If you’ve seen the Transworld Gear Guide you’ve seen a gift card worth $500 to a company called Red Star World Wear which sells sunglasses and watches. Since this issue was delivered, I’ve seen a lot of people asking whether this is a scam. These people are highly-engaged snowboard enthusiasts, if they think you’re scamming them, you’re doing it wrong. Or you’re actually scamming them.
Is the Red Star $500 “gift card” a scam?
It’s not really a “scam” like some Nigerian dude stealing money from your checking account (although since I first published this article, a lot of people have left comments about really bad customer service, fraudulent charges, failure to refund money, etc. so be careful!) but it is a pretty shady sales tactic and you should see right through it because:
- Quality products tend to sell themselves without gimmicky marketing.
- No business makes money by giving away $500 worth of free stuff to millions of people.
The merits of guerilla marketing and word-of-mouth and focus groups notwithstanding, face it: nobody is going to see you wearing your totally sick new Red Star World Wear watch and shades, and then go pay full MSRP. So they’re not making money by giving you free stuff, and they’re not doing a controlled giveaway/promotion, either.
If it’s not a scam, how does Red Star make money?
Red Star offers you what seems like a crazy-exclusive deal on high-quality product (by pretending that their product is worth some ridiculous price) and then offers you an opportunity to buy at a steep discount just by paying a small “service fee” which the gift card doesn’t cover.
The main problem is, this ad is specifically designed to hide the fact that you’re paying $20 for $20 sunglasses, not getting a super-rad deal on a pair of $200 high end sunglasses. Red Star basically admits this.
There is a 9% Service Fee (per item) that pays for all expenses that RedStar incurs to get the product into your hands. This 9% service fee includes: USPS First Class delivery, processing and handling, and general overhead which includes; customer service, order processing, warehousing, labor, cost of goods and materials, profit, and marketing.
A mere 9% fee covers all of their expenses and earns them a profit!
This isn’t a new concept, various companies have been hawking watches and sunglasses this way for years in all types of magazines from Smithsonian to Runner’s World to Field & Stream, but Red Star is certainly a new low in terms of the way they are pushing this by the in-your-face popout and the deceptive “gift card” concept.
Is Red Star World Wear a scam? No. But it’s definitely scammy, and on that basis alone I would avoid them. If that’s not enough, then just ask yourself what valuable contribution Red Star brings to the world of snowboarding.