| Sam Young Newsletter |
Issue 132, May 2007
Hi guys,
For any of you who are considering an NSE business opportunity, read PhotoMax Fails to Sell first.
There's a great new trend in property. Read on in Real Estate - Fins or Sharks?.
Don't forget, if you want to be taken off my mailing list, click here to send me a reply e-mail and I will remove your name.
| PhotoMax Fails to Sell |
A few weeks ago I was given a presentation by a distributor from NSE, or Nu Skin Enterprises, trying to sell me a distributorship for "PhotoMax".
This is a many tentacled company, with all sorts of little products that you trip over. As well as NSE, Nu Skin Enterprises and PhotoMax, there are Big Planet, DVD Movie Magic, MaxCast, Pharmanex, NUS and Global Internetworks (all associated Multi-Level Marketing companies). It was a fairly slick presentation, and it smelled like Amway.
Buying into NSE's PhotoMax opportunity required a US$3k start up investment which was glossed over very quickly, as was the US$100/month purchasing to stay in the scheme; so that's $4,200 spend in the first year. That's NZ$480/month for the first year, equalling NZ$110 a week, which would buy enough weekly labour to do cleaning, washing, and have some shopping trips run. A not-inconsiderable investment.
Buying into NSE's PhotoMax opportunity required a US$3k start up investment which was glossed over very quickly, as was the US$100/month purchasing to stay in the scheme; so that's $4,200 spend in the first year. That's NZ$480/month for the first year, equalling NZ$110 a week, which would buy enough weekly labour to do cleaning, washing, and have some shopping trips run. A not-inconsiderable investment.
You then get to sell products to all your friends and family members (more shades of Amway), clipping the ticket on all 'down-stream' sales at a munificent 20%. I worked out that to merely recoup your initial investment, you would need to generate down-stream turnover of $21,000 to get break-even, not profit. You would have to have a down-stream turnover of $42,000 to make a tiny US$4,200 gross margin profit and recoup your investment.
The NSE presenter made a big song and dance about having a potential with PhotoMax of tapping into a $85 billion dollar available slice of the image industry. Big figures look impressive, but let's look at $85b in context; PDVSA, the 9th largest oil company in the world, made revenues of $85b in 2005; Honda made revenues of $87b in 2005; Australia's government welfare spend is $88b pa; NZ's GNP is $74.5b pa; Procter & Gamble made $57b profit in 2005. So in reality, an $85b market isn't that big on a global scale. The global oil industry turnover alone for 2006 was $2,673b.
Taking the Honda example, their 144,800 employees turnover $87b, thus their average employee generates $600,000 pa (generates, not earns. This is revenue, not profit).
In comparison, NSE turned over $1.1b in 2006 for 100,000 'distributors', thus the average distributor generates revenue of $11,000 pa. However, profit is only $32.8m, which translates to $328.00 per distributor (you can verify the stats at http://finance.google.com/finance?q=NUS).
Not forgetting that this scheme costs you $4,200 to belong in the first year, Mr Average Distributor then makes a loss of $3,872... hardly the stuff that dreams are made of, is it.
Additionally, I am not sold by NSE's IT strategy, storage or the technology (check out their offer at http://www.nuskinusa.com/bp/static/photomaxprod/prod_wm_lg.html). NSE offers online storage of your data, and while I agree that predictions are for more storage, backups and applications to go online, I think there will be much cheaper options than NSE's as customer demand grows. Also, customers also have to undergo a paradigm shift in their levels of trust, to be secure enough to store important items on the internet rather than on their own PC's hard drive. There are issues around what happens to your data if this company goes belly up, too. A number of MLM companies have gone down the gurgler in the past few years, usually through injunctions; notably Purchase Plus Buyers Club, 2Extreme, Equinox and Trek Alliance.
The NSE presenter made a big song and dance about having a potential with PhotoMax of tapping into a $85 billion dollar available slice of the image industry. Big figures look impressive, but let's look at $85b in context; PDVSA, the 9th largest oil company in the world, made revenues of $85b in 2005; Honda made revenues of $87b in 2005; Australia's government welfare spend is $88b pa; NZ's GNP is $74.5b pa; Procter & Gamble made $57b profit in 2005. So in reality, an $85b market isn't that big on a global scale. The global oil industry turnover alone for 2006 was $2,673b.
