hard cost on each iPad was $255. If you are going to be reselling on eBay you will want to make sure you setup an eBay store which costs $20 a month. This reduces your final selling fees greatly. For example, a normal base seller pays 10% of the final value fee to eBay, but with a $20 a month store you pay only 4% on computers and various electronics. A 6% reduction in final value fee saves you $18 on every product you sell for $300, it can add up! Another option to sell if you aren’t an eBay fan would be with Amazon, also known as FBA (Fulfillment by Amazon). The fees are generally higher than eBay but some argue that you can get more for your item.
In order to sell on eBay you will also need a PayPal account, which scoops 2.9% in addition to your final value fee from eBay. So all in, about 7% comes off the top when selling electronics on eBay.
The average selling price of each iPad was $315 (not counting shipping which the buyers paid) multiplied by 19 = $5,985 in gross sales
We have to deduct the eBay and PayPal fees which combined came to about 7% = $418 in fees
The eBay store cost me $20 a month
Subtotal after fees equals $5,547
My total hard cost for the 19 iPads totalled $4,864
Net cash profit = $683 after reselling 19 iPads
How long did it take to sell 19 iPads?
Not that long actually, I kept a rough estimate of my total time spent and it came to around 30 minutes per iPad, so about 10 hours over the course of a week. That time spent includes photographing, listing, and shipping. I used USPS prepaid padded envelopes so I didn’t have to weigh anything, just pay $6.10 and slap the label on it. You can order the free USPS flat-rate shipping supplies, here. I sold over 500 items on eBay and have done it since 2003, so these times may be a little longer if you are new to eBay.
I made $683 in cash profit plus $452 worth of points from the shopping portals, grand total earning me $1,135 in whatever you want to call it, cash, points, money, dinero, keesh, Benjamin’s. That is an average wage of over $100 per hour, not too shabby.
If I can’t get a credit card is reselling still possible?
You can still buy things online with your debit card, yes, but you miss out on the base earnings from your credit card, usually 1x points, since 95% of debit cards don’t offer rewards. Additionally, by using your debit card you are having to “float” that money until you sell the items since it comes out of your checking account right away. When you purchase something on your credit card you have until the due date to pay it off in full and you will avoid paying any interest. (if paid in full by your due date)
You essentially get a free 30-45 day loan by using a credit card in addition to the 1x-2x points you earn on every dollar spent. I would like to point out that your credit card company is going to report your credit card balance based on the total you have charged on your statement closing date, not your balance on the due date. Your statement closing date is different from your payment due date and typically falls on the same date every month. If you rack up $4,000 on your credit card and pay it off on your due date, you will not pay any interest on those charges but the credit bureaus will see a $4,000 balance which will bring your scores down. To avoid a large credit card balance being reported to the bureaus it is best to pay off your credit card 3-5 days before your statement closes. It seems weird to pay off your credit card before the due date, but you can read about it more, here.
If you sign up for a business credit card, which almost anyone with an excellent credit score can do, the balance of that credit card is not reported to the credit bureaus. Business credit card accounts are kept off your personal credit reports even though you earn all the points! If you carried a $4,000 balance up to your due date, it won’t have any bearing on your credit score! (but it does for personal credit cards)
Where do you find good deals to resell for profit?
The first thing you will want to check is how many points that particular website earns through a shopping portal bonus, I like CashBackMonitor. Make sure you do this before you start looking for good deals. Everyone has their own way of finding deals and very few people who are seriously reselling are going to give up their ‘honey holes’. I found these iPads by cruising TechBargains. Some argue that if a deal makes it to TechBargains or SlickDeals that it is impossible to make profit, clearly that was not the case in this instance.
First, I like to go on eBay and search for the item > advance search > sold listings, and see what they recently sold for. That gives me a good gauge on how much money can be made and how long it takes to sell an item. Some resellers cruise their local Walmart, Staples, or Best Buy and look for clearance items that they can make money on. I don’t have the time or patience to do it that way, plus I live a bit far from huge shopping centers. I like reselling small electronics because the margins are higher and the shipping is dirt cheap.
What is a good credit card for reselling?
If you have an average credit score, say the mid 600’s, the new Chase Freedom Unlimited card at 1.5% cash back would be a good choice. If you have 700+ credit, the Starwood SPG card from American Express would be my pick. Keep in mind, even though the SPG card only earns 1x point per dollar spent, the points are valued at 2.5 cents per point. That means you are earning 2.5 cents (or 2.5%) back on all purchases. As long as you don’t mind redeeming those points on travel, that is your best bet!
Questions? Hit us up on the Book of Faces.