Quixtar Explained why its a Scam
One Wednesday afternoon I was doing some homework as is a common occurrence and my roommate asked me if I would be interested in going to a business opportunity presentation that one of my previous roommates had bought into. I can't say I thought our previous roommate was a terribly bright person, and wondered what multi-level-marketing system he had bought into. It turns out it was America's favorite modern multi-level marketing company, Quixtar.
Quixtar is a multi-level-marketing company in which people can become an independent business owner (IBO), and have the opportunity to resell Quixtar marketed products and receive a percentage of all of their gross sales. IBO's can also recruit new IBO's and make a percentage of the income their referrals make. Independent business owners also receive a percentage of purchases that they make through Quixtar's website.
In theory the business idea sounds reasonable, but when we look deeper, we see some troubling information. My previous roommate who had bought into Quixtar suddenly began buying products from Quixtar which he had never gotten before. Why would he suddenly start to buy energy drinks and nutrition supplements? He received a commission on every sale, including to himself. He now had more opportunities to buy products and unconsciously bought products that he otherwise normally would not have bought because he got a commission on them. It took him a while to realize this, but eventually it went through his head.
Quixtar IBO's often spend a lot more money than they make on Quixtar products than they actually receive in commissions, because IBO's have an incentive to buy stuff they normally would not. With any reasonable business proposition, you should be at least making some money, not paying them for products you don't really need just so you get a commission.
Another major bone of contention with the company is that the market is very over-saturated. It's nearly impossible to refer new IBO's because everyone has already heard about it. This means more than likely either the person you want to refer is not interested because they know they won't make any reasonable amount of money with it, or they have already been referred.
So what do you get for all of your hard work and sales? The average Quixtar IBO made $115 a month in 2005. The median income is probably much lower, since there were a few very large bonuses of nearly $1,000,000 which skew that number upward. The typical Quixtar IBO probably makes more like $75 a month.
In late 2004, Dateline reported that a lot of high level Quixtar IBO's made the majority of their money selling promotional and motivational materials rather than actual Quixtar products. If Quixtar was such a profitable business, wouldn't they be selling Quixtar products rather than motivational materials to sell those products?
There are just too many issues with Quixtar to make it a worthwhile business adventure. IBO's end up working very hard and long hours and end up getting paid not very much money in the end. Starting a business with a solid business plan is definitely a great idea, but Quixtar is not the way to go.
