Is Time Up For Multi Level Marketing?

I’m sure, like me, that you see these sorts of adverts all the time –

“Make millions now with just a few hours per week”

“Fire your boss, earn $10,000 per week. NOW.”

These adverts are in the newspapers, left at bus shelters, in phone boxes, plastered across the internet and spammed by email.

If you haven’t already guessed, they are promoting multi level marketing – MLM.

time-up-for-mlm

MLM: Has it had it’s day?

I’m of the opinion that multi level marketing was once a legitimate business model which provided a means for small companies to get their unique products to consumers in smaller towns and out of the way areas which otherwise had no access to these products. The products tended to sell themselves, and the multi level angle was a way of rewarding those who had worked hard to build the organisation. The focus, back then, was always on the product.

Today, in this internet age we live in, consumers can obtain pretty well anything they desire, with ease, and at competitive prices. Therefore, I would say that there is no longer the same need for multi level marketing as a distribution system in the way that there was before.

Perhaps that is why a large number of MLM companies now seem to focus more upon recruiting new sales people. With overpriced products, those working in multi level marketing need fresh faces in order to make profit, be it through the recruitment itself, their downline’s sales or, simply, by persuading them to buy products which can often be found cheaper elsewhere.

With that in mind, would it therefore be fair to say that all multi level marketing opportunities are scams?

With multi level marketing out-priced, and unneeded in terms of distribution, the only thing left to sell is membership, to recruits who will then look to make money from further recruitment. This, if I’m not mistaken, would define multi level marketing as a pyramid scheme and a fraud.

With products freely available across the internet, and at much lower prices, can you really believe these claims from multi level marketers that their opportunity is so great that everyone will be buying into it, or that it is the way business will be done in the future?

With almost no MLM schemes selling any kind of significant volume of products to consumers outside of the program, surely that is the proof that MLM is a thing of the past, continuing to exist solely by scamming more hapless recruits into their world?

Buying your way in

If a multi level company is based on selling products at retail, why do they ask recruits to pay sign-up fees to join? If the product is that good then the distributors will make money for themselves, and the organisation, by making retail sales won’t they?

If a signing on fee is required then it sounds like no more than one of those advanced fee email scams I receive in my inbox every twenty minutes.

Scamming you twice

Once you’ve paid your dues and joined the scam multi level marketing organisation, they may well attempt to fleece help you again.

Often, this is via the requirement to buy promotional materials or samples of the products for which you have already paid for the privilege of selling. If the organisation asks you to buy tapes and dvds for extortionate amounts of money then shouldn’t you think twice? They cost so little to produce, and are supposedly designed to help you sell the wonderful retail products to make money for the company, so why do they need to make such a big profit out of selling them to their own distributors?

Also, why should you have to buy samples when you have already paid to join in order to sell those very products?

Doesn’t that sound like a scam to you?

Training

If you have a traditional job then your employer will train you to undertake your duties to the best of your ability. This makes good financial sense to them as it will maximise your productivity and ability to generate a good return versus your wage cost.

Why then, do many multi level marketing schemes require payment in return for their training seminars?

Surely it would be in their best interests to train their distributors for free so that they can profit from their retail sales?

The trappings of success

If you join a multi level marketing scheme and get to meet the boss, or one of the other guys at the top, then you may well see them in their plush offices, or with their photographs of holidays, boats and mansions.

Do you really think you will have these too, by pushing their products for them?

Unless you are really gifted and determined then these trappings of success will be out of your reach, attainable only by those at the top who sit back and see their minions fail and lose money whilst lining their products through their uplines.

Dropping out

The drop out rate for multi level marketing is somewhere around 98%. This means only one in fifty people continue in the scheme for any length of time.

Why?

Is it because they are not gifted or lucky, determined or successful? Or is it because they realise they have been duped, paying a fee for something they then realise they cannot sell?

Joining the cult

Some multi level marketing schemes are almost cult-like in their approach to marketing and doing business. Over a period of time distributors are slowly brainwashed into believing all the hype that they come out with in their attempts to gain a new sale recruit.

Negativity is not allowed anywhere within the organisation or outside of it either. On this blog, and others like it, supporters of various multi level marketing schemes will always appear to have their say, and often to rubbish the claims of those who speak out against the organisation they work for.

In fact, some are so determined that I have seen them commenting on this very site using multiple names (oops, guess they didn’t realise I know their IP addresses). Some have even said they are leaving this site in disgust, never to return, only to reappear a few minutes later with another positive comment under a different alias.

If you have a website that says anything negative about certain MLMs then you become a target. There are services out there, that specifically targeting multi level marketing organisations, offering to optimise there sites in order to outrank anyone who says anything counter to their doctrines.

A recent development is that these MLMs will post articles themselves, on unrelated websites, that will ask if they are a scam and then ‘prove’ that they are not. With clever marketing, utilising YouTube amongst other places, they then get said sites to rank well in the search engines, often spamming their way to domination over the whole first page of the search results.

Buying it yourself

Many multi level marketing schemes offer different levels to their distributors, often offering different levels of commission or other perks.

