If you have been searching online for a way to make money I am sure you must have come across Multi Level Marketing (MLM) opportunities. So what is MLM and network marketing opportunities really all about? Does MLM live up to the hype about it?
In my personal opinion no, it doesn’t, and I’ll explain to you exactly why.
What is Multi Level Marketing about?
In Multi level Marketing (MLM), also known as Network Marketing, distributors sell products or services to the public via word of mouth and/ or direct selling. Distributors earn commission on sales they have made. Distributors can also recruit others into the program and they will earn commission from the sales made by their recruits and their down-lines too up to a certain point.
So this sounds great right? Not only can you sell products and make commission but if you recruit people you can earn commission from their sales too! And if they recruit more people you can earn from them too…. and so on.
Hang on doesn’t this sound like a pyramid scheme?
According to MLM companies, no this is not a pyramid scheme, it is “network marketing” which is completely different.
What I can’t understand is what makes Multi Level Marketing not a pyramid scheme? Apparently the fact that a company sells products makes this a legitimate type of business. The focus of the company is on products and NOT on recruiting people.
Ok so let’s just ignore the small problem that this looks suspiciously like pyramid scheme for now. Let’s address some other points first. So how does multi level marketing work?
Multi Level Marketing Joining Fee
Yes if you want to join an MLM company and be able to sell their products and recruit others there is always a joining fee! Why would you need to pay to be allowed to make sales for them?
Yes I know, they give training and marketing materials and sometimes product samples to be able to sell and let people test them … and blah di blah other reasons.
I am an affiliate marketer and I never have to pay anything to be allowed the honor of marketing for other companies. They want me to make sales for them so they GIVE me marketing materials when I sign up. Why wouldn’t they?
I can certainly understand if I am doing face to face marketing and I need printed things like business cards or brochures, but that should surely be a choice that I make to use those marketing aids if and when I choose to. I don’t want to be forced to purchase marketing materials.
And on the training, most websites that I have signed up to as an affiliate have provided me with training materials on how to market their products, why wouldn’t they? It is in their best interest to do so.
So why is there lways a cost when signing up? No matter which way I look at it, it makes no sense to me. Unless of course it is a pyramid scheme… which we will address later.
MLM Product Prices?
The cost of goods bought through MLM is quite frankly insane. So the marketing thing goes that the MLM products are such great quality, they are needed by everybody…blah di blah di blah so you will make lots of money promoting their products.
Ok so here are some interesting things I have found online. Lets have a look at some of Amway’s products. I just chose Amway because they are the largest and most well known MLM company. I also chose them because I had personal experience with them about 15 years ago (which I will share with you later in this post).
So this one above is really interesting to me firstly because you are not allowed to sell your Amway products on Amazon. The second thing is why would you sell your Amway products on Amazon at half the price? Maybe some poor distributor is trying to flog their stock to recuperate just a little bit of the money they lost?
Just for interest sake go to Amazon and search for this exact product description (Nutrilite All Plant Protein) and see how many people are flogging their Amway products! If they
Now let’s have a look at what a comparative brand is selling All Plant Protein for.
Oh wow, that is a difference of $35.71, literally double the price.
Just in case you were wondering this is not a once off case of MLM products being more pricey. It is the same for every single product in every single MLM company. They have to be more expensive to be able to give each person in the down-line their little cut of the price.
Over inflated prices are a given with MLM. The products are not any more quality that you can buy at your normal super market yet they claim to be one of a kind, quality products that will sell easily. Don’t be fooled.
The Hard Sell of MLM
So what do they teach you about marketing. Well mostly how to try and shove this opportunity down anyone and everyone’s throat… wait did I say opportunity or product? Yes I said “opportunity” because once you join an MLM company the focus moves far far away from the products you are supposed to be selling and you are pushed to recruit everyone and anyone you know into the business.
The marketing techniques usually start off with having to make a list of everyone you know starting with your family and close friends. Ending off with the receptionist at your kids school because well you know her name so you know her well enough to try and recruit her.
They then go on to teach you how to always be on the hunt for new recruits at all times. Anyone you come into contact with is a target. If someone bumps your arm on the street you have made contact! Go for it!
This is not the way that I want to live my life. As I mentioned previously I have had some experience with MLM many years ago and it still leaves a bad taste in my mouth.
The MLM Business Model is not Sustainable
MLM businesses depend on new recruits. If there are no more new recruits the business will collapse. Does this sounds stable to you?
The business does not depend on product sales, it can’t! Not with prices like that. It will be incredibly hard to sell any products at all. I know I have been there.
Is Multi Level Marketing a Pyramid Scheme?
