Today’s Opinion: Global Wealth Trade: too good to be true?POSTED: 03/13/11 8:54 PM
Global Wealth Trade is a company that retails jewelry over the internet. The structure of the organization resembles that of multi-level marketing businesses. They promise untold riches to anyone who is willing to join the organization, but only very few participants in such a scheme are actually making money.
Global Wealth Trade is also active in St. Maarten. The company is not doing anything illegal, but it is about to ruffle some feathers and encourage interested sales people to join the organization.
Global Wealth Trade will want people to believe they’re able to make a fortune. They flirt with the top income earners as examples of what could become anybody’s dream. Founder Reza Mesgarlou has a reported income in excess of $700,000, Robert Elsinga, who is linked to GWT in St. Maarten apparently makes more than $180,000 while others listed on the internet boast incomes of between $80,000 and $350,000 a year.
Who would not want to join such a sexy organization with such tempting income potential? There is of course one catch. If something seems to be too good to be true, it usually is. It is not per definition so, that people who join the company won’t make any money at all – but the chances that they will end up with six figure paydays are close to non-existent.
So what does it take to join Global Wealth Trade? On its web site, the Canadian company makes clear that there is an annual membership fee of $194. Access to a shopping account (that allows people to buy at “wholesale” prices costs $77.25 per month or $154.50 per month, depending on the package.
And what are those packages? Global Wealth Trade calls them retailer, Gold, Titanium and Platinum respectively.
The “members” have to choose which package they want to buy. The kit presumably contains jewelry the company produces and that the members can sell to family and friends. Or to others, of course.
The price? The cheap retailer package comes at $306, and the most expensive option, Platinum, at $3,036.
There is a ten day cool off period within which members are able to come back on their decision to join, but they will lose at least $306, because the company has declared this amount for some reason non-refundable.
There are interesting critics around on the internet who warn that Global Wealth Trade is nothing more than a pyramid scheme, designed to rip people off. One blogger reports that GWT was once known as JewelWay International Inc. that sold worthless jewelry to would-be entrepreneurs, suggesting they could sell it for incredible profits. The company was shut down by the American Federal Trade Commission in November 1997, according to the blogger. He also claims that Oliver Koncz, the former CEO of another defunct pyramid scheme called TTI (Treasure Traders International) has apparently “dusted off” the old JewelWay business plan to form Global Wealth Trade. “Long story short, the Canadians are trying to rip us off, don’t buy into their shit.”
The company refers on its web site to Cecil Frenet, a former “night time social worker” from St. Maarten who has joined the company as “a Platinum.” We guess Cecil bought $3,036 worth of jewelry from Global Wealth Trade. We wish Cecil well, of course, but we keep having our doubts about GWT.
Multi level marketing companies are, according to one analysis we found, unstable. MLMs tend to flood the market with products for which there are in the end not enough buyers. The distributors at the bottom of the food chain remain stuck with the product; many MLMs disappear again when the pyramid collapses and the real market forces have kicked in.
The economic reality is that there are only a certain number of people whom are willing to buy any product at a certain price. MLMs usually approach their markets with overprices products, a strategy that limits the pool of prospective customers even further.
There are of course MLMs that do work (like Mary Kay), but that is again inherent to the product: there is a recurring demand for cosmetics. Expensive and “exclusive” jewelry that GWT brings to the market is a completely different story.
Once the market is saturated with GWT jewelry, new distributors that join the company are guaranteed losers, because there are no customers left. They get stuck with the product, and their only way to squeeze some money out of the venture is by bringing in more distributors who stand even less of a chance to make a dime.
GWT promotes itself as the most prestigious luxury designer fashion house in the world on its web site. It boasts of “the world’s highest paying compensation plan with an unprecedented payout of up to 70%,” and labels its business a “recession-proof opportunity in an ever-expanding multi-billion-dollar designer industry.”
The web site is glitzy, and the language the company uses is boisterous. It is all too good to be true, plenty of marketing push and nothing to prove that there is indeed a solid business out there.
Maybe our local jewelers have something to say about this way of marketing jewelry. Really such a golden opportunity, we’ll soon see all of our local jewelers close their stores and join the ranks of Global Wealth Trade. If that happens, and only then, will we concede that our opinion about multi level marketing schemes is completely off the mark.