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January 2, 2007
Retailing in Quixtar Part 1 (3.4%)
By Truth in Quixtar
I wanted to write a post about how the enforcement of the Amway/Quixtar retailing rules were a joke but found that stepping into that realm only seemed to open more doors to more issues. So in the interest of trying to keep the posts on this as brief as possible I decided to break it up into three parts.
In part 1 I will discuss the number 3.4% which is the number I got from the California lawsuit transcript. Just to give some background, DJ Poyfair, who is the counsel for the Plantiffs (Orrin Woodward, etc), was making a point about how the high prices were not justified by the high quality of the products and had this to say:
This network marketing company has outside sales of 3.4% of outside. That’s if you accept their definition of what constitutes outside retail sales.
Now, Poyfair was referring to the 70% rule from FTC v. Amway when bringing this up, and was trying to imply that the FTC said IBOs should be selling 70% of the products that they buy. I write this only to include proper context, I will save the 70% rule for Part 2.
The first thing that came to mind when I saw that only 3.4% of sales in Quixtar were outside sales, is that this is no real surprise. I don't think anyone could honestly say they expected such a number to be any higher. I think it speaks volumes to the fact that the focus is on sponsoring and very little focus has been placed on actually selling a product to a customer.
With those kinds of numbers I don't see how this can be taken seriously as a business. I have said it before that if IBOs had the numbers to show they were really a business, they wouldn't have to have rehearsed answers when showing the buisness plan. Try flashing the 3.4% next time you show the plan and I bet the person across the table gets up and leaves in about 3.4 seconds.
Of course as with any other fact that comes out about Amway/Quixtar there is a supporter there to try and put spin and sugar on it to make it sound better. The spin/sugar this time is that this number is only concluded by using the definition Quixtar uses for an outside sale. Ironically, that is the same definition that many would assume it is, a sale to an actual customer, not an IBO. The argument is that many people who are IBOs simply buy the products and don't sponsor or sell to others, therefore making them actually customers.
On the surface this seems valid and if one were to count those purchases as sales to customers the number would certainly rise. But, I see it as just another example of what is wrong with this business. Why should someone have to sign up as a business owner just so they can get a good price? Doesn't it make more sense to have your prices competitive in the first place so that you can make retail profit on top of your PV check? What other business model does someone have to sign-up as a business owner just to get good prices?
Frankly I think IBOs should be a bit peeved with Quixtar over the prices and compensation plan. Ty Tribble many times has showed examples of other MLM companies that have much better compensation plans as well as better prices on their products. Sitting on 3.4% Quixtar looks more like a Wholesale buyer's club then it does a business.