Taking the Honda example, their 144,800 employees turnover $87b, thus their average employee generates $600,000 pa (generates, not earns. This is revenue, not profit).
In comparison, NSE turned over $1.1b in 2006 for 100,000 'distributors', thus the average distributor generates revenue of $11,000 pa. However, profit is only $32.8m, which translates to $328.00 per distributor (you can verify the stats at http://finance.google.com/finance?q=NUS).
Not forgetting that this scheme costs you $4,200 to belong in the first year, Mr Average Distributor then makes a loss of $3,872... hardly the stuff that dreams are made of, is it.
Additionally, I am not sold by NSE's IT strategy, storage or the technology (check out their offer at http://www.nuskinusa.com/bp/static/photomaxprod/prod_wm_lg.html). NSE offers online storage of your data, and while I agree that predictions are for more storage, backups and applications to go online, I think there will be much cheaper options than NSE's as customer demand grows. Also, customers also have to undergo a paradigm shift in their levels of trust, to be secure enough to store important items on the internet rather than on their own PC's hard drive. There are issues around what happens to your data if this company goes belly up, too. A number of MLM companies have gone down the gurgler in the past few years, usually through injunctions; notably Purchase Plus Buyers Club, 2Extreme, Equinox and Trek Alliance.
They also made quite a song and dance about how cheap hard copy photographic prints were to order; at about 14 cents per photograph. Retail overnight ordering of prints is currently only 20 cents, so it wouldn't take much for retailers, via the established photo labs, to be incredibly competitive with 14 cents. Great for customers.
NSE also made a bit of a song and dance about their breakthrough MaxCast online video streaming technology - it uses no buffering and is supposed to be much higher definition and resolution. I must admit that the quality I saw in the demonstration was very good. So I tried MaxCast at home, to check that the demonstration had truly been online and had not been merely loaded onto the demo laptop (call me suspicious if you will).
NSE also made a bit of a song and dance about their breakthrough MaxCast online video streaming technology - it uses no buffering and is supposed to be much higher definition and resolution. I must admit that the quality I saw in the demonstration was very good. So I tried MaxCast at home, to check that the demonstration had truly been online and had not been merely loaded onto the demo laptop (call me suspicious if you will).
Maybe I was looking for fish hooks anyway, but I found lots on this package. The reason that you get such great quality is that the video file has to completely download before you get to see any of it; all 112Mb of very standard .wmv video file for the item I was viewing. It appears that the reason it is high quality is that it doesn't buffer at all ...I think you call that 'selling a negative' aspect as a positive. This is not 'streaming video'; this is downloadable video files.
So I had a look for any independent or technical reviews of this 'wonderful new MaxCast technology' that 'all the big players will wish they had a slice of' - and couldn't find any. I have looked on all the MaxCast sites on the internet, trying to get any technical information about the product, and can find no technical specs at all. As a result, I feel this is probably because there isn't any new technology. I had asked the distributor if NSE were planning to licence the technology, and he was quite surprised at my question; I guess it's rather hard to licence something that doesn't exist.
All I can say if any of you have this deal thrust at you, be careful. It looks slick, but I feel the returns aren't there. The reason that businesses often make a 100% mark up on products is that is how much margin they need to stay in business. 20% is not enough.
All I can say if any of you have this deal thrust at you, be careful. It looks slick, but I feel the returns aren't there. The reason that businesses often make a 100% mark up on products is that is how much margin they need to stay in business. 20% is not enough.
Another thing that you may be told is that network marketing is the 'new way' that products will be sold. Interestingly, I thought that network marketing was how we USED to sell things, and that now we did things like mass marketing,
However, this presentation encouraged me to have a very interesting trawl on the internet, and to have found some interesting and cautionary websites. Check out a very interesting article on Amway/Quixtar at http://www.msnbc.msn.com/id/4375477/, the American Federal Trade Commission's check list at http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.shtm and a nice list of 10 MLM fallacies at http://www.mlmsurvivor.com/fitzpatrick.htm.
| Real Estate - Fins or Sharks? |
Finnish real estate site Igglo lets would-be buyers 'pre-order' houses that haven't yet gone on the market.
