Author Topic: Multi-Level Marketing (MLM)/Network Marketing  (Read 35703 times)

Beard N Bones

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Multi-Level Marketing (MLM)/Network Marketing
« on: June 14, 2016, 03:11:08 PM »
After a lot of reading and thought, I have come to the conclusion that there needs to be conversation specific to the Multi-Level Marketing (MLM) business model on this forum.  The MLM Business Model is Anti-Mustachian at its core.  And unfortunately, we come across these companies all the time!   If a person located in a small remote Canadian town can have that much exposure to this business model (as I have), it has become an epidemic. 

There is a need for discussion on the MLM business model and the companies that use it.  Why? 
1. The facts surrounding the business model are shocking. 
2. Many otherwise logical, rational, and reasonable individuals become participants in MLMs. 
3. And, the business model is unforgiving (financially and otherwise) to those that take part in it - and to their friends and family.

I would like to see this thread be:
1.  Educational - for those that are or are not directly involved with these businesses.
2.  A Place Where Advice Can Be Asked For & Given.
3.  A Place Where MLM Rants Can Be Made.

"[Those involved with MLM companies have] high loss rates (close to 99.9%) – much higher than for no-product pyramid schemes (87.5% to 93.3%)."  Jon M. Taylor, President of Consumer Awareness Institute.


« Last Edit: June 15, 2016, 10:57:19 AM by Beard N Bones »

solon

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #1 on: June 14, 2016, 04:56:07 PM »
A friend of the family recently got into one of these. She left messages on all our phones asking to set up a "demo" for us. Sigh. Here we go again!

woopwoop

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #2 on: June 14, 2016, 05:39:31 PM »
Unfortunate to see people get sucked into this stuff. Trump's ACN is one of the ones I've had some contact with, and it's just downright awful:
http://pyramidschemealert.org/like-donald-trumps-hair-acn-may-not-be-what-it-appears-to-be/

"In Canada, ACN is required to disclose the “average” income of ACN sales reps. The ACN Canadian website reports the average of just the “active” reps to be only about $9 a week."

This for something that costs $500 as a "startup fee" that you can only recoup by roping in more people below you. Plus the costs of conferences and training meetings. Blech.

MoneyCat

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #3 on: June 14, 2016, 09:24:32 PM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

I never had any intention of selling this stuff to anybody else, but they had me watch the coaching video conference when I officially joined and it is ridiculous. Their entire structure isn't based on selling videos and supplements. It's based on getting more Beachbody coaches. Everyone is a coach and nobody has any customers. The only sales they are getting are from other Beachbody coaches. Lots of desperate people are wasting hundreds of hours a month in the pointless pursuit of more coaches when they could be using that time to run a real side hustle and actually make money. For example, I make money teaching martial arts classes three days a week.
« Last Edit: June 14, 2016, 09:27:09 PM by MoneyCat »

Beard N Bones

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #4 on: June 14, 2016, 10:11:04 PM »
...Trump's ACN is one of the ones I've had some contact with...
*SNIP*

Just as insane, is the highly revered Warren Buffett Berkshire Hathaway, getting intimately involved with Pampered Chef - a company my wife was introduced to by a pastor's wife.

Yep. Anyone have thoughts on why it seems there is a higher percentage of "religous" people involved with MLM companies?

PhysicianOnFIRE

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #5 on: June 14, 2016, 10:21:21 PM »
...Trump's ACN is one of the ones I've had some contact with...
*SNIP*

Just as insane, is the highly revered Warren Buffett Berkshire Hathaway, getting intimately involved with Pampered Chef - a company my wife was introduced to by a pastor's wife.

Yep. Anyone have thoughts on why it seems there is a higher percentage of "religous" people involved with MLM companies?

I would guess that it's because a level of trust and obligation is requisite in getting others to buy in. When you belong to the same faith, there are components of both.

