Swimming In My Head…

diving in the deep end…

Shop-to-Earn or don’t…

I received two invitations to become a part of Shop-to-Earn today ironically (‘Twofer Tuesday’).  One was from a trusted friend and the other from a business owner (not related to STE) in an email blast via a business network that I belong to.

I watched the overview video and found it somewhat interesting, but then I did what every other person considering this venture should do.  I researched it.

Since I’m not signed up, I can only share what my research found and my opinion.

What I learned is that it is indeed an MLM business model.  There is an opportunity to make at least a small amount of money, but you have to recruit.  The commission structure is somewhat complicated in that there are ‘left and rights’ and ‘balances’ and all kinds of other criteria that must be met to make money.

Basically, I’ve gathered that you are granted a website after making a $400+ dollar investment in which people can shop online from your website and you’ll subsequently make money from them.  The bigger reward money is made by recruiting, recruiting, recruiting others into your organization.

Now, everything following is merely my opinion of why I won’t become an STE member, but should have no bearing on anyone else, save for caveat emptor.

First, in this down economy we have learned to be very frugal with our purchases and we research everything including where we can get the lowest prices for the items that we regularly purchase.  Sometimes those purchases are made online and sometimes they’re made at a ‘brick-and-mortar’.  The point is that although there is a market for shopping online, we have not yet, nor are we close to reaching a place where nearly everything we purchase will be done online.  With a $100 monthly commitment to purchase products through the website that you would be granted by becoming an STE ‘broker’, that initial investment really becomes $400+ in addition to $1,200 in annual purchases and somewhere around $112 to renew annually.  STE supporters generally counter with the benefit of cash back for purchases but that’s already available with some credit cards, loyalty programs and other free programs.

Next, nobody in the forums (STE ‘brokers’) seems to discuss the tax repercussions of ‘owning their own business.’  Since STE technically owns the website and merely grants you access and usage rights for that  website, it seems that some would-be-buyers are not taking into account that they are still generating income for which they will have the tax liability as a 1099 independent contractor.  If they’re business savvy enough to set up some type of corporate entity, there is yet another expense.  Even if you ‘do-it-yourself’ and don’t solicit the help of an attorney, there are fees associated with setting up a corporation which would provide the best tax scenario.

I noticed that there was quite a bit of argument about the validity of the business and whether or not it’s a scam.  I don’t feel that it’s a scam because people aren’t forced to join.  People have a choice to be involved or they have the choice not to.  I’m choosing not to because it’s my belief that only a small percentage of those involved with this will indeed reach the earning levels used to rope you in.  I also think that people would be foolish to think that someone is solely looking out for their best interests by getting them involved with this.

Which leads me to my next reason for wanting no assoication with STE.  Since we all have choices, I wouldn’t choose to try to persuade my friends or relatives into changing their shopping habits to exclusively shop via my online web portal.  I wouldn’t choose to persuade my friends or relatives to get involved with something that requires a lot of work and time with only the hope of reward (the payoff is not necessarily commensurate with the amount of time and effort put into it).

But most importantly, the nagging question that I’ve had for every MLM opportunity that I’ve been confronted (and I do mean confronted) with is this: what happens when the bubble bursts?  It always does.

In this day and age, unless something is so revolutionary, there is always a way to do things less expensively.  For example, VM Direct is an MLM organization that touts video email and video social networking.  The problem with it is that you have to pay nearly $700 to join and then you have to attend weekly meetings, recruit, recruit, recruit, and build a huge team of people that must be successful to make it through the 15 ranks available.  Sadly, I learned the hard way that I could do the same thing for free or virtually free with technology that is already widely available.  Fortunately, I got my money back and managed to learn a valuable lesson.

I guess what this all boils down to for me is very simple: people are getting smarter on a daily basis due in part to the freakish amount of information available to us at any given second of the day.  There will be some who feel that this is the next best thing and it’s worth every penny.  There will be others like me who would rather not give STE $400+ dollars and instead continue to find shopping deals on my own…just like I’ve been doing all along.

Why did I post this?  Mostly because I sincerely hope that people take advantage of the information that is available to them prior to making any decision either for or against Shop-to-Earn.

For some interesting reading Google “Shop to Earn”.  I opted to not place any links in this post because I cannot state it any clearer, we all have a choice and research is the best way to make a decision so research away and draw your own conclusions.

December 2, 2008 Posted by | Finances, Life In General, Really? | , , , , , , | 25 Comments