I was at a neighbor’s party and one of their guests heard I had alpacas. He sauntered up and, with a superior air, said, “Alpacas? That’s a pyramid scheme.”
Besides his incredible rudeness in the home of a mutual friend, I found his ignorance and hypocrisy rather offensive. You see, I had talked with his wife previously and she had said they had considered owning alpacas but decided to put the money into their home instead. Not a mention that they deemed it an unsustainable business model. Huh.
So let’s clear this up right now: Alpaca Breeding is not a pyramid scheme. It is also not a MLM ( multi-level marketing).
So what is a pyramid scheme? According to the Federal Trade Commission:
“They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure. There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company’s incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company’s distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.”
And regarding an MLM:
“Multilevel marketing programs are known as MLM’s, and unlike pyramid or Ponzi schemes, MLM’s have a real product to sell. More importantly, MLM’s actually sell their product to members of the general public, without requiring these consumers to pay anything extra or to join the MLM system. MLM’s may pay commissions to a long string of distributors, but these commission are paid for real retail sales, not for new recruits.”
So let’s take a look at the alpaca business model:
1. Alpaca breeders have something to sell: alpacas, alpaca fiber, fiber products, and services
2. Alpaca breeders do not get a payment for introducing (“recruiting”) new breeders
3. Alpaca breeders to not get “cut” of any sales that new breeders make
4. Alpaca breeders sell not just to new breeders, but also existing breeders and the general public
It always infuriates me when people rush to label derogatorily when they don’t understand something. And let’s face it, a lot of people don’t understand why alpacas are worth anything. Yet they don’t question when someone will buy a pureblood horse for $12,000,a rare breed of dog for $1000 or more, or a piece of art for $100,000. I can quantify the practical value of an alpaca much more easily than any of those due to its premium fiber qualities. And like all of the above-mentioned, the market sets the value of an alpaca. In other words, the value of an alpaca at any point in time is what someone is willing to pay for it, regardless of how the seller may price it.
You may or may not be pleased to know that I didn’t respond to the ignorant comment by the other party guest. Although I could feel a dozen blistering retorts hovering on the tip of my tongue, I didn’t want to take the bait and start an argument at what was supposed to be a congenial mingling. I politely suggested that he would find he was wrong if he researched it and walked away. Perhaps this was a disservice to the alpaca community, as it could be viewed as an opportunity to educate and generate awareness. But some people cannot be convinced and knowing the background he and his wife had in looking into alpacas, I think this stance probably makes him feel better about choosing a renovated house instead of an alpaca business. And the alpaca industry is probably the better off for their decision.
The Pacablogger 