Beard N Bones

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #6 on: June 14, 2016, 10:35:30 PM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

I never had any intention of selling this stuff to anybody else, but they had me watch the coaching video conference when I officially joined and it is ridiculous. Their entire structure isn't based on selling videos and supplements. It's based on getting more Beachbody coaches. Everyone is a coach and nobody has any customers. The only sales they are getting are from other Beachbody coaches. Lots of desperate people are wasting hundreds of hours a month in the pointless pursuit of more coaches when they could be using that time to run a real side hustle and actually make money. For example, I make money teaching martial arts classes three days a week.

I think you highlight an important distinction that needs to be made moneycat. Often times the product that the MLMs "sell" are (almost always) very expensive but (sometimes) reasonably decent.  But just because the product may be decent, that doesn't mean the business model is good and a distributor/consultant/coach will make money. As a matter of fact, most involve do not make net profit - rather they lose financially because they have to "pay to play."

From what I understand, MLM profits come from the "distributors"/"sellers" as actually being the largest portion of buyers of the products being sold. Someone getting in to make a profit in these companies will lose money. 

Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #7 on: June 14, 2016, 11:24:58 PM »
Everything you need to know: https://www.factsaboutherbalife.com/

mousebandit

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #8 on: June 15, 2016, 09:03:14 AM »
I think there are plenty of solid, legitimate mlm opportunities out there.  The point is to move product, and they move product very effectively and efficiently by incentivizing wholesale discounts and mandatory monthly automatic purchases.  The big problems that it's simply too easy for people to drop the ball and walk away.  What makes it so easy to get in, also makes it too easy to walk away, hence the huge numbers of failed distributors.  There's very little capital start up costs, no business plan, no legal structure.  It's very much an impulse purchase. 

That said, it works for moving product, and if you treat it like a business and put in the time and work, you can do great.  I have a dozen friends driving Lexus for free, getting the big cabo and cruise vacations, etc.  and dozens more that I've met through the company.  But they're working for it, make no mistake.  There's plenty of million dollar earners,but they take it seriously and work it like a business. 

Imo, mlm is great, it just attracts people who have no aptitude or drive for being entrepreneurs, so the vast majority of them fail.

I also think the passive income claims don't play out as well as they're marketed to.  Once you stop having active involvement with your team, it becomes a crapshoot as to whether or not they will stay active.  Because everyone underneath you is Independent as well, you have no guarantees if your managers, so to speak, will keep working or kick into retirement themselves.  Somebody has to work basically.  And once that down line as its called, starts to dry up, if you don't get in there and keep selling, your residual income dries up too. 

All that said, if you're an entrepreneur and willing to put in the time and work, it can be a good vehicle. There are good products and companies out there.  But the vast majority of distributors are not prepared and they will fail.

NESailor

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #9 on: June 15, 2016, 09:23:09 AM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

I never had any intention of selling this stuff to anybody else, but they had me watch the coaching video conference when I officially joined and it is ridiculous. Their entire structure isn't based on selling videos and supplements. It's based on getting more Beachbody coaches. Everyone is a coach and nobody has any customers. The only sales they are getting are from other Beachbody coaches. Lots of desperate people are wasting hundreds of hours a month in the pointless pursuit of more coaches when they could be using that time to run a real side hustle and actually make money. For example, I make money teaching martial arts classes three days a week.

Seems like all of my wife's friends are coaches too.  Once of them even gave us an entire big bag of Shaekology for free to try to get her into it.  No chance.  We tried the stuff and decided our fresh smoothies were tastier and threw the whole thing out.

The "oldest" coach who got in early claims that she nets 8K / month from it.  That seems almost too good to be true but she does have all these other girls buying supplies and signing up people so I guess it's possible?

MrsDinero

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #10 on: June 15, 2016, 09:31:57 AM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

I never had any intention of selling this stuff to anybody else, but they had me watch the coaching video conference when I officially joined and it is ridiculous. Their entire structure isn't based on selling videos and supplements. It's based on getting more Beachbody coaches. Everyone is a coach and nobody has any customers. The only sales they are getting are from other Beachbody coaches. Lots of desperate people are wasting hundreds of hours a month in the pointless pursuit of more coaches when they could be using that time to run a real side hustle and actually make money. For example, I make money teaching martial arts classes three days a week.

