BidXcel Review: “Profit-sharing” done right?
When BidXcel first popped up on my radar not much information was out about the upcoming penny auction opportunity.
From information available at the time though, it seemed as BidXcel was going to be a continuation/relaunch of the failed outdoor niche orientated ‘Win The Hunt’ penny auction, but this time with an attached MLM compensation plan.
That was a few weeks ago now and since then Win The Hunt has been completely shut down and BidXcel compensation plan details have been released. Read on for a full review of the BidXcel MLM opportunity.
Win the Hunt was a penny auction launched in July 2011 by Andrew Bracken and Dave Hofer.
In late 2011 Bracken announced that Win The Hunt would be ‘going into 2012 with ‘a solid customer base of over 100,000 registered members’. Despite this, when I visited the site a few weeks ago most of the penny auctions available were expiring with no bids.
Sometime between then and today, the Win The Hunt auctions have been pulled offline altogether.
BidXcel appears to be built on the foundation of Win The Hunt combining the penny auction side of things (with a much broader niche offering auction wise) and a MLM compensation plan.
Andrew Bracken is still on board in an executive management role and has been named as the CEO of BidXcel. David Hofer has also been named as a co-founder of the company but whether or not he has an executive management position in BidXcel was unclear at the time of publication.
As for who owns BidXcel, the company is keeping that secret stating only that
Ownership in the two companies is privately held.
Operations wise, it appears BidXcel are operating out of the US state of Colarado.
The BidXcel Product Line
Like all MLM penny auctions, BidXcel’s product is penny auction bids. These bids are purchased through the company and can then be used to bid for items on BidXcel’s penny auction website, XcelBids.
XcelBids are sold in “bid packs” as follows:
- 20 bids – $40
- 50 bids – $100
- 225 bids – $200
- 555 – $500
- 1550 – $1000
The XcelBids domain (xcelbids.com) was registered on the 3rd August 2012 but is currently offline.
The BidXcel Compensation Plan
Through their compensaton plan, BidXcel offer their members retail and profit pool commissions, along with matrix commissions and a series of matching and incentive based bonuses.
Qualifying Volume and Group Volume
The BidXcel compensation plan revolves around sales volume that is broken up into two main categories, Qualifying Volume (QV) and Group Volume (GV).
Within the BidXcel compensation plan structure, QV is defined as
retail Bid purchases (made) by you (BidXcel affiliates) or your personally referred retail customers
and GV as
retail bid purchases (made) by personally referred affiliates or their personally referred retail customers.
In order to qualify for commissions in the BidXcel compensation plan, affiliates must have two active retail customers and be generating a minimum of 40 QV a month.
Additionally BidXcel affiliates must also perform a “daily business promotion” in order to qualify for commissions. BidXcel as of yet haven’t specified what this promotion is, other than stating that qualification includes
a daily check-in with the promotional task you completed that day.
No further information is provided.
BidXcel Membership Ranks
Certain commissions offered through the BidXcel compensation plan are determined by an affiliates membership rank.
There are eleven membership ranks in total in the BidXcel compensation plan and along with their respective qualifications, are as follows:
- Certified Affiliate – 40 QV and 2 active customers
- Supervisor – 40 QV, 120 GV and 2 active customers
- Manager – 100 QV, 300 GV and 2 active customers
- Director – 100 QV, 400 GV and 2 active customers
- Executive – 100 QV, 500 GV and 2 active customers
- Senior Executive – 100 QV, 600 GV and 2 active customers
- Bronze Executive – 100 QV, 600 GV (of which one recruited affiliate must be generating at least 300 GV towards) and 2 active customers
- Silver Executive – 100 QV, 600 GV (of which two recruited affiliates must each be generating at least 300 GV towards) and 2 active customers
- Gold Executive – 100 QV, 600 GV (of which three recruited affiliates must each be generating at least 300 GV toward) and 2 active customers
- Platinum Executive – 100 QV, 800 GV (of which four recruited affiliates must each be generating at least 300 GV towards) and 2 active customers
- Diamond Executive – (1oo QV, 1000 GV (of which five recruited affiliates must each be generating 300 GV towards) and 2 active customers
Note that from Gold Executive onwards the amount of GV required by recruited affiliates exceeds the total required in order to maintain that rank. These figures are taken directly from the BidXcel compensation plan and I’m not sure why there’s an excess in the sum total GV recruited affiliates are required to genearate vs. the total GV required.
BidXcel affiliates are paid a 20% commission on the retail purchase of bids made by either their genuine retail customers or other affiliates they have recruited.
Recruited Affiliate Bid Purchase Commissions
In addition to the “retail” commissions affiliates make when their recruited affiliates buy bids, BidXcel also offer an additional percentage commission offered down four levels.
Affiliates you personally recruit form your level 1, affiliates they recruit your level 2 and so on and so forth.
