There’s a guy at another forum pitching for Lyoness, saying that he gets a ridiculously high cashback when buying gasoline. Since this is my job I know that the number he quoted is something like 3 times more than the gas station profit margin. I asked how can this work for the gas station owner since according to these numbers he’s in the red from step one and getting more customers through Lyoness will only make him lose more.
What I got as an answer was that the algorithms are very complicated and he himself spent 10 days to understand them and that this whole program is “exclusive” and not for everyone.
There’s a longer discussion on an Irish message board about the company but I haven’t linked as I’m not sure of the rules about doing so. I can message the link to you if you want to see it.
The lack of unbiased information about them online can only be described as ‘suspicious’; luckily, the Irish forum thread is on the first page when you google “Lyoness” and that gives a little bit of good information. Unfortunately, the good information makes it sound exactly like a MLM scam, otherwise known as a pyramid scheme: Huge up-front investment, with return dependent upon recruiting others.
Short answer: No. Gas was never a loss-leader. It is after all the basic product of a gas station.
Longer answer: In the old days gas stations were the place where you would change your oil, do minor repairs on the car, buy car related accessories, etc. Markup on oil back then was 70-100% plus the cars needed much more frequent oil changes. This allowed the gas station to sell gas for a very small profit because there was so much money made on all other car related things.
Fast forward to today: People now go to gas stations pretty much just for gas and nothing else. Yes, they still sell oil and other stuff but not as much as in the old days and they can’t have the crazy markups of the past because there’s more competition today. So the gas has to make enough profit to sustain the gas station on its own.
This doesn’t match what I’ve heard from gas station owners recently. Gas isn’t a loss leader, but it’s not making much profit, either. The market forces the gas prices low enough that the oil companies are making money but the individual filling stations really aren’t. They do still make a lot of their profits on soda, candy, and other knickknacks.
As I’ve understood it, gas alone makes enough to keep a station operating, but a “succesful” gas station is going to be the one moving add-ons.
I’ve just started working with Lyoness, and I don’t want to come across as an expert yet, because as the original poster mentioned it is very complex.
The short answer to your question is that Lyoness has made a deal with BP. As in the corporate entitiy and not the individually owned gas stations. So an easy example would be: if you went into BP’s office and asked them to purchase $2million in gift cards, I’m sure they would give you a considerable discount. When you use the gift cards at the station, the owner is still getting his full dollar value. Thats why it works.
Yes, you do need to bring people into the system. No, its not a pyramid. The only requirement is to shop within the system whenever possible.(I don’t mean you have to spend money you normally wouldn’t) Its not a get rich quick scheme, but there is the ability to make money using the system.
At the end of the day at the very minimum you will see 30-40% savings on everyday purchases.
This reminds me of one of my dad’s stories. My dad had an MBA from Harvard and taught business for his whole career. One day, a kid knocked on his door selling some book deal - the great classics sent to your door every month or some such. This was something my dad might actually have been interested in, so he starting asking questions about the details. The kid quickly offered that they were selling the books for less than it cost to make them. My dad, the business professor, asked how they could possibly be making money then. The kid genuinely answered that they made it up in volume. He lost the sale.
Also, I was friends with a gas station owner about a decade ago. He said that although they weren’t losing money on gas, he made more profit on a single candy bar than he did on a gallon of gas. FWIW.
Lyoness does offer some interesting ways to save money especially if you shop on line. It’s not a scam, not an MLM, not a pyramid, but it does require some work as does any business. If it was free money then it would be a scam.
People I have talked to that were upset by Lyoness were not experienced in business anyway. The small one time investment is nothing compared to start-up costs that one usually blows in only the first month of a new business.
If you shop, eat, wear clothes or own a car and like to talk - Lyoness could be great.
Hey paladin - I shop, eat, wear clothes AND own a car (none of this naked driving for me) and like to talk, please do tell me all about the many riches I will make from your wonderful magic card
I’m a simple man, would you mind walking me through, on a step by step, how one makes money from Lyoness? Could you include why and how you need to bring in new members? Thanks.
yes i did sign up just to post for this blog. Simply because I knew the answer to the Original posters question. I do not claim to be an expert on Lyoness, and I stated that I have only recently joined. I have also signed my retail store up to accept Lyoness discount cards, because I believe in the concept. In addition, you can visit there website and see that they are working with companies like Walmart/BP/Loews etc…All of which have legal departments and would not sign on to something if it was a pyramid scheme or illegal.
In simple definition a pyramid scheme is one in which those at the top make money from new recruits entering. In lyoness you need people to sign up simply to use the shopping network. If people stop signing up the model still works. It is also possible for me to do better with the program than the person who referred me. All of these would be impossible in a “pyramid Scheme”. It should also be said that the company has been licensed in the USA and has had there accounting model thoroughly inspected and certified.