Seems like all of my wife's friends are coaches too.  Once of them even gave us an entire big bag of Shaekology for free to try to get her into it.  No chance.  We tried the stuff and decided our fresh smoothies were tastier and threw the whole thing out.

The "oldest" coach who got in early claims that she nets 8K / month from it.  That seems almost too good to be true but she does have all these other girls buying supplies and signing up people so I guess it's possible?

I have a problem with BB calling their people "coaches"  I know many who tried and failed at being a BB Coach.  At the same time I know 2 people (husband and wife team) who seem to be doing very well as BB Coaches.  They were already very fitness oriented before signing up.  They do a lot of other things than just BB videos, she runs ultra marathons and he has a personal trainer certification.

I do have to say I love the workout videos and own several (bought on either Ebay or Craigslist for less).  I used to buy Shakeology but didn't drink it enough and ended up throwing out 4 expired bags because my OB told me to not drink it while pregnant. 

Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #11 on: June 15, 2016, 09:47:09 AM »
I think there are plenty of solid, legitimate mlm opportunities out there.  The point is to move product, and they move product very effectively and efficiently by incentivizing wholesale discounts and mandatory monthly automatic purchases.  The big problems that it's simply too easy for people to drop the ball and walk away.  What makes it so easy to get in, also makes it too easy to walk away, hence the huge numbers of failed distributors.  There's very little capital start up costs, no business plan, no legal structure.  It's very much an impulse purchase. 

That said, it works for moving product, and if you treat it like a business and put in the time and work, you can do great.  I have a dozen friends driving Lexus for free, getting the big cabo and cruise vacations, etc.  and dozens more that I've met through the company.  But they're working for it, make no mistake.  There's plenty of million dollar earners,but they take it seriously and work it like a business. 

Imo, mlm is great, it just attracts people who have no aptitude or drive for being entrepreneurs, so the vast majority of them fail.

I also think the passive income claims don't play out as well as they're marketed to.  Once you stop having active involvement with your team, it becomes a crapshoot as to whether or not they will stay active.  Because everyone underneath you is Independent as well, you have no guarantees if your managers, so to speak, will keep working or kick into retirement themselves.  Somebody has to work basically.  And once that down line as its called, starts to dry up, if you don't get in there and keep selling, your residual income dries up too. 

All that said, if you're an entrepreneur and willing to put in the time and work, it can be a good vehicle. There are good products and companies out there.  But the vast majority of distributors are not prepared and they will fail.

Not 1 thing in this entire post is even remotely close to accurate. The products sold at all MLMs are shit and marked up egregiously. Most MLMs are illegal pyramid schemes. When recruiting becomes more central to actually selling the product it's a pyramid scheme.

They are also just embarrassing - having to pressure your closest friends and family to support your horrible business efforts. And don't ever associate MLMs with entrepreneurship. Entrepreneurship doesn't mean getting scammed by a pyramid scheme and then "building your business" by recruiting other suckers.

I'm sorry you got involved in a scam. You should get out now. 

Beard N Bones

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #12 on: June 15, 2016, 11:05:10 AM »
Everything you need to know: https://www.factsaboutherbalife.com/

Looks like a good website dealing with Herbalife directly.  I have found that the following paper written by Jon M. Taylor, PhD. has been the best in explaining the pitfalls of MLMs in general (IMO, it is a must read):

fattest_foot

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #13 on: June 15, 2016, 11:38:31 AM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

A few years ago a coworker started doing Advocare, and being someone quite knowledgeable about supplements, I decided to take a look at what it actually was (I should also note that this same person is now a Beachbody Coach).

The summary is that it's completely overpriced even with your Coach discount. You could buy a protein powder and greens product for about 1/8th the cost of Shakeology and get the same profile of ingredients.

The only thing it offers is convenience, but even that is dubious when you're really only talking about saving yourself about 15-30 seconds of mixing different products.

mousebandit

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #14 on: June 15, 2016, 11:43:21 AM »
Frugal D - sorry you feel that way, but no, not every single product marketed via MLM is worthless.  I'm not involved in any now, because at the end of the day, it's still about selling, and I don't like selling.  But, there's plenty of good products and decent companies.  There's plenty of crappy ones, too, granted.  Just like any product you'd buy on a retail store shelf.  Some you'll like, some you'll love, and some you'll throw in the trash. 

