The combined number of recruits from these cycles are the sales force which is referred to as the salesperson’s “downline”. This “downline” is the pyramid in MLM’s multiple level structure of compensation.
Jump up ^ H. Höpfl & J. Maddrell, “Can You Resist a Dream? Evangelical Metaphors and the Appropriation of Emotion”, Metaphor and Organizations, eds. D. Grant & C. Oswick (Thousand Oaks, Cal.: Sage, 1996), 200–12.
Founded in 2012 by a Mormon mother, Deanne Stidham, LuLaRoe is named after her three grandchildren, Lucy, Lola, and Munroe. As the company lore goes, she designed clothing for her daughter and had so much success selling copies to the parents of her daughter’s friends that she hired consultants to sell for her. In just four years, her company’s range of leggings, dresses, shirts, and other wares generated $1 billion in sales, making it one of the largest MLMs in the US; between October 2016 and June 2017, it claims it sold nearly 40 million pairs of leggings. Mary Kay, one of the oldest and most successful MLMs, had $4 billion in sales in 2015.
“Let me tell you about an incredible ground-level business opportunity,” and you are invited to a house or to lunch for “a discussion.” Funny enough, you feel sick in your gut that there is some hidden agenda or deception. “Probably a multi-level marketing (MLM) organization,” you think. Suppose it is? Should you trust your instincts? Is there anything wrong with MLM?
In the MLM business model, the commission derived from the MLM’s pyramid-shaped structure (i.e. from the sales of one’s recruits) is the most profitable revenue stream. This revenue stream, however, is also the least statistically probable source of remuneration to a salesperson. Conversely, the revenue stream from direct-sales of ones own personal sales is the least profitable. This revenue stream, however, is also statistically the most likely source of remuneration to salespeople. For the overwhelming majority of participants, however, neither one of these two revenue streams will be profitable after operating expenses are deducted.
Some people don’t want to give out their SS# to become a rep. The companies need these to file taxes with the IRS. I understand concerns about keeping your SS# private. One alternative is to get a Tax ID # from your state. (Update: One reader shared there is a way to get a discount from doTERRA without your SS#.)
If you are a materialist, you only have to get over the cheekiness of the presentation. But if you do not wish to promote such ideas, if you consider them sinful, then this puts you at the focal point of a moral dilemma. Do you wish to be a salesperson for materialism?
It is generally agreed that to mislead people in order to get their money is morally reprehensible. It is labeled “theft” or “fraud,” and those who do it should be punished. No one is naive enough to suggest that you can’t make money at it. Crime can pay, at least temporarily.
I really like the support available with both YL and doTERRA. I didn’t avail myself of all of it, but of what I did, I found doTERRA’s support network to be stronger. Both companies had websites with treatment and/or testimonial resources available (actually, the most valuable resources were not but together by the companies, but by outside sources–likely reps high up in the business).
But one woman’s trash may be another woman’s treasure. New consultants are reporting getting boxes full of old merchandise that appears to be from merchants who went out of business—the ugly stuff others couldn’t sell. “While LuLaRoe may resell some inventory returned in original packaging and in new condition to its employees in its company store,” LuLaRoe CMO Lyon says, “LuLaRoe prefers that product that is returned in original packaging and in new condition be used for donations or giveaways only.” Consultants dispute that claim, posting pictures of “new” merchandise with old patterns and tags that have been marked up by other consultants.
To be fair, MLM isn’t the business style for everyone. You do have to look at your personal network as a potential customer base, which requires a delicate balance — one that not everyone enjoys. That was the case for Nadia Manes, a 34-year-old from Oakville, Ont., who recently dabbled in selling Arbonne. “Did I like the product? Yes,” she says. “Did I like harassing people and convincing them to sign their paycheck over to me so they can get a new face wash? Absolutely not!”
I recommend you consult with a professional before ingesting any essential oils. Consult a Medical Doctor, Naturopath, or clinically trained Aromatherapist who knows you and is aware of your medical history, as well as any medications you are on. With this information, the professional can tailor a regimen that works for your body.
