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Quixtar Marketing Efficiency |
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| Most Quixtar teams state that Quixtar is more efficient at distributing and marketing goods and services. They claim middle-men are eliminated, and that shopping with Quixtar also reduces a shopper's driving time. An example of their argumentation is below. Many groups claim Quixtar is the next consumer revolution, whereby consumers get paid to build "pipe lines" of consumers, through which goods and services move. | |||
S o where does the money come from? Good question! It comes from "Direct Distribution" of products and services.Direct Distribution simply means getting products directly from the manufacturer to the consumer. By eliminating the middleman (like trucks, warehouses, loading docks, wholesalers, and retail stores) you can eliminate a large percentage of the cost of the product. For example, here is an illustration of traditional distribution. If you shop at a store, you are paying for each of these steps in the distribution chain
When you think about it, you're paying a lot of money for a product when you purchase it at the store. On average, a manufacturer's cost to produce a product is only 20%. This means for something that you pay $19.95 at a store, the cost to make it could have been around $3.99. The middlemen could have added as much as $15.96 to the cost of the product! And you pay for it! The most costly part of a retail product is the distribution. In the above example, there are four middlemen between the manufacturer and the consumer. So, the products sit on trucks and in warehouses and YOU pay for it! What could happen if the manufacturers could just send the products directly to the consumer? Let's take a look....
By eliminating the middlemen, a large portion of the cost of a product is saved! That's a lot of money -- and if you're an IBO in the Quixtar business, it's where your profit comes from! In short, by removing the wasted time and cost in distribution, you can have a profitable business and save your customers money and time. Quixtar has streamlined this process so consumers can make purchases and have the products shipped to their door!
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Buying straight from the manufacturer is nothing new. Their are other retailers who also buy direct from the manufacturer such as Costco and Wal-Mart who have just 18-23% of sales as overhead expenses. However Quixtar IBOs take almost 32% of sales as overhead for Quixtar, and this does not even include Quixtar's overhead costs. IBOs forget to include the enormous time and monetary commitments it takes to build and maintain a Quixtar business. Most Quixtar teams promote the "buy from yourself" model and most IBOs have no retail sales. Since the Quixtar prices are usually viewed as being quite high, it is very difficult to attract retail customers. This then implies that the typical "IBO store" is only moving product equal to the IBO's personal purchases, which is just a few thousand dollars per year on average. In the end, the time and money(?) an IBO might save by shopping with Quixtar is far out weighed by the time and money the IBO spends trying to recruit others to duplicate the scheme. Quixtar reports the average active IBO grosses just $115/month from the business. If the average active IBO spends 10 hours per week on their business they earn an average of $2.67/hour for their effort. However, the typical system cost in Quixtar is about $175/month for a single person, and $235/month for a couple, turning the IBOs gross profit to a net loss. Although the business is supposed to save their participants driving time associated with shopping, the participant's real driving time is significantly increased as distributors drive instead to meetings with prospects, open meetings, leadership meetings, tool pick-up, seminars, and functions. Some groups must even drive to pick up their products. Teams like WWDB are on standard fulfillment and don't have home delivery of the products. Quixtar reports that the average IBO has just 38.5PV of sales per month (about $96/month). Analysis from three Quixtar groups of 456 IBOs [1], [2], [3] shows that the sales per IBO was even lower than that reported by Quixtar. The groups had an average of just 9 PV/IBO. For the sake of this analysis, about Quixtar's distribution efficiency, we will make the very unrealistic assumption, that errors in the favor of Quixtar, which is that each "IBO store" in a Quixtar team has 150PV(>$375) in sales per month. Note this is over 3.5 times the average IBO sales. The total bonuses paid on 150PV/month is about $124/month, or $1,488/year, since Quixtar pays back about 33% of sales to IBOs. Keep in mind that Quixtar also reported that the average "active" IBO, who had renewed, earned a average of $115/month. The Quixtar teams teach its IBOs to duplicate themselves. Part of the duplication process includes getting new "IBO stores" to also participate in the system and follow the proven pattern of success. In fact many of the lines of sponsorship tapes explain that Quixtar volume is directly proportional to the volume of system tools moved into a team. I don't have yet any data to confirm this but this comes from the mouths of several Diamond leaders on the Quixtar team. The correlation creates the perverse situation that IBOs' volume only increases when they consume motivational tapes and attend motivational functions. It would seem strange that a business that has "cut out all the middle men" must resort to convincing its customers to buy motivational tapes to get them to buy overpriced soap and toothpaste. Now that Diamond IBOs have stated that Quixtar volume only increases with expenditures on the system, we can see just how efficient the Quixtar distribution system is. Let's look at some of the easy to obtain expenses for an IBO. Single IBOs following the "system" can have the following basic costs in terms of time and money. IBO couples could have costs that are much more since they buy twice as many tickets. |
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Item |
Cost |
Cost per year |
Hours |
Standing order tape |
$12.00 |
$624 |
car time |
Yearly Total |
$2846 |
810 hours |
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It is plain to see from this analysis that the Quixtar distribution system is extremely inefficient. Not only do the system costs of $2846/year exceed the income ($1,488/year) by almost 100%, but the IBO has at least 810 hours invested, for which he received no net compensation. Assuming the IBO could make at least $6/hour in a part time job, the average IBO is losing $5,218/year.
Here is a break down of hours involved in being a real IBO. Tool Pickup Open meeting, Monthly Seminar Leadership Meetings Product PV Parties Major Seminar Go Diamond Weekend Showing the plan Does this give you any idea of the time involved here? Incredible! I am exhausted typing it, and I can't believe I did all that! |
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