I agree that the "warm market" and "hot market" aspect of mlm are difficult for most people, me included.  It brings a level of personal responsibility and rejection to the whole business which I don't like.  If I were forced to be a salesperson, I'd only do cold market, and never start with people i know. 

THat said, yes, there is big money to be made, but again, it's a business, and you have to be suited to it, and treat it as such.  It's also so personal that you really need to be tuned-in to your industry niche.  If you're a couch potato who lives for junk food, beachbody is probably not your niche, LOL.  Contrarily, if you're a fitness buff already, and agree with their health and dietary recommendations, it could be a good fit.  But again, it's a business, and it's about moving product. 

The fact is, they don't make a ton of money off people signing up as distributors - it's the product that gets moved because of the distributor agreement - the monthly autoships.  Distributors are going to buy more product, refer more people, and keep doing both, because there's something in it for them.  Product is moving, that's the bottom line.  And if you're more likely to buy and keep buying product because you're now a "distributor" and you get "wholesale pricing", then right on.  THat's a good marketing strategy. 

The marketing that goes along with the "opportunity" side of the business is very fluffy, I agree.  They're pitching an affluent lifestyle, with very little work required.  Not totally accurate.  But, then again, show me any large retailer who has marketing that is completely accurate and not at all fluffy. 

What is truth is that there are companies who do give the cash and bonuses you hear about.  Tupperware is alive and strong.  My friend has been driving her TW rigs for decades, LOL.  Her daughter is also a leader and hasn't bought her own personal vehicle since she was like 19.  My girlfriend from high school quit her full time university job last year and went full time with her Mary Kay business.  Is she rich, no.  Is she paying her bills and putting her daughter through college?  Yep.  The last company I was involved with has like 3 of my high school girlfriends driving the free Lexus and making upwards of $3k-$5k cash per month on top of that.  THere's another 8-10 ladies in our hometown who are also driving the Lexus and making less per month.  (and they're all working their hiney's off for it - make no mistake).  For every success story are there 300 people who quit, and never made a dime?  Yep.  That's how it goes.  They made an impulse purchase of a "business franchise" and they didn't prepare for it, they probably didn't work it, and they probably weren't at all suited to being an entrepreneur, particularly a personal network salesman.  That's okay. 

It's easy to bash on, but it is a legitimate form of business and marketing.  It's just way too uncomfortable for most people, and way more work than most people realize.  And that's okay.  That's why I don't do it anymore, LOL.  I have acknowledged my limits and my niche.  But to think that it's a scam, or all the products suck, that's not realistic.  I've got my mlm face cream on this morning, and will every morning forever, LOL!   It will become more and more popular, too.  Personal recommendations and social networking is the basis for huge growth. 




Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #15 on: June 15, 2016, 12:01:02 PM »
Everything you need to know: https://www.factsaboutherbalife.com/

Looks like a good website dealing with Herbalife directly.  I have found that the following paper written by Jon M. Taylor, PhD. has been the best in explaining the pitfalls of MLMs in general (IMO, it is a must read):

Really great paper! Thanks for sharing!

mm1970

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #16 on: June 15, 2016, 12:08:45 PM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

I never had any intention of selling this stuff to anybody else, but they had me watch the coaching video conference when I officially joined and it is ridiculous. Their entire structure isn't based on selling videos and supplements. It's based on getting more Beachbody coaches. Everyone is a coach and nobody has any customers. The only sales they are getting are from other Beachbody coaches. Lots of desperate people are wasting hundreds of hours a month in the pointless pursuit of more coaches when they could be using that time to run a real side hustle and actually make money. For example, I make money teaching martial arts classes three days a week.
Ha ha yes!  Another "discount coach" here.  I do love the workouts.  They are fantastic, especially times like now when spouse is traveling and I'm stuck working out at home with the kids.

