Friday, March 11, 2005

PT Barnum was right

I took a trip with a family friend to see one of those dreadful MLM presentations. In variably over the years friends have dragged me to one pitch or the next. The point was always about selling dealerships rather than moving product. Legitamate companies move product . The salesman exists to promote and get product into the hands of the consumer. Salespeople are territorial in nature and even have been known to sabotage each other. When they are promoted to the next level they mentor the ones below. There are exceptions who help each other but that is reflective of a superior company.
I have seen the drills before the number jumbles. The crowd with confederates going oooh and ahhhhhh much like a live infomercial. This particular one was high pressure and big dollars. They were looking for 5k minimun and they did not leave you alone for a second. This was far more serious than a standard MLM ripoff.
The people in the audience were an eclectic mix of mainly religious Jews. The speaker was one I recognized from a previous pitch. Obviously, his other Utiopian get rich scheeme did not work. The man was a pro and had done this innumerable times in other forums. I knew the routine he was a chemist who got tired of working for somebody else. Even if I had not heard his speach the routine was the same. Name an occupation insert a few details and a joke about the futility of working for somebody else. The familiar frustrations that plauge people throughout the work day .The other version has a destitute family saved by the latest marketing scheeme.
The salvation is always the new concept. There is a quasi religious messianic quality to the gathering.
The pitch on this particular item was household good made from natural fiber. There were absurd claims about synthetic fibers causing cancer. There were also claims that natural fibers have chemical agents that repell dust mites. There was also a tax strategy that was advised that according to CPA and the IRS would result in a heavy fine. My experiences in the garment trade revealed impossibilities in the product and business model.
The first thing that struck me as odd was a $4000.00 blanket being sold with care labels that sell for $30.00. Real vendors in high end merchandise spare no expense in care labels. A mistake on a carelabel can cost hundreds of thousand. I also looked for the RN number at this point an owner said to me . "What are you looking at ? We are legal business." This was before I said one word and now my doubts were confirmed.
I know the mark up in the higher priced goods is aroud 4x . The reason is the returns ratios become a killer at the higer end. I started to do an elelmentary QC check and I had all three owners demanding to know what I am looking at. I explained as a garment professional there are things I am trained to look for. At this point I was never left alone.
I asked " What is your return ratio ? ?What percentage of product is rejected for QC ?

1 comment:

Redbeard said...

Many, many years ago, when I first left the Cubicle Culture to venture into entrepreneurship, I wound up selling for a fast-buck operation. In order to be a success in that organization, it was necessary to offer under-the-table free gifts to the buyer. The goods were so horribly overpriced that the freebies were the only way to get people to buy very much. I couldn't do that, so after a couple of months, I quit.

A job that prevents a man from looking at himself in the mirror when shaving simply isn't worth it.