Online shopping multi-level marketing companies (MLMs) aren’t new. My Power Mall (MPM) has been around for a while, Team National has been in the mix too, and now Shop to Earn has popped up and is being aggressively marketed by its members.
My bottom line on all of these companies: Don’t waste your time or money. You can find better deals on your purchases outside their systems. And the systems are really nothing more than typical MLM recruiting schemes. Shopping is not the objective, recruiting is. Let me explain these programs to you…
The guy who started the ShopToEarn, Patrick Welsh, supposedly spent 10 years planning it. Any business professional worth their salt knows there’s something desperately wrong with spending ten years setting up a company, but who are we to judge? Here’s what the site says:
Pat has spent the last 10 years creating and developing this ShopToEarn platform that couples networking and e-commerce. By forming partnerships with the biggest names in retail while seeking out positive partnerships with the finest green companies, our mission of helping people become healthier and wealthier is being realized by many.
The concept of this program seems simple enough: Get money back on items you’re already going to shop for. Except there are already programs out there that offer this, and there’s no fee to sign up. For example, a site called Jellyfish rebates part of every purchase you make through the site. No fees. No catches. No recruiting.
What does it cost you to become a part of ShopToEarn? To become a “website owner” it’s $349, or to become just a “business builder” it’s $99. To become a “broker” which is a website owner and business builder, it’s $448. There is also an annual renewal fee that is charged, which is $69 for a website owner or business builder, or $119 for a broker.
How does ShopToEarn work? Basically the site is a huge collection of affiliate links owned by Shop to Earn. When you want to buy something, you click on an icon, which takes you to the particular retailer’s site. Shop to Earn is paid a commission each time you shop using those links to the retailers, and you are given part of that money.
You can see that all the icons are affiliate links just by holding your mouse over them and looking at the URL you’re going to be clicking on:
Most of these affiliate links offer payments in the range of 1% to 10% of purchases, with the most typical payments being 2% to 4%. The company says you can make up to 30% back, but those payouts don’t occur often. Sometimes bonuses or volume incentives are offered by the retailers.
But under the best case scenario, the “owner” of a ShoptoEarn store could get a little more than half of that affiliate money. And that’s only if you max out every possible commission and bonus, and meet the rules of the complicated commission pay plan. I bet your actual payout will be much less if you’re like about 90% of the people involved.
Who will make money from ShopToEarn? How many people do you suppose will even make their initial investment back from shopping? Even if you were to make 5% back on your purchases, you’d have to purchase $9,000 of merchandise to even earn back your initial investment of $450. And I’m not even convinced that most people are even making an average of 5%.
Those figures demonstrate that without recruiting new people into the company, the average consumer is probably unlikely to make their initial investment back.
Could you do this without Shop To Earn? Absolutely. You could earn affiliate money with almost all of the retailers featured on their site, and you would keep all the money. You could do this on your own, and for only the cost of web hosting.
These affiliate links aren’t hard to get. All you need is a website. You sign up with LinkShare or CommissionJunction or Performics (now ConnectCommerce via Google), and voila… you have access to the exact same retailers. I have accounts with all these companies, and therefore have access to the exact same retailers that ShoptoEarn does. Except I get to keep all the money. (Hmmmmm… wanna sign up with me? I’ll only charge you $350… Just kidding!)
Is it about shopping or recruiting? The truth with this company, like all other MLMs out there, is that the purpose is not really to get you to shop online. It’s not about the product or service they pretend to sell.
The purpose (in my opinion) is to continuously recruit new marks into the scheme. They’re each paying about $450 to sign up for the opportunity to receive money back when they shop online. And you’re going to get a piece of that when you sponsor people into the scheme.
The actual money to be made from shopping is very little. The affiliate payments aren’t huge, so it only stands to reason that the portion of the affiliate money paid to members is even smaller. Unless you recruit a bunch of people in, you will probably never make much.
The die hard MLM fans will say, “Of course you have to work hard and recruit. It’s a business. Go out there and sell it!”
Except who wants to sell a recruiting scheme, disguised as an online shopping mall? Do you want to lie to your potential recruits each time you tell them it’s all about shopping from their own store? It’s not about shopping, in my opinion. It’s about recruiting. Every MLM is not about the product or service. It’s really about recruiting new marks to the scheme.
Is it a pyramid scheme? People pay a fee to become a member of the scheme, hoping that they can recoup their money by recruiting more members who also pay fees to join the scheme. When you recruit a downline, the structure sure looks like a pyramid to me.
This recruiting goes on continuously, and the bottom of the pyramid is ever-expanding. The people at the bottom can only hope that they can find enough new marks to recoup their original investment. Check out this graphic from the company itself, and see if you think it looks like a pyramid or not.