Using this structure, BidXcel pay out the following Affiliate Bid Purchase commissions:
- Level 1 – 5% of the bid purchase amount
- Level 2 – 4% of the bid purchase amount
- Levels 3 and 4 – 3% of the bid purchase amount
The Xcelerator Bonus Pool
BidXcel claim to be a “customer acquisition program” for XcelBids with the Xcelerator Bonus Pool being designed to reward affiliates ‘for (their) customer acquisition activities‘.
BidXcel claim the Xcelerator Bonus Pool is made up
up to 50% of the retail customers acquired using bids on the XcelBids E-Commerce site every day.
Given that retail customers themselves aren’t revenue, I can only assume the above quote, taken directly from the BidXcel compensation plan, is a typo and they are actually referring to revenue generated by the use of bids in the XcelBids auction.
The 50% of revenue generated by the use of bids (note that revenue is actually generated upon the purchase of bids, not their use however the use of the bids is a qualifying factor for that revenue to enter the Xcelerator Bonus Pool), is split into 4 bonus pools.
Affiliates are able to participate in any one bonus pool, primarily depending on how many bids they, their recruited affiliates and customers have used in the XcelBids penny auctions.
- Pool 1 (15% share) – 100 to 999 XcelBids used in the auctions and must also have 2 retail customers
- Pool 2 (21% share) – 1000 to 2999 XcelBids used in the auctions and must also have 3 retail customers
- Pool 3 (28% share) – 3000 to 4999 XcelBids used in the auctions and must also have 4 retail customers
- Pool 4 (36% share) – 5000+ XcelBids used in the auctions and must also have 5+ retail customers
Note that for each 1000 used bids counted in the Xcelerator Bonus Pool, an affiliate must have 1 additional active customer.
Matching Xcelerator Bonus Pool Bonuses
BidXcel pay out a matching bonus on the earnings of recruited affiliates in the Xcelerator Bonus Pool, paid down up to four levels:
- Level 1 – 5%
- Level 2 – 4%
- Levels 3 and 4 – 3%
Matrix commissions are paid out in BidXcel using a 3×9 matrix. With you at the top, a 3×9 matrix has three member positions directly under you forming your level 1. In turn these three positions branch out into another three positions each (your level 2) and so on and so forth down 9 levels in total.
The first few levels of a 3×9 matrix look something like this:
Using this structure, commissions via the BidXcel matrix appear to be tied into the purchase of “ePacks”. There are two monthly ePack purchases made available to affiliates:
- Basic ePack – $40 a month with 20 XcelBids
- Xtra ePack – $100 a month with 50 XcelBids
The company states that the purchase of an ePack is “optional”, however they also mention they are “qualifiers” so I believe that a monthly ePack purchase is required in order for affiliates to qualify for matrix commission payouts.
BidXcel claim that ‘over 50% (of the monthly ePack revenue) is paid out to qualified affiliates and spread throughout each level of their matrix‘, with how many levels of their matrix affiliates are paid out on determined by their membership level:
- Supervisor – 4 levels
- Manager – 6 levels
- Director – 7 levels
- Executive – 8 levels
- Senior Executive or higher – 9 levels
At the Platinum and Diamond Executive levels there is also something about “matrix re-entry” mentioned. I believe this involves the creation of a new matrix above an affiliates primary matrix position in order to effectively extend the size of their 3×9 matrix.
Matrix Generation Bonus
Paid out as a percentage matching bonus, the Matrix Generation Bonus is paid out on the matrix earnings of recruited affiliates in your downline.
A generation is defined as the recruitment of a new affiliate. Affiliates personally recruited are the first generation, affiliates they recruit are the second generation and so on and so forth.
How many generations deep you are paid out on depends on an affiliate’s membership rank:
- Bronze Executive – 10% on generation 1
- Silver Executive – 10% on generations 1 and 2
- Gold Executive – 10% on generations 1 to 3
- Platinum Executive – 10% on generations 1 to 4
- Diamond Executive – 10% on generations 1 to 5
Lifestyle and Car Bonuses
No specifics are provided on either the BidXcel Lifestyle and Car bonuses, other than affiliates are only able to choose one of the two.
Membership at BidXcel costs $49.95. This appears to be a once-off fee.
Monthly matrix commissions are tied into the purchase of either a $40 or $100 ePack, so should an affiliate wish to earn matrix commissions, the required purchase of ePacks could be seen as an additional monthly expense.
BidXcel define themselves as
the global marketing arm for XcelBids, an E-Commerce solutions site available to a worldwide market.
BidXcel is a customer acquisition program and you are rewarded for your customer acquisition efforts.
With e-commerce being defined as nothing more than
the (electronic) buying and selling of products or services
this appears to be little more than an attempt to perhaps differentiate themselves from being seen as “just another MLM penny auction”, or distance themselves linguistically from the MLM penny auction niche altogether.
