MLM can no longer claim to be new and, thus, exempt from the normal rules of the market and the way goods and services are sold. They have been tried and, for the most part, have failed. Some have been miserable failures in spite of offering excellent products.
Investigate the products or service the company sells. Since you’ll be responsible for pitching and selling this product, make sure it is reputable. Some MLM companies market questionable or dangerous products, and you could face legal action if you take part. You should keep the following in mind when considering a product:
Manes invested about $4,000 into her Arbonne business, which she maintained for a year. By the end, she’d only made $600. “I had vendor shows, so I had to purchase product for display. Obviously, I used the products that didn’t sell… but I wouldn’t have initially bought them,” she says. “I also felt pressure from my upline to purchase more to make the business successful. It was constantly said that you should have the latest products and try everything before you sell it.”
“I did pretty well for myself,” says Stern, who split sales with her business partner. The work was part-time, and she pulled in anywhere from $5,000 to $10,000 a month in revenue. Every month, the head of her consultant group would post a leaderboard for the top inventory buyers and sellers, some of whom were bringing in up to $60,000 a month. Stern noticed that the amount of inventory bought correlated with higher income, so after attending one of LuLaRoe’s touring conferences, she was inspired to bulk up her inventory. She and her business partner went on a buying spree, posting pictures of all the unopened boxes on her Facebook page, which began to swell with excited customers.
^ Jump up to: a b Vander Nat, Peter J.; Keep, William W. (2002). “Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes”. Journal of Public Policy & Marketing. 21 (1): 139–15. doi:10.1509/jppm.220.127.116.1103.
Jump up ↑ Danny Robbins (September 10, 2006). “Nobel Prize winners say sites falsely cite research”. Fort Worth Star-Telegram. Archived from the original on 2006-12-06. https://web.archive.org/web/20061206191858/http://www.dfw.com/mld/dfw/news/nation/15486298.htm.
As economic opportunity has become more concentrated in urban areas in the US, rural communities have fallen behind. Residents of towns like Casper (Wyoming), Spring Creek (Nevada), and DeRidder (Louisiana) all missed out on economic recovery following the 2007 global financial crisis. Bootstrapping, hard-working families in these regions are urgently searching for a way to regain their economic liberty, along with their dignity.
So, as the saying goes, “Get in early!” This is a rationalization on the level of “getting in early” on the L.A. looting riots. If profit from the sale of products is fundamentally set up to fail, then the only money to be had is to “loot” others by conning them while you have the chance. Don’t miss the “opportunity,” indeed!
When glitzy recruitment videos yield to the reality of suburban cul-de-sacs, people selling for MLMs can be plunged into debt and psychological crisis. Joining a MLM is appealing to women who find hope in their promises of a better life: freedom, economic independence, and an endless supply of cheery trinkets. Despite professing quick-income prospects though, it’s difficult for MLM consultants to earn more than pocket change. When glitzy recruitment videos yield to the reality of suburban cul-de-sacs, people selling for MLMs can be plunged into debt and psychological crisis.
FLARE spoke to a handful of young Canadian women, most of whom said they make money on their businesses. For some, this additional income covers “extras” they might not have been able to afford on the paycheque from their day jobs. Take Stella & Dot stylist Elyse Berendson, a 29-year-old preschool teacher who joined the company to supplement her income.
Consultants and clients say the clothing’s quality has been going back up, but the PR damage has been done. Shoppers are becoming wary—and wondering why they’re not buying leggings that don’t rip on the first wear for $7.99 at Wal-Mart instead.
Network Marketing distributes goods and services through distributors, which may include hundreds, thousands and even hundreds of thousands of distributions networks. Distributors may buy products from the company for pennies on the dollar, and then sell the products, or they may simply sell the goods and/or services for the company and receive a commission on the sales.
Many readers will share the experience of observing MLMs divide families, friends, churches, and civic groups. Lifelong friends are now “prospects.” The neighborhood is now “a market.” Motives change, suspicions rise, divisions form. The question is begged: “Is it worth it?”
This is a list of companies which use multi-level marketing (also known as network marketing, direct selling, referral marketing, and pyramid selling) for most of their sales.