Now the company and its representatives will tell you that they’re not a pyramid scheme, and that pyramid schemes are illegal. Pyramid schemes are illegal. And MLM companies like Shop to Earn use the guise of a product or service to make it appear that they’re legitimate. After all, a pure pyramid scheme just exchanges money. If an MLM injects a product or service into the mix (no matter how undesirable or worthless that product), they have just legitimized their operation.
Is this a new idea? The idea of buying items “from yourself” and getting a piece of the action is not new. This has been one of the main principles in Amway (Quixtar) forever. Go to any indoctrinated Amway person’s house, and you’ll see all of their products being used in the kitchen and basement and bathrooms.
And they’ll tell you, “I’m going to use cleaning products anyway, so I might as well buy them from myself and make some money along the way.” Why add to the profits of Wal-Mart, when you can profit for yourself?
Except it’s really no bargain to shop from yourself if you don’t have a chance to find the absolute best price on the internet. If you’re limited to a finite number of retailers, you’re probably paying more for your items than you really need to. So where’s the profit if you’re overpaying or not getting the specific brands or items you’d prefer?
Isn’t this an inexpensive way to be able to start my own business? Ummmm, no. You don’t really own a business when you sign up with ShoptoEarn. Heck, you don’t own anything with them, other than your login and password. You can build a downline, but you don’t own them either. The company really owns them, and you operate as long as they allow you to. When the company goes away, so does your “business.”
Don’t I earn commissions from purchases by my downline? Yes, you can get commissions and bonuses, but as with any MLM, there are lots of catches and confusing details to the pay plan. As with all MLMs, you must “qualify” to get commissions. You don’t just get them automatically when someone you recruited buys something. You initially need 3 recruits to purchase the website owner option and generate $100 of “monthly volume” to even qualify to get a commission.
But I know someone who made $10,000 last month with STE!!! Yes, claims of huge earnings with MLM companies are normal. That’s how they entice you into the scheme. Sometimes these earnings are real. But the people getting the big checks are far less than 1% of all the people involved in the scheme, and that check has been generated based upon massive recruiting of new marks.
Your chances of making that much money are slim to none. And the claims that all you have to do is work hard and you’ll make that much money too? Hogwash.
There are millions of Americans who have invested significant time and money into MLM ventures and have lost money because of them. Your odds of success in an MLM are extremely low, and unlike real businesses, your hard work isn’t a good predictor of how much money you’ll make.
MLM recruiters tell you those people failed because they were lazy, didn’t want to work hard, didn’t really want to make any money, or just wanted a get-rich-quick scheme. Those are nice phrases to explain away the high failure rates in multi-level marketing schemes, but they’re just not true. The truth is that the structure of MLMs ensures that the vast majority of people will fail to turn a profit.
What other problems are inherent with ShopToEarn? The prices of the products through these online shopping malls are said to be higher than with other retailers. I don’t know how true this is, but I do know that you’re limited in what retailers you can buy from. It’s not like ShoptoEarn is a free-for-all and you get money no matter where you shop.
There are only certain stores (a lot of them, yes) but not every major store. And remember that the retailers themselves have to make money and might be pricing items a bit higher to cover this affiliate commission that they pay.
Another problem I see is that membership in a program might encourage people to buy things they otherwise wouldn’t. Oh, I know it’s all about self-control and stuff. I’m just saying that you might be tempted to spend more than you otherwise would because it seems like a good deal.
And as always, shipping charges can be a problem when shopping online. It’s important to factor that into the purchase. There are plenty of times when the shipping charges more than cancel out your commission on the purchase, so it’s not worth it.
What about the other companies that offer these shopping programs? MyPowerMall initially looks like a better option than ShoptoEarn because there is no sign-up fee. However, there is a catch, of course. You must buy at least one thing a month to keep your store with MyPowerMall.They cleverly call this program “One Thing.” If you don’t make a purchase during a month, you lose your store. (Well, the owner of the company gets your store and anyone who thought they were shopping with you is now shopping with her!)
Team National uses a similar concept as Shop To Earn and My Power Mall, but it is much more expensive to sign up. Depending on who you believe, the TN membership costs between $795 and $2,195. They call what you’re “buying” a “benefits package.” Apparently jewelry and insurance are some of the more prominent offerings of TeamNational, but there are other things available as well.
It’s going to take a lot of recruiting and buying to earn your money back with Team National. And as with the other shopping sites, consumers often find that they can get better deals elsewhere on their purchases, so they’d actually be losing money if they bought via TeamNational.
What’s the bottom line? In my opinion, ShopToEarn, MyPowerMall, and TeamNational are a waste of time and money. You’re not really building a business with them, you’re just participating in a grand scheme to recruit as many new victims as possible. The amount of money you’ll save by shopping through these sites is questionable at best, and in many cases, I think you’ll actually lose money. Avoid these companies like the plague.
Note to promoters of these schemes: You will not be allowed to offer your services here. Don’t link to your site or ask for people to contact you. If you do, your comment will be deleted. This site is not a place for you to advertise your scam.