Tuesday, May 5, 2015

Turnover Tuesdays - My First Attempt at Reselling - Fail!

Disclaimer: I receive a referral commission for the following link(s) and I greatly appreciate supporting the site: Amazon

Reselling merchandise has quickly become one of my favorites ways to Manufactured Spending.  I just started doing it this month and I've learned a ton.

Check out all of the Posts here:

Week 2 - My second straight fail
Week 3 - My iPad mini collection
Week 4 - Bed Bath and Beyond
Week 5 - An iPad Idea for Your Staples Gift Card Collection

I think it is the thrill of figuring out what is a good resell and what isn't.  Then when you get the email from Amazon saying they have shipped out your item, that's just an awesome feeling.  Cash, Money!

Introducing Turnover Tuesdays (HT - My wife - aww!).  Every Tuesday I would like to highlight one item that I have resold.  This will include profitable and non profitable sales.  I hope that there is always something to learn.

The Item - Craftsman 12 Volt Right-Angle Impact Driver

A few weeks ago, Sears was running a promotion for 10x Southwest Rapid Rewards miles for one day.  As Frequent Miler pointed it, it is possible to "double dip" on Sears purchases.  You can earn 10x per dollar for buying a gift card and 10x per dollar for using a gift card.  Therefore, you can actually earn 21x per dollar (1x for buying the gift card itself).

I decided that this would be my opportunity to try reselling.  I am glad I decided to go slowly at first because this one didn't work out too hot.

Based off a tip from P.L. commenting on Big Habitat, I decided to buy this Craftsman 12 Volt Right Angle Impact Driver.  At the time, it was being sold for $78.43 ($89.99 now).  I checked on Amazon and the same item was $97 ($104 now).

I thought to myself, that's an $18.50 spread.  I will definitely at least break even, makes tons of free miles and possibly make money too!  Amazon's fees can't be that high, right!?  Either way, I decided to buy only one because it was my first time and I wanted to see how the process works.

Here is what actually happened:

Shopping Portal

I bought a $75 gift card and used the $75 gift card and I paid $8.90 on a regular credit card for the difference between the price of the item and the $75 gift card.

20x points for $75 is 1,500 southwest points.  10x points for the $8.90 is 89 points.

Grand Total 1,589 Southwest Points

Credit Card Points

I used a Barclays Arrival to actually make the purchase.  Let's call that 2% cashback. It's really a 2.22222% cashback on travel but 2% is easier.

2% cashback on $83.90 is $1.68

Loyalty Points

I got 839 Shop Your Way points which is worth about $0.84 towards a future purchase.

Fulfillment By Amazon Fees

I have exclusively used Fulfillment By Amazon.  You can check out Trevor @ Tagging Miles for some more information on it.  He just started a series on Fulfillment by Amazon.

Amazon charged me $4.47 to ship to their factory and then $16.61 to sell and ship the item to the buyer for total fees of $20.94.  That's a 22% margin on a $94 sale.  Not too shabby for Amazon!

My price kept getting undercut by one of the sellers.  It started at $97 but I ultimately sold it for $94.

$94- $20.94 = $73.06

Final Tally

Unfortunately, $73.06 is less than $83.64 by over $10! Fail!

Cash =  -$10.58
Credit Card Points = $1.68 towards travel
Shop Your Way Loyalty Points = $0.84
Miles - 1,589 Southwest Points (still haven't posted - argh)

Silver lining is that if you value Southwest Points at a low valuation of $0.01 per points (definitely worth more than that, maybe ~1.5 cents) then I got almost $16 worth of miles which covers the loss. In essence I am buying miles cheaply.  However, that was not my intention and not what I want in the future since this is time consuming.

Lessons to be Learned

1) Take tax into account

When I bought the item I didn't care about taxes.  I compared $78.43 to $97.  I had an $18.50 spread for goodness sake! The problem is that taxes get paid.  Taxes were $5.47 here.  My $18.50 spread just went down to $13 without me noticing.  That's a lot smaller.

2) Use Fulfillment by Amazon Revenue Calculator.

I was more or less hoping the fees wouldn't be too bad.  If only Amazon would tell you what their fees are!  Except they do, the tool is readily available and called The Fulfillment by Amazon Revenue Calculator.  If I checked it before, I would have seen a $16.61 fee before shipping to Amazon.  That's already more than the original spread.

There are more success and failures to come, stay tuned for next Turnover Tuesday!