It should be noted that when selling product, the only distinction from a real-world business is the possibility for deception due to the “looseness” of the MLM and the incentive to exaggerate claims without any accountability. Other than this, selling product in an MLM is fairly similar to selling any product in the real world.
MLM businesses operate in all 50 U.S. states. Businesses may use terms such as “affiliate marketing” or “home-based business franchising”. Many pyramid schemes attempt to present themselves as legitimate MLM businesses. Some sources say that all MLMs are essentially pyramid schemes, even if they are legal.
With MLMs, the situation is much worse. Nobody is home. Even the Soviets had someone thinking about how much was enough! If the bureaucrat in Russia was having a hard time trying to play Adam Smith’s “invisible hand” in setting the supply level in the Soviet Union, then an MLM “executive” is in a truly unfortunate position. Not only is there no one assigned to make the decision of how much is enough, the MLM is set up by design to blindly go past the saturation point and keep on going. It will grow till it collapses under its own weight, without even a bureaucrat noticing.
Clearly, there’s a disconnect between what most people think about MLM and what the women who are actually participating in these companies experience. And we may be doing a disservice to these business owners by characterizing all MLM companies as scams.
These are only a couple of examples of people who went from struggling with their finances to being financially secure, and continuing to make a fortune. There are hundreds of more examples of people who have literally gone from rags to riches through Network Marketing. However, it should be emphasized that these people did not just sit back and collect money, they had to put in the hard work and dedication necessary to grow their network of sales, as well as doing the work required to get the word out and represent their companies.
For most people, thankfully, the MLM experience usually ends in very quick financial failure and is then sidelined. Two possible responses are: 1) being embarrassed about participation, or 2) becoming even more intractable when the MLM has failed. You will find the latter chasing after the latest “get rich quick” scheme with similar results. “If we could have just sponsored so and so–they have so many friends–we would have made it.”
All products and services have partial market penetration. For example, only so many people wish to use a discount broker, as evidenced by the very successful but only partial market penetration of Charles Schwab. Not everyone wishes to join a particular discount club, or buy gold, or drink filtered water, or wear a particular style of shoe, or use any product or service. No one in the real world of business would seriously consider the thin arguments of the MLMers when they flippantly mention the infinite market need for their product or services.
You can begin searching for a position anytime you want! Once you’ve gotten a job, it may take a few weeks or months to get fully trained and ready to begin working, but after that you’ll be able to become a full blown network marketer.
There are more than a few MLM “executives” like this who will pop up tomorrow in the MLM du jour. MLM exploitation can be very profitable and the jail sentences light. Let the MLM “dream” buyer beware.
MLMs are also criticized for being unable to fulfill their promises for the majority of participants due to basic conflicts with Western cultural norms. There are even claims that the success rate for breaking even or even making money are far worse than other types of businesses: “The vast majority of MLMs are recruiting MLMs, in which participants must recruit aggressively to profit. Based on available data from the companies themselves, the loss rate for recruiting MLMs is approximately 99.9%; i.e., 99.9% of participants lose money after subtracting all expenses, including purchases from the company.” In part, this is because encouraging recruits to further “recruit people to compete with [them]” leads to “market saturation.” It has also been claimed “(b)y its very nature, MLM is completely devoid of any scientific foundations.”
Well, I’ve been an MLM rep for a number of different companies, including YL and doTERRA (DT), so here are my thoughts about MLMs–mainly regarding the oils companies, but some of my thoughts extend to other MLMs as well. I did some research into BeYoung but chose not to become a rep of their company.
Mannatech, a dietary supplement MLM notable for featuring future US Presidential Candidate Ben Carson as a spokesperson, later accumulated more than $15 million in fines and settlements for falsely claming their products could cure cancer, diabetes, autism, AIDS, and other diseases.
“Most people aren’t in it to replace income. Most people are in it to make additional income,” says Hassay. “If you could give me $1,000 that I don’t have right now, my life would be a heck of a lot better. And that’s what most people are doing. There’s a wonderful group of women who join in September or October, buy Christmas presents for their family, quit in January and join again the next year.”
