It you’re considering getting involved in ShopToEarn, don’t miss this post with lots of important information!
A fellow financial blogger recently went down the road of examining a new multi-level marketing company called Shop to Earn. He was considering signing up, and did a review based on the information he had up to that point. He asked readers to chime in with their views. Here’s some of what he had to say in that first post:
- It’s so early (they just had their first public forum this weekend and it just hit my workplace; I think you’ll be hearing more in the coming weeks, but this is the closest to a “founder” that I’ve ever heard, only 6 or 7 levels away), that the likelihood of making some decent money is quite high.
- Of the various MLMs I’ve had some familiarity with, the time commitment seems quite low. My friend has sworn he’s doing no conferences, no recruiting sessions, etc. He’s signed up a few of his friends and family already and he’s done. At this point, he’ll passively mention it to people as he comes across entrepreneurial types, but he doesn’t “have to” to anything else at this point except watch the checks roll in (and eventually sell or buy some Earthy stuff).
- Each signup’s $100 and 200 points and these points all roll all the way up, so the bigger your network gets, your points end up accruing rather quickly. It’s roughly 10 cents per point, so if there are like 20-30 signups per month under you (many levels), that’s ~$400-$600 per month. It’s not a flat number though, the growth is exponential (unless it dies!)
- As is usual for MLMs, there’s an up front buy-in fee. In this case, close to $400 to get the full benefits of a website and business owner. While $400 is nothing to sneeze at, it’s not as bad as some programs I’m familiar with where people have to take on all kinds of inventory, sell stuff, etc. Essentially, at this early juncture, I’m told (and I’m trusting my friend here) that everyone’s making it back in month one and from there, the growth is expected to be explosive.
- Frankly, I don’t like the Earth products. I don’t really see much use for them and I don’t know if I’ll find anything I actually need. Apparently, they’re adding new companies and products as they’re going and at this point, you don’t need to start with the $100 minimum. Apparently, that doesn’t start for a few months, so there’s a period where it’s income only.
- I’ve usually associated people involved in MLMs as being a bit different; especially the enthusiastic ones. My friends are one thing and they never got so into them that they started acting weird, but you always here about the Amway people or the ACN people who go overboard with the whole thing. I don’t want to be “That Guy”. So, all I can do is approach this with great skepticism and balance putting in the time for due diligence with waiting too long and ending up missing the boat while my friend’s bankrolling a few thousand bucks a month.
- It might peter out quickly and it wasn’t worth the time and energy.I might not be able to sign anyone up. I have a few people in mind, and of course, I have Everyday Finance as an outlet, but I’m not turning this blog into an MLM outlet. I don’t really know what’s going to happen. I guess 2 people sounds easy; would have to wait and see.
- Based on the presentation I saw, there are still many unanswered questions. I have a list out to my friend who has access to one of the early adopters, who pretty much knows all the details. I question why much of this isn’t in writing, but I guess if the top members are displeased and feel duped, this would quickly trickle down and everyone would quit and the whole MLM would tumble. So, I tend to trust what I’m hearing; I do fault them for a lack of communication though.
- Apparently, the two people you sign up (or have at least one placed under you) are your left and your right. At least 1/3 of all your points must come from either side to get the cash rewards. The points don’t disappear, but you might have say 10,000 points in queue on the left and only 2,000 on the right. You’d have to get the 2,000 up to 5,000 in order to get your reward of ~$1,500. I can see how this is a tool to keep your network strong on both sides. It’s just not ideal in that it might force you to replace a weak performer later on when you thought you were done putting any time in.
The blogger did not join Shop to Earn, and did a follow-up on the problems he found with the concept. He was planning on joining (ultimately changed his mind, though), and got onto a conference call to find out more. He found the person conducting the call to be a slick talker.
He was able to log into the site for a demo to see exactly how things worked, and here are a few things he found:
When clicking around the personnel network in the top earner profile, I noticed something pretty odd. Many of the people pretty close to the top, just a few levels below him, were already inactive, meaning they exercised the 14 day opt-out option.
Why would people who got in so early opt out when they stood to make so much money?
Next, I noticed an interesting geometric pattern. Especially for an initial member…a guy at the top…I figured his network would be filled up completely underneath him. But it wasn’t.
What I actually saw was that he had primarily filled up tons of people out his outer LEFT and RIGHT legs, but the center of the triangle was virtually EMPTY! This leads me to the FLAW.
Since you’re only able to sign up one person on your left and one on your right, what do you do with the extra people you sign up? If you sign up, say 4 people in your first month trying to get that “Score” bonus of 5 required, you end up basically forcing these new 3rd and 4th people under someone else below you.
What I discovered through both the telecon and through asking questions of a member is that they actually recommend that you seek to place all additional signups on your outermost left and outermost right legs. This drives an exponential increase in membership the deeper you make those outer legs. Why waste time building up 1 level below you when you can build 6 levels down on the outside, right?…still seems OK I guess…
Where this is problematic is that you only get your bonuses if your points are distributed with AT LEAST 1/3 on your RIGHT and 1/3 on your LEFT. Now, this is where the trouble comes in. By looking at the picture above, you probably shrug this off, right? You say, as long as each of the guys directly under me perform well, my points will usually be like 60/40, 40/60 drift and I’ll always get paid, right? WRONG. What struck me as I thought more about it is that YOU ARE ON THE OUTER LEG OF THE PERSON ABOVE YOU!
Because you are on someone else’s outer leg by necessity, you are locked into a massively lopsided point score immediately. You want that bonus, right? Well, by the time you figure this out, you’ve already placed multiple members on your outer left and right legs. Well, that outer left leg is like 6 deep in a week and the point score on the left has now run away from you because the guy above you is placing more people on that leg. If you want that bonus, you better work like hell to get 5-10 signups over on your right side.
Guess what? The same thing is happening to the guy above you. The same thing’s happening to the woman above him. It’s beautiful- Beautifully Evil. It forces everyone in the chain below say, the top couple founders, to scramble to fix this weighting issue. It forces them into a panic to sign up more and more people. Since everyone’s in the same boat, it’s a runaway scenario though, they cannot keep up because everyone above and below them are facing the same scenario. This now explains why one of the initial members had total empty slots in the center of his triangle and why others were dropping out so early on. They may have figured it out!
What is all of this saying? The only way to get your bonus money is with a somewhat balanced downline in order to meet the requirement of at least 1/3 of your total points on each side. If one side of your downline explodes, you won’t get your bonus unless you can add people (and points) to the other side.
And people above you can add to your legs, meaning that you have little control over this balancing issue. Oh sure, it sounds good that someone above you added to your downline. After all, you get a cut of the action. But if a person added to one side of your downline causes you to go out of balance, you forfeit your bonus money. Not so good.
I am going to look into this company more and write up some of my thoughts. I will say that this has some common red flags of fraud: It seems to have an overcomplicated pay plan. It relies on an endless chain of recruiting of new members. It seems to only offer a substantial benefit to early adopters.