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Ebiz for miles

October 14th, 2008 by Kenric

I believe my friend Andres sent me an article a while back on an ebusiness that wasn’t making that much money but it was doing well because of its use of credit card perks.  My Ebiz2 looks like it will be like that also.  The profit margins are not that great but the products are relatively expensive.

How does this work?

Well, as a dropshipping business the order process goes like this.  Someone buys something from my store for $950.  I placed an order with my dropshipper for $900.  The product is shipped from the dropshipper directly to my customer.  In this example I would make about $20 after the 3% credit card fees.

When I place my $900 order with my dropshipper, I am using my own credit card to place this order.  If I get 1 order a day for 30 days, I will spend $27,000 on my credit card that month.  Even though I am making only $20 on a $1,000 order, I get additional benefits by using my credit card to pay for my products.

$27,000 is worth 27,000 miles on most airlines which can get you a round trip ticket.  The value of this ticket could be $150 to $300.  Most airlines have limits to the number of credit card miles you can charge per year so you would have to switch airline cards after you maxed one out.  In addition to miles, you can get other benefits depending on the credit card that you choose to use.  You can get free hotel rooms, rental cars, restaurant coupons and gift cards.  Essentially, you can get your vacations for free.

I believe the example in the article that I read was about a business that was charging $4,000 a day on its credit card so the person was getting a free ticket every week, a free room the next few days, etc…   This person was getting one free complete vacation a month even though his business was not making that much money.

Just another way to look at your ebiz…

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