Reader John contacted us to share his experience with manufactured spending, buying a lot of LEGO and trying to turn the boxes into Avios. It is a great – and educational – story and well worth reading.
This article is well timed as LEGO is running another fantastic promotion until Monday night – click here for details of how to earn 1,500 Clubcard points (3,600 Avios) with a £75 LEGO City purchase. If John’s article tempts you to try the same thing, the opportunity is right here!
I’ve edited his article, added a few pictures and take all the blame for mistakes and inappropriate images. (That is me as in Anika). Over to John:
What exactly is manufactured spending?
“When I started collecting points, it didn’t take long for ‘manufactured spending’ to catch my eye. Manufactured spending is the process of making a purchase on a rewards card, converting those purchases back into cash and then paying off your rewards card bill with this cash.
As with most things related to our hobby, the UK isn’t as straight forward as the US. (Although Rob wrote up an interesting post on a few (now expired) options back in 2013.)
I had ruled out manufactured spending here in the UK until I came across reselling as a means of generating spend.
How does reselling create manufactured spend?
It might ruffle some feathers to call reselling a form of manufactured spending as many argue that reselling is about generating revenue – the points should be a bonus. Whilst I’m not an expert, why not read through my article and see what you think?
Whilst educating myself, I came across this series about the exploits of a manufactured spending and reselling based in the US. Everything seemed straightforward enough and I started drafting an ‘experiment’ that would allow me to dip my toe without risking too much if things didn’t go to plan.
How I planned my reselling / manufactured spending experiment
I looked at a few different options for manufactured spending with reselling. I wanted to maximise the number of points generated for my efforts and mapped out complicated solutions that involved multiple trips to the Avios shopping portal with gift cards purchased from Tesco being converted into products to sell on eBay.
It all got very messy, very quickly.
I threw out these ideas and tried to find the simplest solution possible whilst maximising my chances of success.
My application calendar informed me that I could apply for a Starwood SPG American Express card which came with the standard sign up bonus of 10,000 SPG points after spending £1000 in 90 days.
In addition to this, I had an existing Amex Gold and was risking to fall short of my target spend of £2,000 in three months to trigger the 20,000 points sign-up bonus unless I made some additional effort.
I figured out my target spend on the SPG card and came across an offer on Nespresso machines for the Amex Gold that would allow me to rack up a few £100 and hit my sign-up bonus.
Amex and Nespresso were running an offer where you’d get a hefty discount on a coffee machine when purchasing 400 capsules (about a 6 months supply for us). In addition to that I found out that spending over £200 got me another machine free of charge and a milk frother. Everything looked great.
But Nespresso machines alone weren’t enough for my experiment.
Luckily Tesco was offering 1500 additional Clubcard points for a £75 spend on certain Lego Friends sets.
To make the setup even more attractive, it happened that Tesco was running a series of voucher codes (£10 off when spending £75+ and £5 off when spending £40+).
I figured that I needed to buy 14 orders of at least £75 each to hit my minimum spend on the SPG card and trigger the 1,500 bonus points.
To test the vouchers I purchased an initial order of three sets that totalled around £85.72. The voucher brought this down to £75.72 and I netted 75 base Clubcard points plus an additional 1500 Clubcard points. Great!
I realised that I could be a bit more scientific about my order combination and that 72p (multiplied by 14 orders) would increase my total order costs by over £10.
I decided to purchase the most efficient combination of products to allow me to hit my spending targets, activate the voucher and net my points. Based on the value of the sets that were included in the deal and the vouchers that were available, I set up a calculator that would tell me the exact combination of items to purchase.
The £10 discount worked twice before refusing any further orders. I then processed two orders with a £5 discount and repeated the process for my wife and completed the remaining 6 orders without discount.
Click + Collect were less than pleased!
With the order processed on a Saturday, I received 14 texts messages on Monday afternoon informing me that my orders were ready for collection.
Click + Collect at Tesco were less than pleased to be handling 14 huge boxes! Hand on heart, I expected more questions leaving Tesco with a shopping trolley overflowing with LEGO Friends but nobody seemed to care.
I jammed it all into my car and got it home. It was daunting looking at the volume of product I’d now have to shift to recover my investment!
Had I been a bit more confident about my ability to resell all this LEGO, I might have taken some pictures but the prospect of being £1,000 in the hole with 42 boxes of LEGO to offload didn’t seem very funny and as a result ….. no pictures. Sorry guys.
How I priced my items for reselling
I compared listed prices on Amazon and eBay to find that – though resale prices were slightly higher on Amazon – the whopping 15% commission on toys and games wasn’t attractive.
I decided to list on both platforms based on maximum return, but after having had products selling on eBay almost straight away and nothing on Amazon, I removed all of my stock from Amazon to shift it to eBay.
Sales were initially slow and I started worrying that I’d be sat on £1,000 of LEGO Friends with a credit card bill looming.
Everything you read on reselling as a manufactured spending technique reminds you that in order to get a good price you may need to sit on your stock for a long time. You should therefore ensure that you can clear your credit card bill by other means. I ignored the advice.
Don’t make the same mistake if you choose to follow suit!”
John Peden has been collecting points since 2013 and made his first big redemption earlier this year. He and his wife flew return to Mexico City with BA in First for their honeymoon which you can read about here. He runs a web development company called Tweak Digital and lives in Manchester.
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