“Network marketing” and “multi-level marketing” (MLM) have been described by author Dominique Xardel as being synonymous, with it being a type of direct selling. Some sources emphasize that multi-level marketing is merely one form of direct selling, rather than being direct selling. Other terms that are sometimes used to describe multi-level marketing include “word-of-mouth marketing”, “interactive distribution”, and “relationship marketing”. Critics have argued that the use of these and other different terms and “buzzwords” is an effort to distinguish multi-level marketing from illegal Ponzi schemes, chain letters, and consumer fraud scams.
Yes, some people do make money from MLMs. But most appear to just learn a very expensive lesson. This is why billionaire investor, founder of Pershing Square hedge fund management company and philanthropist Bill Ackman has put a short bet of US$1 billion on Herbalife, as featured in Betting on Zero.
Thus, there is reason for the “bad taste” most people have for MLMs. By instinct if not experience or insight, we wince at the thought of what we know will follow in the wake of an MLM. Relationships strained, factions formed, deception, manipulation, greed, loss, a closet full of videotapes, brochures, and useless inventory that “everybody wants.”
Use the internet to your advantage in network marketing. You can interact with many more people than you would in your personal network. The more contacts that you can make, the more your network will grow. Spend some time to create a web site that people can use to interact and to find out more about you.
But then we watched Betting on Zero, a documentary featuring a US hedge fund manager’s battle with Herbalife – and some of the lives the company has apparently ruined. After watching the documentary we did some more digging. And the more we learned, the more concerned we became.
You can definitely generate a hefty income through Network Marketing, but ONLY if you are willing to put in the effort to generate leads, train others, and make it your focus to get the word out. Network marketing is ultimately not a ‘get rich quick’ scheme, as it requires an ample amount of work and effort to make it work. However, if you are willing to put in the work, it could be the door to your financial success.
For more, see the Frequently Asked Questions, Additional Points and Rebuttals section at http://www.vandruff.com/mlm_FAQ.html E-Mail the author of this article, Dean Van Druff, at end of this section.
On the other hand, many people have gotten into Network Marketing and have made a fortune from it. People such as John Haremza, who signed up as a sales rep for a small water filter company, and is now worth millions. Alternatively, Sebastian Greenwood, who made an investment in Onecoin, and put in the hard work and time necessary. He is now considered an ambassador of the company, having made his fortune there, and spends much of his time helping others grow successful.
And this is one of the reasons why most MLMs aren’t ethical – they sell the dream that anyone can be successful with their ‘opportunity’. They don’t make it clear that only a small percentage of people who join them will make a liveable income (or any income at all).
Assuming the blue individual recruits five, and those five recruit their own five, and so on, the maximum theoretical cycles of recruits possible in the “downline” of the blue individual is 14 cycles (514 = 6.1 billion people), after which point the total human population is exceeded.
If these guys show up in your neighborhood, you are either “in” or “out,” family or target, friend or foe. Suspicion rules the day; everyone has an “angle”; greed supplants innocence. The “neighborhood” is turned into a marketplace, and may never recover from the blow.
“Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing”: “You’d be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope.”
While participants’ movement up the pyramid of an MLM can be accomplished in theory, and indeed this is one of the distinguishing factors between MLMs and traditional pyramid schemes (besides featuring actual sales of products or services), said upward movement is so extremely improbable as to render it practically impossible, despite all efforts and investments of time and money by a participant.
Cruz, Joan Paola; Camilo, Olaya (2008). “A System Dynamics Model for Studying the Structure of Network Marketing Organizations [Peer reviewed paper that refers uses Taylor as references]” (PDF). Archived (PDF) from the original on December 29, 2009.
Set yourself up at a booth at a job fair and sell your network marketing business to potential job seekers! They have all the time in the world to dedicate to promoting their company, so they’re perfect for the type of career you’re promoting. Ask for their resume and have an interview with them right there, then contact the people you believe will be the best choices for the position.
Jump up ↑ Sataline, Suzanne (May 11, 2007). “Health Claims by Sales Force Boost Supplement Firm; Mannatech’s Products Attract the Gravely Ill; Disclaimers on Labels”. The Wall Street Journal. https://online.wsj.com/news/articles/SB117884606430799400. Retrieved July 8, 2007.
