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Why I spent £1052.84 on LEGO Friends – Confessions of a HfP reader (Part One)

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:

manufactured-spending-confessions-of-a-hfp-reader

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.

nespresso-george-clooney

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.

pile-of-lego

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!”

Click here for Part Two to read on!

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.

(Want to earn more Avios?  Click here to visit our home page for the latest articles on earning and spending your Avios points and click here to see how to earn more Avios from current offers and promotions.)

Bits: Kids fly free to Scandinavia, two nights for the price of one at Macdonald Hotels
Why I Spent £1052.84 on LEGO Friends - Confessions of a HfP reader (Part Two)
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Comments

  1. Never bothered with the reselling route.

    Doesn’t seem worth the hassle and much closer to not being in the spirit of the Tesco T&Cs

    • Agreed. It’s been suggested that Tesco might not award the points. While I’m not rushing out to repeat this exercise, the points flagged in my account and are in the process of converting into vouchers so hopefully it’s a done deal. Time will tell!

  2. Thanks John and the HfP crew. Still a relative newbie – hardly any travel etc. – but have a few novel ideas and approaches to maximising points accruals. The MS info and ideas is what i’ve been after for some time. Ta, Rob

    • Hand on heart, it’s not that difficult to build up a meaningful balance with more straightforward methods. Just take your time and keep chipping away.

  3. I have looked at the arbitrage opportunities even as far as short selling but you really have a very short window of opportunity, unless it is something as resilient as a box of standard Lego, where you know that over time, only the price will move and the product will never go out of stock.

    If you wait for the product to arrive through your purchase channel, you may well have lost out as hundreds of others will flood eBay with the same product. However, if you are prepared to list before the product arrives and discount the price a little, then you may be able to shift a lot of product very quickly.

    Even then you are competing with mums who don’t factor in all their costs, nevermind their time as it is a sort of hobby (win or lose) and others who get emails from eBay saying that you have reduced your prices and their sales have fallen off. So they undercut you and suddenly you sell nothing.

  4. flyforfun says:

    I’ve done a mass buy once, when Tesco offered 500 points per CD/DVD back in 2009 on their xmas range. I spent around around £500 and got something in the region of 62,000 miles iirc. But I fluked it and there was a BA miles double transfer offer so I ended up with enough miles to go to South America in Club and using a 2-4-1 voucher instead of WT+ as I’d initially been planning.

    All the CDs/DVDs I gave as xmas presents that year, to many people who were very happy to receive them! I did look at trying to sell them but thought this was the better route in this case. I doubt my friends and family will want to receive Lego for xmas this time though!

  5. John says:
    QUOTE
    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.
    UNQUOTE

    I bought the AmEx/Nespresso offer but didn’t know about the ‘extra machine free of charge’. I guess it’s now too late to benefit?

  6. great article
    i’ve often been tempted to do something like this but never took the plunge as living overseas and out of UK makes shipping/insurance a nightmare – have to find something can sell local
    with christmas coming up lego isnt a bad idea

    • My wife did Lego sets, which were in short supply (the XL kids version in a very large plastic tub) but they were an Argos purchase and swiftly put out on Ebay. However the maths was not brilliant.

      Form hazy memory, the normal price was about £40 and they sold quickly on Ebay at about £32/35 P&LP or up to £37/39 P&P included.

      She bought lots for around £15 and pushed them out in the low £30s, shifting a few per day. But soon after the Ebayers and newcomers sent the price down to below £20 where some were obviously dumping.

      In the end she made some money but learned a lot. Had no-one else been able to get supply, she would have cleared between £10 and £15 per piece but ultimately got back less than half that.