Thursday, December 3, 2015

Shop Your Way To Wealth? Uh, No.

A lady is selling a "program" to teach people how to "shop their way to wealth!"   Apparently, there is still one sucker born every minute, in the USA.

Ann Seig has a program out called "Shop Your Way to Wealth!" which, if you click on the site, says it not available right now, but they will put you on the waiting list as soon as it is!   This is an interesting gambit, as it makes the program seem popular and also unobtainable, and the plebes will bite on anything, once you tell them you can't have it.

Doubt me?   Look at the long lines outside cheesy chain restaurants on any given Saturday night.  People wait in line for an hour to have a boil-in-a-bag entree from T.G. McChotke's Onion Garden Buffet.  The line out the door is half the attraction.   And it certainly works at nightclubs, to be sure.

Can you really shop your way to wealth?  Well, according to some sources, you'll have to pay $2000 to find outI know a neat way to save $2000.   If you pay me $1000, I'll tell it to you.

However, if you really want to find out about the program, without spending $2000, and have three hours of your life to waste, you can listen to the program on YouTube.   The "model" is to buy things and then re-sell them on Amazon.   And like any good MLM presentation, it starts out with "testimonials" from "satisfied customers".

It is an interesting gambit, as people (particularly women, who I am sure are the target audience) love to shop.   And if you can tell people they can make money shopping, it is like telling men they can make money watching football.   It would be like shooting fish in a barrel.

Of course, technically, you could make money by astutely buying products at a lower price and then reselling them at a higher price.   The problem with this model is that in order to make a career of it, you have to have a steady stream of lower-priced goods available to buy and also a ready outlet to sell your goods at a higher price.  This is the conundrum of every merchant in the world.   And mercantile businesses are businesses of thin margins. 

A used car dealer is a good example.   They go to auto auctions and buy cars that are off-lease or traded-in, for less money than the public would pay.   They take these home to their dealership and then clean them up and repair them - again at a cost lower than the public would pay.   Then, using their dealership showroom and saturation advertising, they "sell" the vehicles to the public by using high-pressure sales tactics and the ability to offer financing and take trade-ins - which the general public can't do when selling a car themselves.

But Amazon?  Yea, sure, you can buy things and sell things on Amazon - or eBay.  I recounted before about a woman in Maine who buys overstocked clothes at a discount store up in Bangor, which has a generous return policy.   She buys things she thinks will sell on eBay, puts them online and sets the minimum price higher than what she paid for the item.   If it sells, she makes money.  If it doesn't, she returns it to the store for a refund.

Yes, it is a pretty neat business model.  Yes, it also involves a lot of hard work.  She has to go to the store, figure out what will sell and what won't (based on her skills, which are acquired over time) and then set up eBay auctions, taking pictures of each item, and then run the auctions (they don't run themselves) accept payments, leave feedback, and then pack and ship each item.  In terms of "making money" it might be less than minimum wage, if you factor in all the hours.  Whether she is reporting this as taxable income is another matter.

And of course, you end up with non-paying bidders, people who leave negative feedback, lost packages in the mail, people who want to return things, and so on - you know, all the usual headaches that anyone running a retail operation will have.

And since this isn't a business model that you can Patent or protect, it is available to the next little old lady who goes to the same store, buys things right out from under you, and then sells them for a penny less online.  So you have to cut your prices, find new sources, and the pattern continues, until both of you are barely making any money at all.  It is call retail and it is a cutthroat business.  This is the conundrum of every merchant in the world.  And mercantile businesses are businesses of thin margins.

And while the program is called "shop your way to wealth" it really involves actually selling things as well.   How does the program work?  Well, unlike our eBay lady, the program uses Amazon, and uses some interesting aspects of Amazon, including one called "fulfillment":
Shop Your Way To Wealth is pretty much Amazon Local Retail Arbitrage.
What you do is go to your local store with their Amazon App and scan items to see what kind of prices they are going for on Amazon.
If you see that the price at your local store is way less than Amazon, you then buy these items up at that store…
Then you get home and package these items and send them into Amazon.
This is called Fulfillment by Amazon.
That just means when you send items into Amazon in bulk, they will package the item for you, ship the item for you and handle customer service and returns for you.
An interesting strategy.   But what you are really doing, in effect, is not "shopping your way to wealth" but just going to work for Amazon.   And it is hard work, too.   In order to make a lot of money at this, you have to move a lot of product.   The idea you can make tens of thousands of dollars with no real effort on your part, is a little overstated.   It would be a job, not merely "shopping" and a hard job at that - chasing margins in the retail business.

The idea that Amazon will "handle everything" is a bit overstated.  If you want them to handle "fulfillment" then you have to front the cash for the inventory, and then allow Amazon to take a cut to handle the sale.   Then you have to hope the items sell.  If they languish in inventory for months or years, you could end up stuck with a lot of money invested, and nothing coming in.

And just because something is priced higher on Amazon doesn't mean it will sell.   There have been postings galore about obscenely priced items on Amazon in the past, including food items being listed for two to three times their market value - or more.   Why this is, is beyond me.   But suffice it to say, no one is going to pay $30 for a jar of Hellman's mayonnaise, no matter how many cases you ship to Amazon Fulfillment.

Is "Shop Your Way to Wealth" a scam?   Well, not really, although some people have some not-so-nice-things to say about Ms. Seig.  For $2000, she is just telling you things you can learn for free, just by searching online, or even listening to her YouTube video.   Charging a lot of money for something is not illegal in America, and that is all Ms. Seig is doing - charging $2000 for something you could figure out on your own.

So, the question is, if this is such an easy way to make money, why isn't everyone doing it?   Well, to be sure, there are a lot of folks out there buying and selling things on eBay and Amazon.   The guy with the used book store is no longer just relying on walk-in traffic to sell books - he lists them for sale on Amazon as well (and I've bought a few of them!).   Similarly, other dealers in everything from car parts to printer toner to clothing and even food have gone online, often using the Amazon or eBay platforms, to sell product.   It expands the audience for your products, particularly if you have lots of hard-to-find parts that not everyone is interested in, in your local area.

But huge riches from this?  Not really.  And as others have noted, for the $2000 they want for this "seminar" you could go out and buy $2000 of inventory to sell on eBay or Amazon (and hope you get more than $2000 for it).

The only one really making money out of these "programs" are the people who put on the seminars.  That's where the real money is - in telling people how to make money.   Think about it.  If this was such a profitable deal, wouldn't Ms. Seig be doing this herself, rather than telling others how to do it?

In every "seminar" type scheme, whether it is "cash flow notes" or "buying ugly houses" or MLM marketing - or whatever, you have to ask yourself that basic simple question:  If this was such a fucking lucrative deal, why are the people putting on the seminar telling US about it, instead of doing it themselves?  And the answer is quite clear:  There is more money to be made in seminars than in these schemes.

Shop your way to wealth?  No, more like just running an Amazon or eBay retail store, with all the attendant hassles.

Sorry, there ain't no such thing as a free lunch!  (But they do have one at the seminar!)