{"id":14853,"date":"2017-10-18T09:00:57","date_gmt":"2017-10-18T16:00:57","guid":{"rendered":"http:\/\/www.nexusnewspaper.com\/?p=14853"},"modified":"2017-10-16T12:53:03","modified_gmt":"2017-10-16T19:53:03","slug":"calculated-thought-canadian-e-commerce-giant-gets-called-out","status":"publish","type":"post","link":"https:\/\/www.nexusnewspaper.com\/newsite\/2017\/10\/18\/calculated-thought-canadian-e-commerce-giant-gets-called-out\/","title":{"rendered":"Calculated Thought<\/em>: Canadian e-commerce giant gets called out"},"content":{"rendered":"

I was scrolling through Facebook one day and an advertisement caught my eye. It read, \u201cBecome a Facebook millionaire,\u201d and I immediately thought, \u201cWhat\u2019s the new get-rich-quick scheme being pushed now?\u201d<\/p>\n

To my surprise, it was an ad for Shopify, the Canadian e-commerce platform.<\/p>\n

A week later the headlines rolled out: Shopify\u2019s stock price fell 20 percent over two days.<\/p>\n

I know people who have used Shopify to create online stores, and some are quite successful. I think it is a great tool for entrepreneurs. It removes a ton of barriers by providing website design themes and payment gateways at a reasonable monthly price.<\/p>\n

\"\"<\/a>
Calculated Thought<\/em> is a column dealing with student finances that is featured in every issue of Nexus<\/em>.<\/figcaption><\/figure>\n

Their stock rose over 100 percent this year. Why the sudden change in sentiment?<\/p>\n

Ask Citron Research.<\/p>\n

Citron Research is an online US investment newsletter that, according to its website, identifies \u201cfraud and terminal business models.\u201d<\/p>\n

Its founder, Andrew Left, is a prominent short-seller. A short-seller bets against companies, borrowing shares from a stockbroker, and immediately sells them at the market price. Ideally, the stock price goes down, and the short-seller returns the shares to the broker at that lower price and pockets the difference.<\/p>\n

In a recent post featuring Left, Citron outlined why Shopify may be operating against the rules of the Federal Trade Commission (FTC), a bipartisan US watchdog that fights for investor and consumer protection.<\/p>\n

Left compared Shopify to Herbalife, a multi-level marketing (MLM) company that paid $200 million in fines after an FTC investigation found its business practices were unfair.<\/p>\n

MLM business models recruit resellers who earn commissions and are usually compensated further for recruiting more resellers; some MLM business models have been likened to pyramid schemes. Complaints arose with Herbalife that resellers were duped, and that the majority weren\u2019t making any money.<\/p>\n

According to the FTC case, Herbalife was not a pyramid scheme, and the wrongdoing was that Herbalife misled its resellers by presenting unrealistic results. The ruling, according to an FTC press release, \u201cprohibits Herbalife from misrepresenting distributors\u2019 potential or likely earnings [and] prohibits Herbalife from claiming that members can \u2018quit their job\u2019 or otherwise enjoy a lavish lifestyle.\u201d<\/p>\n

Left claims this is exactly what Shopify is doing. He cites Facebook ads, including the exact one I saw, and posted screenshots of its website that read, \u201cThe online store for someday millionaires,\u201d and of a letter-of-resignation template provided by Shopify for its users. Left\u2019s main beef is the \u201cdirty secret\u201d that Shopify pays outside affiliate marketers to get new merchants to sign up.<\/p>\n

Has Shopify done anything wrong? Affiliate marketing is used by countless businesses with no controversy, and Shopify is not an MLM business.<\/p>\n

I will, however, say that the \u201cmillionaire\u201d advertisements are irresponsible.<\/p>\n

Although Shopify doesn\u2019t provide information on its \u201cchurn rate\u201d (how many users fail and fold up their stores), I can\u2019t imagine the majority succeed, let alone become millionaires. We\u2019ll see if the FTC pays attention.<\/p>\n

I think it\u2019s more troubling that Left stands to profit by the price declines in Shopify shares.<\/p>\n

Was this a genuine effort to call out unfair business practices?<\/p>\n

Or was it simply exploitation for profit?<\/p>\n","protected":false},"excerpt":{"rendered":"

I was scrolling through Facebook one day and an advertisement caught my eye. It read, \u201cBecome a Facebook millionaire,\u201d and I immediately thought, \u201cWhat\u2019s the new get-rich-quick scheme being pushed now?\u201d To my surprise, it was an ad for Shopify, the Canadian e-commerce platform. A week later the headlines rolled out: Shopify\u2019s stock price fell […]<\/p>\n","protected":false},"author":2,"featured_media":12581,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5,200],"tags":[],"class_list":["post-14853","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-columns","category-october-18-2017"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/posts\/14853","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/comments?post=14853"}],"version-history":[{"count":1,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/posts\/14853\/revisions"}],"predecessor-version":[{"id":14854,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/posts\/14853\/revisions\/14854"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/media\/12581"}],"wp:attachment":[{"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/media?parent=14853"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/categories?post=14853"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nexusnewspaper.com\/newsite\/wp-json\/wp\/v2\/tags?post=14853"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}