Though emphasis is always made on the potential of success and the positive life change that “might” or “could” (not “will” or “can”) result, it is only in otherwise difficult to find disclosure statements (or at the very least, difficult to read and interpret disclosure statements), that MLM participants are given fine print disclaimers that they as participants should not rely on the earning results of other participants in the highest levels of the MLM participant pyramid as an indication of what they should expect to earn. MLMs very rarely emphasize the extreme likelihood of failure, or the extreme likelihood of financial loss, from participation in MLM. MLMs are also seldom forthcoming about the fact that any significant success of the few individuals at the top of the MLM participant pyramid is in fact dependant on the continued financial loss and failure of all other participants below them in the MLM pyramid.
Jump up ^ Ryan (Editor), Leo; Wojciech, Gasparski (Editor); Georges, Enderle (Editor) (2000). Business Students Focus on Ethics (Praxiology): The international Annual of Practical Philosophy and Methodology Volume 8. New Jersey: Transaction Publishers. p. 75. ISBN 0-7658-0037-3.
Business Students Focus on Ethics: “In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)”
^ Jump up to: a b c d e f Carroll, Robert Todd (2003). The Skeptic’s Dictionary: A Collection of Strange Beliefs, Amusing Deceptions, and Dangerous Delusions. John Wiley & Sons. pp. 235–36. ISBN 0-471-27242-6. Archived from the original on June 26, 2009. Retrieved June 29, 2009.
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.
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.
MLM culture feels unmistakeably totalitarian. The organization is tightly controlled by the top 0.1% of the pyramid, and absolute loyalty to one’s upline is strictly enforced. Open criticism of the company or its leadership is discouraged. Members denigrate non-MLM employment and belittle non-MLM jobs. MLM gatherings, often referred to as “seminars” or “conventions” or “business retreats,” look nothing like any of these things – instead they feature chanting, ecstatic speeches, testimonials, and highly produced audiovisuals, often for hours on end.
Jump up ↑ “13 successful multi-level marketing companies based in Utah County”. Provo Daily Herald. May 11, 2017. https://www.heraldextra.com/business/local/successful-multi-level-marketing-companies-based-in-utah-county/collection_8720a5f3-7203-5b55-864a-f0f3323a2551.html. Retrieved 25 March 2018.
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.
Example: Let’s say I sell $10,000 of widgets every month, and my profit margin, after accounting for all expenses, is 10% – $1,000 per month. Let’s say I decide to start an MLM business and I recruit another distributor, who takes over all my leads. We’ll make a REALLY generous assumption that my distributor’s profit margin is 5% – many MLM products don’t even scrape 1%.
Quartz agreed to Kayla’s request not to use her last name to protect her anonymity, and gave pseudonyms to others. Several of LuLaRoe’s sellers declined to go on the record with Quartz using their full names, citing concerns about possible reprisals from the company due to a non-disparagement clause in their contracts, and concerns about being harassed by other sellers. This fear only perpetuates the cycle as it pulls more women into its spiral.
Raise your hand if you remember when MySpace and Friendster were all the rage. Today, we use a Twitter, Facebook, LinkedIn, Instagram and more. It has to be at least nine years since I logged into MySpace. Although, I created my Facebook account in … Read more
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.)
Consumers of an MLM company’s products/services can, in theory, be merely end-user retail consumers. End-user retail consumers are non-participants of the MLM company, with their relationship to the MLM company being nothing more than in a capacity of consumers. In actual practice, however, the overwhelmingly majority of consumers of MLM products/services are the participants. They are the very “salespeople” within the MLM who had been recruited by a fellow participant positioned above them in the MLM pyramid structure.
For any company selling a product the concepts of marketing and sales are very important as they can mean the difference between success and failure. While they are often used interchangeably or grouped together they are two different concepts … Read more
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:
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.
Fed the fantasy of achieving the all-elusive American dream, many of them are being wooed by multilevel-marketing companies. Known as MLMs (or “direct-sales”), the current US administration is stocked with their cheerleaders: Betsy DeVos, the secretary of education, is married to a cofounder of Amway; Ben Carson is a spokesperson for a vitamin MLM called Mannatech; and president Donald Trump used to have an MLM, Trump Network, and was a spokesperson for another.
the upline/downline: a normal franchise model is flat, and all franchisees deal with corporate headquarters or a regional manager for supplies, point-of-sale materials, and the like – in MLM you deal directly with who recruited you (your “upline”) and in turn manage those directly underneath you (your “downline”) in a weirdly feudal hierarchy
Independent distributors develop their organizations by either building an active consumer network, who buy direct from the company, or by recruiting a downline of independent distributors who also build a consumer network base, thereby expanding the overall organization.
To try and understand what LuLaRoe success looks like, I studied Nicole’s Facebook Live stream. What was she doing so right? Nicole and another consultant pulled out 71 pairs of leggings in an hour. They deemed almost every one “pretty,” “beautiful,” or “cute.” The most egregiously ugly leggings—like one pair covered in paintball splats with flowers overlaid on top—were “fun” and “different.” In an MLM, saleswomanship is key, no matter what the wares you’re selling look like.
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.
“A statistical analysis of income disclosures made by 10 major multi-level marketing (MLM) companies… reveals that, on average, 99% of all participants received less than $10 a week in commissions, before all expenses.”
Pyramid schemes are illegal. They are illegal because they are exploitative and dishonest. They exploit the most vulnerable of people: the desperate, the out-of-work, the ignorant. Those who start and practice such fraud, should, and increasingly are, being punished for their crimes.
“There was a point in time where I had $8,000 worth of inventory sitting in my home while I was running up to food banks to feed my family.” Sales started to decline in the third month. Her consultant group told her it was because she didn’t have enough inventory, so Ashley followed their advice and bought even more. As sales continued to decline, she used her income-tax rebate to buy more, but it didn’t keep her sales from bottoming out at $500 a month. “There was a point in time where I had $8,000 worth of inventory sitting in my home while I was running up to food banks to feed my family,” she says. “I really feel like I failed my family.”
The main sales pitch of MLM companies to their participants and prospective participants is not the MLM company’s products or services. The products/services are largely peripheral to the MLM model. Rather, the true sales pitch and emphasis is on a confidence given to participants of potential financial independence through participation in the MLM. This is referred to as “selling the dream”.
This aspect of the MLM experience should not be underestimated, and the reflective reader would do well to think twice about the value of friends, family, community, and church fellowship before joining or continuing in an MLM.
Multilevel marketing (MLM) or network marketing is a type of unfair and deceptive financial woo, purportedly a business, promoted by a non-salaried workforce selling a company’s product/s or service/s independently, who are paid according to a commission structure that heavily incentivizes endless recruitment.
For example, when a hypothetical 20-something, Priya, buys skincare, makeup and bath products from Arbonne at a discount and sells it at the suggested retail price, she earns a commission of about 15 percent. But Priya can also earn a percentage of commission on whatever Sarah, a friend she recruited to the company, sells. Word-of-mouth is one of the key strategies in direct sales, so both Priya and Sarah are likely reaching out to their friends and families — and, increasingly, online social networks — to both move product and recruit for their respective sales teams.
Christina Hinks, an aspiring journalist and the former moderator of the Facebook group, attempted to draw attention to LuLaRoe practices she found problematic. She has been collecting and documenting LuLaRoe issues at her blog, Mommygyver, which went from product reviews to educating readers on the risks of MLMs and inventory loading, revealing fat shaming by consultants, sharing stories of women who claim to have been victimized by LuLaRoe, and posting screenshots and stories of shenanigans by consultants and leaders at the top.