I know some coaches (locally and on line) who make a living at it.  But it's very very hard.  I've also known some to do well but then quit due to the sheer amount of work.  It's pretty crazy.  Lots of people I know go on these free "cruises" and vacations they get for being top sellers.  So for fun, I looked up what was required to make the cruise.  I'm not positive I have it right, but I think it's essentially 2 new customers a month for a year.  (2 new customers on a major workout program/ shakeology).  That's a lot.  And of course the "free" cruise required them all to buy plane tickets for themselves and their families from CA to FL, plus hotels for a couple of nights before and after the cruise.

Those that I think do reasonably well at it are already in the fitness industry, and it's kind of a side job.  And of course, the real money is in getting more coaches, and then they are ruthless.  One family has a karate studio, so they give free workouts 2-3x a day in their studio, and get customers that way.  Another two rent space in gyms to give classes.  On the flip side, my best friend's uncle owns the karate studio.  She really wants to try a workout but doesn't want the crazy hard sell.  So...I loaned her my DVDs for the particular workout.  (I have also loaned/ given away DVDs as gifts.)

Love the workouts.  Hate the business model.

mm1970

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #17 on: June 15, 2016, 12:09:54 PM »
Unfortunate to see people get sucked into this stuff. Trump's ACN is one of the ones I've had some contact with, and it's just downright awful:
http://pyramidschemealert.org/like-donald-trumps-hair-acn-may-not-be-what-it-appears-to-be/

"In Canada, ACN is required to disclose the “average” income of ACN sales reps. The ACN Canadian website reports the average of just the “active” reps to be only about $9 a week."

This for something that costs $500 as a "startup fee" that you can only recoup by roping in more people below you. Plus the costs of conferences and training meetings. Blech.
oh I got stuck in one of those sales pitches! from a friend who also sucked me into an essential oil sales pitch

deadlymonkey

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #18 on: June 15, 2016, 12:29:52 PM »
My neighbor was a BB coach and really into it and full devotee to the company.  She does pretty well at it and has lots of clients.  My wife joined one of her groups but our neighbor was honest with her and told her she should just be a coach for the discounts and military and their dependents can be a coach without any fees.  So my wife gets all the discounts by being a coach but doesn't pay the monthly coach fee.

Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #19 on: June 15, 2016, 12:30:11 PM »
The fact is, they don't make a ton of money off people signing up as distributors - it's the product that gets moved because of the distributor agreement - the monthly autoships.  Distributors are going to buy more product, refer more people, and keep doing both, because there's something in it for them.  Product is moving, that's the bottom line.  And if you're more likely to buy and keep buying product because you're now a "distributor" and you get "wholesale pricing", then right on.  THat's a good marketing strategy.

Do you not understand that this statement makes it a pyramid scheme? Money is not being made from retail sales, but from recruiting distributors.

mousebandit

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #20 on: June 15, 2016, 01:20:22 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

MoneyCat

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #21 on: June 15, 2016, 01:28:29 PM »
Beachbody sucked me in because they have great home workouts and health supplements that I have used to lose weight and get fit. I am officially a "Beachbody Coach", but only because I wanted the "coach discount" for a supplement I take that they sell called "Shakeology". It's basically a protein shake drink with a lot of herbs, vitamins, and minerals. It's expensive (about $115 for a 30 day supply), but I use it to replace one meal a day and partially pay for it by eliminating my alcohol purchasing.

A few years ago a coworker started doing Advocare, and being someone quite knowledgeable about supplements, I decided to take a look at what it actually was (I should also note that this same person is now a Beachbody Coach).

The summary is that it's completely overpriced even with your Coach discount. You could buy a protein powder and greens product for about 1/8th the cost of Shakeology and get the same profile of ingredients.

The only thing it offers is convenience, but even that is dubious when you're really only talking about saving yourself about 15-30 seconds of mixing different products.