I’ve used oils internally and felt that they were helpful (though the Slim and Sassy did nothing for me :-(), but I am changing my thinking on this. Oils are super potent. It takes about 16 pounds of peppermint leaves to make 1 ounce of peppermint oil. Wow. (Source)
This is just an inkling of the things you need to learn, in order to run a successful network marketing business. You know that this isn’t a get rick quick scheme. You may get rich, but it won’t be quickly. If you focus on learning all you can and applying what you learn, you will see results.
So, MLMs profit by conning recruits up-front with a “distributorship fee,” and then make further illicit money by “confidencing” these hapless victims as they fail via the “sale” of collateral material.
The unfortunate “distributor” at the bottom is the loser, and once this becomes apparent beyond all the slick videotapes and motivational pep-talks, good people start to get a bad taste in their mouths about the whole situation.
The problem here is one of common sense. At a mere three levels deep this would be 1,000 people. There goes the neighborhood! At six levels deep, that would be 1,000,000 people believing they can make money selling. But to whom? There goes the city! And the MLM is just getting its steam going. Think of all the meetings! Think of all the “dreams” being sold! Think of the false hopes being generated. Think of the money being lost.
The final figures are out… and the news is better than even expected! The Network Marketing and Direct Sales profession hit a new record in 2013 with $178 BILLION in global sales. That’s up from $167 Billion in 2012. Network Marketing is BIG business!
Thus, MLM has evolved into a “niche”: it can be used to sell products that could not be sold any other way. An MLM is a way to get undue credibility by exploiting people’s personal friendships and relationships via “networking.” This is an intrinsic moral difficulty with MLMs that will be expanded in the last section.
Network marketing seems like a breeze on the surface. Many people jump in, thinking they just have to pull in a few people and then sit back and watch the money roll in. Those people do not last very long. Take some time and learn these tips and tricks for your new business.
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.
“The community I’ve found within Arbonne is unlike any other I’ve encountered,” she says. “I previously worked in science/research/education, where there is a lot of job scarcity, competition and uncertainty. In our community, we all assist each other and lift one another up, as we have a common goal of sharing what we love.”
Jump up ↑ Vowell, Nicole (September 25, 2014). “2 Utah companies respond to FDA warning over health claims”. Deseret News. http://www.deseretnews.com/article/865611752/2-Utah-companies-respond-to-FDA-warning-over-health-claims.html?pg=all. Retrieved 26 October 2014.
One such success story is Nicole Haas of Williamsburg, Virginia. A bubbly blonde and former personal trainer, she put $12,000 on a low-interest credit card to start her LuLaRoe business in January 2017. Through working 25 to 30 hours a week, she paid off her credit card in May and now puts $3,000 a month in her family’s account, less taxes. “It’s changed my life,” she says. “It’s changed who I am as a person.”
Thus, a parallel or “shadow” pyramid of motivational tapes, seminars, and videos emerges. These are a “must for success,” and recruits are strong-armed into attending, buying, buying, and buying all the more. This motivational “shadow pyramid” further exploits the flagging recruits as they spiral inexorably into oversaturation and failure. The more they fail, the more “help” they need from those who are “successful” above them.
Research has shown that our brains release more of the pleasure chemical dopamine when we unexpectedly get a reward at a random time. Gambling addicts will run up credit cards and bankrupt themselves chasing that high, continually putting coins into the slot even though it’s become clear that, overall, they are losing. Likewise, LuLaRoe customers will stay glued to Facebook groups and consultants will keep buying inventory they can’t afford in the hope they will stumble across the rarest, most elusive styles.
“You see, if you can convince ten people that everyone needs this product or service, even though they aren’t buying similar products available in the market, and they can convince ten people, and so on, that’s how you make the real money. And as long as you sell to a few people along the way, it is all legal.” Maybe…
But having devotion to a company despite evidence that they are not telling the truth or that their products are not superior taints the reputation of all MLMs and their reps. It’s frankly uncalled for.
I can’t promise I’ll always be right, but I can promise you that I will do my best, within reason (I do have a family with health conditions, and we homeschool and eat all whole foods) to get the best information to you and correct myself whenever I’m wrong.