Well let’s see what a pyramid scheme is first. Here is Wikipedia’s explanation:
A pyramid scheme is an often illegal, unsustainable business model that lures members via a promise of payments or services for enrolling others into the scheme, rather than supplying any real investment or sale of products or services to the public.
Ok so the difference between a pyramid scheme and multi level marketing lies in the fact that MLM involves products. However these products are over priced and there is usually no focus at all on products… and you have to buy into the program.
Hmm let’s have a visual look at what MLM looks like…. sure looks like a pyramid to me!
Is Multi Level Marketing a Scam?
Well apparently it isn’t according to a lot of people. Some people rave about Multi Level Marketing and claim you can make good money.
Perhaps if you are ruthless with your recruiting and don’t care whether the products are over priced you can make some money. The point that I want to get across is do you really want to do that? The truth is that most people will not succeed with MLM so 99% of the people you manage to recruit into an MLM scheme will lose all their money. I know this and if you are familiar with MLM you probably know it too. Can you with good conscience promote a scheme like this?
I have personally not found one MLM opportunity that does not stink, so this makes me sway towards MLM being a scam.
Let’s look at the facts here, and you can read some of my reviews of multi level marketing opportunities on my website. I can probably make some nice money from MLM opportunities. I certainly have the set up for it. All I have to do is change my reviews of MLM opportunities to positive reviews and add in my affiliate links!
I am sure I will get sign ups… what do you think?
I know I will get sign ups, but I also won’t be able to sleep at night. It is dodgy and just plain wrong.
The Pros and Cons about Multi Level Marketing
Ok so let me me try and be objective here and give some pros and cons about Multi Level Marketing…
Pros of Multi Level Marketing
- The start up cost of your business is relatively small
- Instead of hounding friends and family you can promote online (there are unlimited people searching to make money!)
- The product is already established
- The business is already established
- Promotional materials are ready on hand
- The person that referred you into the business might mentor you and help you get started
Cons of Multi Level Marketing
- It is considered a pyramid scheme and a scam by many (me included!)
- The products are over priced and hard to sell
- You will need a very thick skin to handle all the rejections and negativity surrounding MLM
- Most people never make it with MLM, it is not as easy as the MLM websites make it out to be!
- There is a cost to start, you will need to pay before you can earn
- There will be loads of other people trying to promote the same opportunity, using the same methods and promotional materials as you
My Personal Experience with MLM (Amway)
Like I mentioned previously in this post I have had experience with MLM. When I was in my early twenties a friendly neighbor invited me around for coffee and told me to bring a friend. I thought this was very sweet so I arrived with my best friend in tow.
Shortly after handing us each a cup of coffee and a biscuit she dragged over a flipchart on a stand and started a hard sell of the Amway opportunity. My first impression was that it was really wrong of her to do that. However the fact that my friend and I were always looking for new ways to make some extra money won over. All we had to do was buy a starter pack for about R600 each. This would give us our sample products and our marketing materials.
Honestly we were quite excited. We were told it was easy to make money, we would be taught everything we need to know to be successful. When our starter packs arrived and I opened it up to find hardly anything inside I must say my heart dropped. R600 was a lot of money about 15 years ago, I was expecting a Santa sack of things, but instead my things probably could have fit in a shoebox.
I started following instructions and first spoke to my mom to try and get her to buy the products. It was my first dose of reality. She rolled her eyes and said “Really? Amway? Oh dear, this is a pyramid thing. No thank you.”
Let me tell you I felt very stupid and annoyed. I approached a few more people with the same reaction. And no I had never heard of Amway until then. Turns out lots of other people had too. The people that hadn’t heard of it were listening to me until they saw the price of the products and I lost them immediately.
I was told there would be a training seminar soon and that thousands of people would attend. My friend and I were so relieved, surely we were doing something wrong. We had been trying to sell the products for about 2 weeks and all we got was negativity back. The Amway people were so positive and friendly, they were motivated and always got me and my friend back on track mentally.
We arrived at the seminar all amped to learn how to sell these Amway products, we were soon going to be on our way! However this seminar was not at all what we expected. They did not focus on selling any products. We were told how to corner people, how to suck them in with how great Amway is… how they can make so much money selling these amazing products, how they can become rich with this opportunity. How they will received marketing materials and training and support to sell the Amway products.
What a load of BS and what an eye-opener. I suddenly saw Amway for what it was. I looked around me and realized I was in a room where it was like a cult following. The people were all delusional and filled with hope. I felt like everyone was being brainwashed and everything was lies. I felt so sad for everyone there.
So that was my first taste of MLM and it was bad. I left Amway of course and I have been approached many times with MLM opportunities. No thanks, this is not for me.
Here are some really well known MLM opportunities that I have renewed:
I hope you enjoyed my explanation of what Multi Level Marketing is all about, have you got anything to add or have you had a different experience? Please leave a comment.