Intellectually, I know that I could probably concoct something similar for much less money as you say. Emotionally, however, I have lost 30 lbs since January because of the health benefits of Shakeology and the behavior changes it encouraged in me (such as nearly eliminating alcohol consumption to pay for the Shakeology and reducing the calorie count of one meal per day by replacement.) As a result, I keep buying and drinking the Shakeology. Human behavior is a funny thing and it doesn't always make logical sense. I'm not a robot, you know.

infogoon

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #22 on: June 15, 2016, 01:41:06 PM »
Not 1 thing in this entire post is even remotely close to accurate. The products sold at all MLMs are shit and marked up egregiously. Most MLMs are illegal pyramid schemes. When recruiting becomes more central to actually selling the product it's a pyramid scheme.

I don't know, some of the stoneware from Pampered Chef is pretty nice. I pick it up at suburban garage sales from failed reps unloading old product.

Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #23 on: June 15, 2016, 01:41:55 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

I can't tell if your legitimately intellectually challenged on this or just trolling me, but no, you clearly don't get the distinction.

There are NOT "plenty" that make the majority of their revenue from retail sales. Name 5 for me, please.

Distributors are buying the product because if they don't have monthly auto-fills enabled they won't be eligible for the profit sharing.

Read the paper posted by Beard N Bones in its entirety. If you still don't understand what a pyramid scheme is then there's just no helping you.



   

MrsDinero

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #24 on: June 15, 2016, 01:43:09 PM »
Intellectually, I know that I could probably concoct something similar for much less money as you say. Emotionally, however, I have lost 30 lbs since January because of the health benefits of Shakeology and the behavior changes it encouraged in me (such as nearly eliminating alcohol consumption to pay for the Shakeology and reducing the calorie count of one meal per day by replacement.) As a result, I keep buying and drinking the Shakeology. Human behavior is a funny thing and it doesn't always make logical sense. I'm not a robot, you know.

Check out Vega One.  I did a comparison a few years ago and Vega One were very similar.  Some of Shakeology's ingredients are not listed so it is tough to compare everything.  From a meal replacement standpoint I didn't notice any hunger differences between Vega One and Shakeology.  Vega One also costs about $60 vs Shakeology $130.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #25 on: June 15, 2016, 01:46:05 PM »
Intellectually, I know that I could probably concoct something similar for much less money as you say. Emotionally, however, I have lost 30 lbs since January because of the health benefits of Shakeology and the behavior changes it encouraged in me (such as nearly eliminating alcohol consumption to pay for the Shakeology and reducing the calorie count of one meal per day by replacement.) As a result, I keep buying and drinking the Shakeology. Human behavior is a funny thing and it doesn't always make logical sense. I'm not a robot, you know.

Check out Vega One.  I did a comparison a few years ago and Vega One were very similar.  Some of Shakeology's ingredients are not listed so it is tough to compare everything.  From a meal replacement standpoint I didn't notice any hunger differences between Vega One and Shakeology.  Vega One also costs about $60 vs Shakeology $130.

How is the taste? Chocolate Shakeology was the first powder meal replacement thingy that I could ever choke down. I won't be buying it again because $$, but I wouldn't mind having a substitute if it was actually as delicious.

MrsDinero

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #26 on: June 15, 2016, 01:52:24 PM »
Intellectually, I know that I could probably concoct something similar for much less money as you say. Emotionally, however, I have lost 30 lbs since January because of the health benefits of Shakeology and the behavior changes it encouraged in me (such as nearly eliminating alcohol consumption to pay for the Shakeology and reducing the calorie count of one meal per day by replacement.) As a result, I keep buying and drinking the Shakeology. Human behavior is a funny thing and it doesn't always make logical sense. I'm not a robot, you know.

Check out Vega One.  I did a comparison a few years ago and Vega One were very similar.  Some of Shakeology's ingredients are not listed so it is tough to compare everything.  From a meal replacement standpoint I didn't notice any hunger differences between Vega One and Shakeology.  Vega One also costs about $60 vs Shakeology $130.

