In the first part, I discussed problems and complaints I have in hind sight about the Mary Kay business opportunity. I am sure there are some “successful” Mary Kay business owners out there, but the majority of their revenue comes from the people they too suckered in, not selling cosmetic products.
About a year after I stopped wasting time and money on Mary Kay, and after I paid off my initial inventory debt, I was approached by someone with Quixtar. The first time I heard the pitch, it wasn’t very professional and I walked away. I had no problems seeing it for the MLM it was, and I wasn’t interested in doing that again!
A few months later, as I was itching again to be my own boss a more professional and glossy presentation swayed me. Now the program didn’t sound like an MLM, it was pitched more like a wholesale business opportunity. I paid my yearly fee, which was about $149 back then, and thought “Finally, a large catalog of wholesale products I can sell!”
Teeny-Tiny Profit Margins: When Wholesale Isn’t Wholesale
The first complaint I have is my own stupidity. I sat at this mass recruiting event, which gave me a false sense of legitimacy, and lapped up every word out of the presenter’s mouth. He had charts, and a power point presentation. He showed an example of how we can buy in bulk from the Quixtar catalog special vitamins and sell them or supply them to gyms, spas, and other retail outlets. Of course he said this was just an example, the Quixtar catalog has hundreds of products available for resale.
Wow, this is exactly the complaint I had about Mary Kay that I was now seeing melt away. This is what I wanted to do: If I was going to sell something, I wanted to sell in bulk. Additionally, the presentation showed other brand names I did recognize, and my yearly “business fee” allowed me access to wholesale lots of these products. Not once in this presentation was there the traditional MLM scheme of recruiting more people.
I should have asked to see an actual catalog. Once I was a Quixtar IBO (Independent Business Owner) I was sent one of the catalogs. Turns out, the ONLY products really wholesale priced were the vitamin supplements. Everything else was priced comparable to any bulk wholesale store like Costco, Walmart, or BJ’s.
During the presentation, the profit margin sounded great on the vitamins. However, I really had no interest in selling vitamins, instead I was intending on selling the cosmetics. After all, I had experience there. The difference though on most of the products was only 5-10% from retail price, and that was before I paid for shipping fees! Plus, the brand names were nobodies. There was no real way for me to resell these products and recoup any kind of meaningful salary for my time and effort.
Quixtar Quickly Focused on MLM Downline Than Products
It didn’t take long too before once again I was called in to learn how to recruit people into my “cluster.” One difference with Quixtar was their multiple levels to my cluster; I could bring someone in to just buy products from my website or I could entice someone else to pay that yearly business fee and make a percentage on their product sales.
Here’s the bottom line: programs that only bring you meaningful profit based on a number of people below you also selling products do NOT work. I have learned the hard way that REAL wholesale suppliers sell inventory at least 25% below retail price. The wrong way, which is what many MLM scams are founded upon, are fake business models. Eventually, the people on the bottom get nothing but the paltry 5-10% savings on a select number of products. Yes, you are one of those people on the bottom!
Quixtar Scams by Making You Wait for Profit Payments and Changing the Profit Margins
It’s been so long that I honestly don’t remember the convoluted points system to get your “paychecks.” Each product was worth a certain number of points, arbitrarily set by Quixtar so they could protect their profits. Once you reached certain point thresholds, then you received a check. I ended up only buying products for personal use. This is one of the many excuses given for why there is really no risk as a family will save $149 in a year from replacing groceries with Quixtar products. Unfortunately, we were a family of two at the time, and I doubt I recouped my losses there.
The problem with this system is the points per product structure changed quarterly. As a business woman, there was no real way to plan business goals, even IF the profit margin was worth it. Supposing I did find a magic buyer willing to buy inventory from my website for their retail business, unlikely since real wholesalers have better prices. From quarter to quarter my earnings on those exact products would change. One quarter a case of energy drinks might be worth a certain level of points, and the next quarter only half points. Why couldn’t they just spell it out in dollars in cents? Because then most people would see the paltry profit margins on the products!
Overall, Quixtar is an overpriced bulk grocery membership club. For the yearly business fee, you get prices similar to what you pay at any wholesale grocery club, and you can also pay to have it delivered right to your door. Again, you are not going to make much money selling the products to business customers, it is not a true B2B program. The only way to bring in hefty checks each month is to recruit a bunch of people into your cluster, and there are only so many people you can talk into this kind of thing.
#1 by ibofightback - May 22nd, 2009 at 23:26
I’m not quite sure where you get your numbers, but Quixtar/Amway Global sell their cosmetics at 25%-60% off recommended retail price, depending on your volume. Does that make them a “real” wholesaler? Furthermore there not exactly “no name” brands. The Amway Artistry brand is independently judged as a “prestige cosmetic”, and is one of the top 5 global best sellers in the category. In cosmetics and skin care as a whole it’s one of the top 10. Artistry products have been nominated for numerous awards.