Regardless, compensation plan wise the biggest red flag I see with BidXcel is the inclusion of affiliate bid purchases as qualifying for retail sales and thus Group Volume.
The counter to this would naturally be that 2 active customers are required to earn commissions in BidXcel, however BidXcel only define an active customer as someone who
is using bids on the XcelBids
ECommercepenny auction site.
No minimum requirement as to how many bids must be used is mentioned. That said, with no option to “give bids away”, it’s worth noting that the bids used by customers must be also purchased by them.
This neatly eliminates much of the internal consumption problems that have plagued MLM penny auctions in the past, however the legitimacy of this model then shifts onto the verification of the customers affiliates sign up.
With customers having to purchase bids in order to use them, one would hope at the very minimum BidXcel would be conducting in-house verification on the customers their affiliates are signing up.
Anything less than a thorough check to make sure the customer in question is an actual person and fully aware of what they are signing up for, will leave BidXcel wide open to the problem of fake customers. This has been one of the central problems thus far in the MLM penny auction niche when companies have required affiliates find customers in order to qualify for commissions and bonuses.
Getting back to the counting of affiliate bid purchases towards Group Volume however, at first glance it might seem viable for affiliates to sign up customers, buy whatever the minimum amount of bids that need to be used per customer account and use them in the auctions in order to qualify for the Xcelerator Bonus Pool (spending the rest of their QV requirements themselves), however in the long-term this isn’t at all attractive.
New customers are constantly required with each 1000 used bids that count in the Xcelerator Bonus Pool, and over time the liability of having to buy bids through ever-increasing customer accounts will inevitably become a vastly daunting task. And seemingly not worth the returns thus derived from the Xcelerator Bonus Pool.
As I see it, thorough verification of the customers being signed up by affiliates and the requirement for customers to purchase bids and use them to qualify as “active” is key to the legitimacy of BidXcel.
And this of course then brings us to the issue of customers and MLM penny auctions.
Thus far it’s yet to be proven whether or not a MLM penny auction can attract enough retail customers in the long term to remain viable.
The biggest MLM penny auction to date, Zeek Rewards, was recently shut down for being a Ponzi scheme by the SEC and through those actions, it was revealed that 0.25% of the bids given away by over a million affiliates were actually used by customers.
With those bids being free, it remains to be seen whether or not that percentage can be raised when customers are required to purchase bids.
Looking at the Bid Packs available, depending on whether the minimum amount of bids required to be used is above or below 20, XcelBid customers could be looking at a minimum $40 a month spend on a bid pack just to qualify as active (for which they have no incentive for, as it’s only the affiliate who introduced them to BidXcel who gains anything by a customer qualifying as active).
I suppose a lot of that depends on the quality of BidXcel’s Xcelbids auction platform, but with the penny auctions as yet still to launch it’s impossible to make an assessment of them yet.
One only needs to look at the failure of the Win the Hunt penny auctions Bracken and David Hofer previously launched due to a lack of retail customers to see how important these points are.
Of course Win the Hunt didn’t have an MLM component attached to it, but for a real world MLM penny auction example one need only look as far as Zeek Rewards, a million plus affiliate strong company recently shut down for being a Ponzi scheme.
Looking at the customer statistics of Zeek Rewards, I personally don’t think there are enough customers to go around in the niche to sustain a MLM penny auction (let alone the multitude of them popping up), but compensation plan wise if BidXcel are thoroughly verifying their customers and requiring them to use bids they themselves have to purchase, then I can’t fault them for that.
I will say though that the matrix stuff seems to be out of place. Motivation wise I can’t see it as anything more than an optional incentive to make affiliates buy bids to generate bid traffic through XcelBids, simultaneously rewarding affiliates by paying out commissions on fellow affiliate’s bid purchases.
Having followed MLM penny auctions for nearly a year now, my experience has been that affiliates of MLM penny auctions typically have no desire to use them themselves as customers (read: spend their own money on bids and use them themselves).
With the dust still settling on the Zeek Rewards Ponzi shutdown, I’d be cautious about entering any MLM penny auction at the moment. With so many in prelaunch at the moment I’d be strongly thinking about waiting till some of them launch and then assessing the MLM penny auction playing field after a few months has passed and you’ve got some idea of the operational direction of the company in question.
On the surface BidXcel looks like a step in the right direction but alot of that is going to depend on their verification of customers and the quality of their yet-to-launch XcelBids penny auction.
Track record wise the MLM penny auction niche hasn’t got off to a reputable start so it might be best to adopt a patient wait-and-see approach here.
Update 13th March 2013 – In a rather abrupt notice published on their website, BidXcel have announced that they have shut down effective as of March 2013.