How is the taste? Chocolate Shakeology was the first powder meal replacement thingy that I could ever choke down. I won't be buying it again because $$, but I wouldn't mind having a substitute if it was actually as delicious.
To me it tastes good, but I hated Shakeology chocolate, loved their vanilla hated all their other flavors.  With Vega One it was the opposite I loved the chocolate but hated the vanilla.

mm1970

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #27 on: June 15, 2016, 03:46:49 PM »
Intellectually, I know that I could probably concoct something similar for much less money as you say. Emotionally, however, I have lost 30 lbs since January because of the health benefits of Shakeology and the behavior changes it encouraged in me (such as nearly eliminating alcohol consumption to pay for the Shakeology and reducing the calorie count of one meal per day by replacement.) As a result, I keep buying and drinking the Shakeology. Human behavior is a funny thing and it doesn't always make logical sense. I'm not a robot, you know.

Check out Vega One.  I did a comparison a few years ago and Vega One were very similar.  Some of Shakeology's ingredients are not listed so it is tough to compare everything.  From a meal replacement standpoint I didn't notice any hunger differences between Vega One and Shakeology.  Vega One also costs about $60 vs Shakeology $130.
I here you MoneyCat!  When I first started drinking shakeology, I lost 30 pounds and didn't get sick for an entire year.  And I was sick constantly.  I do love the taste too.

I've tried Vega One though.  Maybe I should try different flavors, but it was so gross.  There was no way I could make it taste good.  I ended up giving almost all of it away (after attempting to down it a few different ways).

(Love Shakeo chocolate, couldn't choke down the vanilla in any way shape or form.  Tolerated the strawberry.)

Now that I just signed up for BOD (online service), I've thought about canceling my coach membership and Shakeo.  Because the advantage for me was the discount.  There are so many workouts available on BOD (the 3 I own, two older ones I own, and a bunch more), that...I don't know if I need the discount.
« Last Edit: June 15, 2016, 03:49:07 PM by mm1970 »

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #28 on: June 15, 2016, 03:54:45 PM »
My biggest problem with MLMs - specifically their social network attempts at bringing in new recruits - is how much they lie. And they don't just make up the lies on there own showing some salesmanship and creativity. No, they just copy and paste a fb status from their upline with no care about fact-checking.

Here are a couple viral claims I've seen posted by friends who are involved in MLM:
  • Did you know that 76% of Americans are $300 away from being bankrupt? And most of those people would be just fine if they could make an extra $300-$500 a month. (NOTE: there is a study that says 76% of people are living paycheck to paycheck, but of course the statement makes it sound like bankruptcy is a status of your bank account and not a legal declaration)
  • 82% of women who are currently making over $100,000.00 per year are doing so through network marketing? (NOTE: ugh, gross and patronizing)
  • Sign up today because you'll never see this introductory offer again! (NOTE: yes, you will. the ceo will change his mind and extend it tomorrow)

My next biggest problem is how they prey on working moms. Just a whole lot of shame about missing out on time with your kids and how this MLM is going to give you the freedom to stay home. They of course don't mention that only 1% of people make money on it.

Also horrible is the lie that how much you "earn" in a month is your profit. My coworker does Scentsy and she regularly buys extra stock just to bump up into a better sales tier. So then two months later when she sells some of her stock, she acts like the whole thing is profit when she actually only has a 25% markup and will have to pay income taxes on it still. Hapless recruit targets can really be swayed into joining when they are told about average monthly earnings then get blown away when they realize expenses are not taken out.

The network marketing part of it is of course horrible too. In the last three years I've been solicited for: Scentsy, Tastefully Simple, 31 Bags, Jamberry, It Works!, Norwex, Just Jewelry, YoungLife*, Usborne Books, Younique, Mary Kay, and Advocare. I'm a 26 year old woman who goes to church, so I guess I'm the prime target! But it really sucks to be in a position where you feel uncomfortable saying no. I'm not sure what my excuse will be once we're debt free, but I'm never going to another party again. It honestly feels like a thinly veiled gofundme rather than a "business" with the way people beg for you to buy crap so they can stay at home with kids. IDK, maybe plan ahead a little bit if you want to stay at home?

ETA: Young Living not Young Life. Also remembered I've been solicited for doTERRA and Stella & Dot
« Last Edit: June 16, 2016, 09:01:32 AM by theotherelise »

iris lily

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #29 on: June 15, 2016, 04:10:59 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

I can't tell if your legitimately intellectually challenged on this or just trolling me, but no, you clearly don't get the distinction.

