Here is part two of HFP reader John’s experience with manufactured spending. You should read Part 1 of the article here before continuing below. HFP has edited the article and any errors are probably ours.
If you want to try to copy John, remember that LEGO is running another fantastic promotion until Monday night – you can earn 1,500 Clubcard points (3,600 Avios) with a £75 LEGO City purchase.
What about the coffee machines?
“I was actually hoping to offset a slight loss on my LEGO sets with the profits I’d make from the coffee machines!
But it turned out to not be as easy.
Nespresso decided to do a sale and suddenly the machines were selling for only slightly more than I’d purchased them for. This meant I’d actually end up losing money after deducting sales, shipping and handling fees.
Deciding that I just wanted to get rid of the stock, I revisited my calculations and tried to estimate the maximum price I was prepared to pay for my points.
Having recently signed up to The Sunday Times Travel Magazine and in-effect paid 0.66p / Avios, I decided that this was my upper limit and reduced my prices to 90% of the RRP.
Suddenly, the floodgates opened and order after order started coming in. To speed up the packaging process I purchased some packing bags on Amazon for next to nothing and got Hermes to pick up the boxes from my work place.
I did look at getting a thermal label printer which would have made getting boxes ready for shipping an absolute doddle, but they aren’t particularly cheap and after reviewing my calculations I decided I wouldn’t be making a habit of manufactured spending via reselling.
Thanks to Hermes destroying one of the boxes, getting another one wet and losing a third one, I had to deal with three complaints. Hermes sorted out the first two complaints (each item was covered up to £25) and I assume the third person managed to track her LEGO down after I suggested filing a ‘missing item’ complaint.
So … was it worth the effort?
You can see my entire inventory management and calculations here.
If you just want the high level information, my total outlay stands at £321.63 in return for 99,666 equivalent Avios. In effect, I’ve ‘bought’ 99,666 Avios for 0.32p each.
I’m relatively new to the miles and points game so I’ve not claimed that many miles but based on my tracking, I’ve averaged 0.3p per Avios. Most of these miles will be used up on a redemption from Manchester to Dubai in First Class in February next year and I’m looking at a value of around 2.06p / Avios on that route. Even if you value miles as low as Rob (0.75p/Avios) this is still a pretty good deal.
What about your time? Doesn’t that reduce the value of these miles?
It’s true, I haven’t accounted for my time. This wasn’t insignificant and has taken several hours over the past few weeks. I’m a reasonably well-paid web development contractor so I could have almost certainly spent my time on a more productive activity than packing and shipping LEGO boxes!
When factoring-in my time, it is not quite as lucrative a deal. Knowing the value I’ll be getting on my redemption to Dubai still means it’s a net gain on my time and money.
Would I recommend reselling? Would I do it again myself?
Difficult question …. I can see myself doing this again under the right circumstances (another big Clubcard bonus from Tesco for example) but definitely won’t be in a hurry to repeat this process each month.
When researching reselling as a manufactured spending technique, all the guides encourage you to build up enough cash reserves that you can afford to have your stock sat for as long as a few months to ensure you get a good price for it. I neglected this and was in more of a rush to sell.
I got lucky with the LEGO sets and ended up with 42 boxes of a product that was reasonably easy to sell. However one of the coffee machines was heavily discounted just a few days after I purchased it and I’m now left with £69 locked up in a coffee machine that Nespresso is selling for £59. Not ideal … but a reasonably small problem in the grand scheme of things.
If you are tempted by reselling, make sure the numbers stack up before you pull the trigger on your move. Research your products and ensure you can sell them quickly and at a price that works for you.
The goal with reselling should be to generate profits and allow the points to accumulate as a bonus on top. In my opinion, this isn’t a great way of accumulating points even if you can ‘buy’ them very cheaply!”
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.)