Some distributors will apply pressure to their downline, demanding that they achieve, thereby lining their products. Other lower level distributors may need their egos stroked and so they will buy inventory for themselves in order to appease one or the other, or both.

Often this inventory will be unwanted by the distributor who purchased it. There are many stories online of failed multi level marketing distributors with garages full of worthless stock.

Fake it until you make it

Purchasing inventory to gain a higher level within the organisation isn’t the only means of faking it until you make it. Within some schemes distributors are encouraged to buy symbols of status, such as cars, or to lease them.

Such purchases or leases add to the illusion that the distributor is successful and may prompt potential recruits to think that they too can make it big by joining. In reality, they just represent a further cost that may not be met from what little the distributor actually does make through the scheme.

Does giving the illusion of being rich and successful mean they are, surreptitiously, scamming new recruits into thinking they can achieve the same trappings?

Shills

If you read some of the comments left on this blog about MLMs then you may be forgiven for thinking that there are a large number of distributors out there who are making a fortune. Whilst it’s possible that some are, I am of the opinion that most are faking it until they make it and are, almost certainly ‘shills’.

These means they represent the multi level marketing scheme in question and are employed to go around the web and blogosphere, leaving positive comments everywhere and leading people into believing their way is best and that they can make huge amounts from it.

The number of times I have had to moderate comments and remove people’s email addresses from their ‘helpful’ comments can attest to this.

Refunded but not in full

Many multi level marketing companies will have some sort of refund offer, leading distributors into believing that there is little to no risk. However, they generally have strings attached, such as not being a full refund, or having terms and conditions attached. These conditions make the practice of returns nigh on impossible and can be very misleading which, in my opinion, is another indicator that it is all just a scam.

Is time up for multi level marketing?

What do you think?

About Lee Munson

Lee's non-technical background allows him to write about internet security in a clear way that is understandable to both IT professionals and people just like you who need simple answers to your security questions.

Comments

  1. Probably most of the conclusions reached are true for most MLMs, especially those created in the last 20 years or so. It would seem true that most things consumers want to purchase, can now be found at good prices on the Internet, or other places, what with the growth of discount stores like Wal-Mart. However, as with all things, there are bound to be exceptions. I noticed the author avoided mentioning names, but by way of example, I would like to offer one possible exception which I believe would counter most of the objections offered, the many detractors to the same notwithstanding.

    I was involved with Amway for a while, so I can speak as one from the inside, both to the positives, and the negatives. To at least some degree, the quality and unique benefits of Amway’s core products sets it apart from run-of-the-mill MLM products. It is true they are premium-priced, but they are also of premium quality. Amway does encourage their distributors to buy all Amway, but then that only makes sense, doesn’t it, if you are going to be a distributor? The whole concept of MLM, at least in Amway, is that instead of buying products at retail, which include profits to several Middlemen, YOU become the middleman and share in those profits. Replacing a large middleman with numerous small middlemen, or distributors. Makes perfect economic sense. And especially now that Amway (compared to 20 or 30 years ago) had almost any product imaginable available. Almost anything you need for day to day living (including cars now) can be bought from Amway. So what if it costs more? That just means you benefit more when your downline buys too, doesn’t it?

    So why does it sound like I am defending MLM? I think Amway is different from just about any MLM, and they were so from the very beginning. Am I still in it? I no doubt would be a lot better off than I am if I had stayed in. Why didn’t I? I guess I just didn’t have the personal determination to get out and do it, in spite of all the examples of other people similar to me, who had made the effort and change. It’s not for everybody; but anybody can do it if they make the effort. And believe me, you will be rewarded if you make the effort. I saw it myself. But like virtually any endeavor in life, it is not the majority who make it big in anything; it is a small minority. This (MLM) is not for anyone who believes in socialism, or that life should be the same and fair to everyone. It is only fair to those who are willing to make the effort and sacrifice, and no doubt that is the same reason you have disparity among members of any MLM organization. It is nothing more than the facts of life and human nature.

    As far as I know, Amway is still booming all over the world. Maybe they ARE the exception to the woes of your average MLM.

    • Hi Milo, thanks for taking the time to write such a lengthy reply.
      I haven’t named any particular MLMs in this post but you will see some discussion about several on other areas of the site 😉
      Personally, I am against multi level marketing, though I am pleased that all sides can take some positives from this article.

  2. We like old side-scroll games, happy friends, mario at one time I was crazy about dink smallwood really funny addictive game. Ok gtg now saying bbye…

    • My boys still play Mario to this day! They have an old Nintendo 64, as well as one of those games that has loads of classics programmed into the controller.

  3. yeah of course I got the idea later on but this was many years back when all this was new here.I just saw the video request by your son!

  4. I didn’t because I am too bad at numbers and business and couldn’t understand what the guy was talking about!

    • It’s simple..you give them money, get nothing but grief in return and then sign up more fools who are ready to be parted from their cash (allegedly)

  5. MLMs are looked down upon by most people here and you are so right about the cultish approach. I had been to an Amway meeting at a hotel and felt people were like hypnotized.

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