Their approach is very interesting. Igglo has gone out and photographed every building in several Finnish cities (including Helsinki), and combines the building photographs with satellite images and maps. That's every property, not just those that are currently on the market.
Would-be buyers can earmark a building, street or neighbourhood they're interested in, and post offers online. This lets potential sellers find out how desirable their property is, even if they weren't actively considering selling. Buyers also receive an alert when a property in their earmarked building or area comes up for sale.
If demand and supply meet, Igglo handles the transaction for a lower fee than is charged by regular real estate agents (less than 2%). Lower fees are made possible by the fact the Igglo agents don't get involved until buyers and sellers have found each other.
Consumers love it, with the Igglo site attracting more than 50,000 web surfers a week.
Igglo's tagline is "Your house is already on Igglo", which is probably quite true if you are in a major Finnish city; and will probably be also true in the rest of Europe in short order, as the company is currently working on European expansion.
Great idea! I was very attracted by the less than 2% commission...
| Quick Launch Toolbar Tips |
The Quick Launch toolbar consists of a bunch of tiny icons immediately to the right of the Start button (in the unlikely event that you can't see the Quick Launch toolbar on your PC, right-click an empty spot on the Windows Taskbar and select Toolbars | Quick Launch).
To launch one of the programs in the toolbar, just click on an icon. If you're like me, you use the Quick Launch toolbar about a hundred times a day.
The Quick Launch toolbar can be customised, as follows, in both Windows XP and Vista:
- Add another program to the toolbar by navigating to the program (ie Start | All Programs), clicking on its listing, hold down the Ctrl key and drag it down to your preferred place on the toolbar. Fast & easy.
- Put folders on the Quick Launch toolbar by navigating to the folder, clicking on it and dragging it to the toolbar. Clicking the folder icon in the toolbar brings up Windows Explorer, but opening at that particular folder (très tricky, n'est pas?).
- Put documents or templates on the toolbar by clicking and dragging. Stick templates (eg .dot or .xls files) you use frequently for creating new files. Each time you click on the template, the application (ie, Word or Excel) opens with a new document based on the template.
- Put URLs on the Quick Launch toolbar - they are faster than Bookmarks (or 'Favourites' for you diehard IE fans). Use Firef..., er, your Web browser of choice to navigate to the website you use all the time, click on the icon to the left of the address (commonly called a "favicon"), and drag it down to the Quick Launch toolbar. Clicking on that Quick Launch icon starts your preferred Web browser with that page loaded. Think of internet banking, TradeMe....
| TLAs for SMEs |
Here is this newsletter's TLA for you:
- MLM, Multi-Level Marketing companies. Think Amway/Quixtar, Nu Skin Enterprises. All those hype-ridden organisations where acolytes go away for regular cult indoctrination weekends, spend all their wages on guru sales materials and come back as rabid 'born again' salespeople. Very boring to have to dinner :-(
Please feel free to email me with any TLAs that you want to get the bottom (meaning!) of.
| Tips, Short+Hot Keys |
In this newsletter, we look at how to change Outlook views with shortcuts:
- Outlook Mail pane view, Ctrl & 1
- Outlook Calendar pane view, Ctrl & 2
- Outlook Contacts pane view, Ctrl & 3
- Outlook Task pane view, Ctrl & 4
- Outlook Notes pane view, Ctrl & 5
| Hot Linx |
For tips on saving money through becoming more evo-friendly, check out Ecobob's website at http://www.ecobob.co.nz/
To learn about a new way to sell real estate, check out http://www.blockhunter.com/ and US Redfin at http://www.wired.com/wired/archive/15.04/wired40_ceo.html
And always worth a reminder for very good, thought provoking reading; check out the Economist's website at http://www.economist.com/index.html
For those of you who haven't made the leap to Mozilla's Firefox yet, here are 13 reasons to use Firefox over IE at http://www.flexbeta.net/main/articles.php?action=show&id=32
Catch you again soon!! E-mail your suggestions to me here
This excellent website definitely has all of the information I wanted concerning this subject and didn?t know who to ask.
ReplyDelete