Jump up ^ Jeffery, Lyn (March 21, 2001). “Placing Practices: Transnational Network Marketing in Mainland China”. In Chen, Nancy N. China Urban: Ethnographies of Contemporary Culture. Duke University Press. pp. 23–42. ISBN 9780822326403. Archived from the original on April 22, 2016.
To represent MLM distributorship as a “business opportunity” or “additional income stream” or “side hustle” – let alone claiming that it’s a way to get rich – is manifestly deceptive and a complete misrepresentation. To succeed in an MLM, you must essentially con your downline into buying tickets for a plane that has already taken off.
The end result of the MLM business model is, therefore, one of a company (the MLM company) selling its products/services through a non-salaried workforce (“partners”) working for the MLM company on a commission-only basis while the partners simultaneously constitute the overwhelming majority of the very consumers of the MLM company’s products/service that they, as participants of the MLM, are selling to each other in the hope of one day themselves being at the top of the pyramid. This creates great profit for the MLM company’s actual owners and shareholders.
Multi-level marketing (simplified Chinese: 传销; traditional Chinese: 傳銷; pinyin: chuán xiāo) was first introduced to China by American, Taiwanese, and Japanese companies following the Chinese economic reform of 1978. This rise in multi-level marketing’s popularity coincided with economic uncertainty and a new shift towards individual consumerism. Multi-level marketing was banned on the mainland by the government in 1998, citing social, economic, and taxation issues. Further regulation “Prohibition of Chuanxiao” (where MLM is a type of Chuanxiao, Chinese name of the regulation is 《禁止传销条例》 ), was enacted in 2005, clause 3 of Chapter 2 of the regulation states having downlines is illegal (original text from the regulation ‘组织者或者经营者通过发展人员，要求被发展人员发展其他人员加入，形成上下线关系，并以下线的销售业绩为依据计算和给付上线报酬，牟取非法利益的。’). O’Regan wrote ‘With this regulation China makes clear that while Direct Sales is permitted in the mainland, Multi-Level Marketing is not’.
Perhaps the successful consultants are right: It’s all about enthusiasm. Perhaps some people don’t succeed because they don’t drink the Kool-Aid. Perhaps it’s about believing that leggings printed like hotel carpets are beautiful to someone. Perhaps you think that a thin polyester dress you could get for $15 in a chain store is worth $60 if you buy it from a friend. Perhaps it’s about having no qualms hawking clothes to people who struggle to afford them, or signing women up underneath you while you struggle yourself.
MLMs aren’t a new business model—they’ve just done a little rebranding. A lot of the old guard such as Avon and Mary Kay are still around, but nowadays, some of the most popular MLMs include Herbalife and Plexus (nutrition and weight loss), Young Living and DoTerra (essential oils), Pampered Chef (kitchen tools), Rodan + Fields (skincare), and Jamberry (nail stickers).
Founded in October 2016, the LuLaRoe Defective/Ripped/Torn Leggings and Clothes Facebook group was initially intended for posting pictures of holey leggings. Now it has more than 30,000 members and has become a place for women to share pictures of ugly merchandise, screenshots of vicious consultant behavior, and to upload documents from the numerous lawsuits against LuLaRoe. (At last count, there are nine ongoing legal battles.)
LuLaRoe also says it invests “considerable time, resources, and talent” to support its “independent retailers,” as it calls its consultants. If they experience financial or psychological hardship through operating their businesses, it says it’s not the company’s fault. “Retail is not for everyone,” says a LuLaRoe spokesperson. “Retailers own their own business and make their own decisions…The success of any business depends on its leader’s own respective and independent business goals, and the strategies they employ to achieve those goals.”
^ Jump up to: a b c d Salinger (Editor), Lawrence M. (2005). Encyclopedia of White-Collar & Corporate Crime. 2. Sage Publishing. p. 880. ISBN 0-7619-3004-3. Archived from the original on February 24, 2017. Retrieved June 13, 2016.