Pyramid Scheme Alert (PSA) provides current and historical news items that are of interest to our members and visitors. None of the reports or commentaries is intended to imply that any of the referenced companies have been charged or convicted as illegal pyramid schemes.
Quixtar Announces First Fiscal Year Results
Quixtar Sold $518 million: IBOs earned $23 per month
October 27, 2000. Quixtar has announced the results of its first year of operation, from September 1, 1999 through August 31, 2000. Although they claim impressive numbers, a quick analysis reveals less-than-stellar returns.
Claiming "over 500,000" so-called "Independent Business Owners" (IBOs), Quixtar had total North American sales of $518 million. Although the company did not specify, based on past releases that figure would be based on "estimated retail," a largely imaginary number with the majority of sales made at wholesale to IBOs for their own use. That works out to $1036 per IBO for the year, or $86.33 per month.
Sales through Quixtar itself accounted for $448 million, while sales through partner stores equalled $70 million. IBOs are paid based on a complicated formula involving "PV," or "point value" and "BV," or "Business Volume." (The Sales & Marketing Plan is predicated on each IBO accounting for at least 100 PV in volume each month.) However, these figures indicate that the PV through Quixtar would have been only about 156 million, or 312 PV per IBO for the year. That is a mere 26 PV per IBO per month. PV on the sales through partner stores involves more variables, and is therefore more difficult to estimate; but would appear to be in the neighborhood of about 1.75 per IBO per year.
So, while sales of $518 million might appear impressive for a first-year ecommerce site, the reality of it is very bad news for the IBOs.
Quixtar's press releases also claim that last year, their IBOs earned $143 million in bonuses and other incentives. That averages $286 annually, or $23.83 per month per IBO. The majority of this will have been paid to the top 1/10th of 1% of IBOs.
So, while Quixtar may be repaying its owners for the expense of starting it, it is obvious that the IBOs constitute an unpaid sales force for the company, and most of them are undoubtedly losing significant amounts of money.
Copyright October, 2000, MLMSurvivor.com. Used by Permission.
|This page last updated on