There are NOT "plenty" that make the majority of their revenue from retail sales. Name 5 for me, please.

Distributors are buying the product because if they don't have monthly auto-fills enabled they won't be eligible for the profit sharing.

Read the paper posted by Beard N Bones in its entirety. If you still don't understand what a pyramid scheme is then there's just no helping you.


Would Avon be one of these? I am old, and Avon has been around forever, and I nly recently learned of its upline etc. Imthought it was straight up direct sales.

Note that I have never bought an Avon product in my life.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #30 on: June 15, 2016, 04:29:19 PM »

There are NOT "plenty" that make the majority of their revenue from retail sales. Name 5 for me, please.


You might not be old enough to remember mail order companies, many of whom had direct marketers and a MLM style recruitment initiative. Some of them are still in business because people want the product.

Companies that make most of their money from product sales, despite being direct marketing ventures with a partial multi-level structure include:

- Avon
- PartyLite
- Pampered Chef
- Tupperware
- Mary Kay
- UnderCoverWear
- Longaberger
- Watkins

... and pretty much anything sold using the "party" system or the mail-order catalogue system. Many of the companies I listed have been selling viable product for more than twenty years. Frequently the products are not actually overpriced based on the quality (Avon and Tupperware come to mind). However each one of these MLMs limits the down-line of every person who recruits others and none is allowed to blow up into a full pyramid scheme.

Regal (Canadian company, possibly out of business now) was primarily mail-order but maintained fully staffed retail stores that sold everything in their catalogues, plus they had Regal dealers who sold out of the catalogue. This was, until the 90's when the Internet made catalogue shopping obsolete, a very effective way to sell in rural or suburban areas.

Back in the 1950's through the 1970's, Amway had some outstanding concentrated cleaning products that simply weren't available in stores. They later became a pyramid scheme, once retail stores started selling concentrated cleaning products at a competitive price and once retail stores started moving into rural areas. It was a business model they embraced as a result of other more competitive products and sales models cutting into their market share. Later they realized they could make even more selling "motivational tools" to their extended downline, and so Amway/Quixtar stopped being an effective MLM and became a con job.

Does this help?

gillstone

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #31 on: June 15, 2016, 04:31:13 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

You're splitting hairs on this.  If most MLMs are unethical or encourage unethical behavior (exploitation of social networks, high pressure sales, absurd promises of wealth) then MLMs should be considered broadly unethical.  Defenses of "not all MLMs are bad" and  "its about having the right people" are not only weak tea, they shift the onus to behave away from the company.  If an MLM promises wealth for only a few hours a week (something which is a blatant lie) the consumer should be wary, but also the MLM shouldn't be lying. 

If I bought oceanfront property in Kansas, I'd be dumb; but the person who sold it to me would still be committing fraud.  That ethical breach isn't wiped away by my lack of due diligence.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #32 on: June 15, 2016, 04:56:50 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

You're splitting hairs on this.  If most MLMs are unethical or encourage unethical behavior (exploitation of social networks, high pressure sales, absurd promises of wealth) then MLMs should be considered broadly unethical.  Defenses of "not all MLMs are bad" and  "its about having the right people" are not only weak tea, they shift the onus to behave away from the company.  If an MLM promises wealth for only a few hours a week (something which is a blatant lie) the consumer should be wary, but also the MLM shouldn't be lying. 

If I bought oceanfront property in Kansas, I'd be dumb; but the person who sold it to me would still be committing fraud.  That ethical breach isn't wiped away by my lack of due diligence.

MLM is a business structure. There's nothing inherently bad or dishonest about a business structure. We've all seen dishonesty in other kinds of business including retail, restaurants, E-commerce, and medicine. The onus of staying honest is strictly on the people at the top, who create the catalogues, sales pitches, incentive structure, product selection, and pricing scheme. When any of those things are done badly, the only way to sell the product is to either exaggerate its merits or guilt-trip someone.

Part of the complaints against MLM should rightly be directed against direct or network marketing. Not all direct marketing or network marketing is MLM. Vector (Cutco) and Kirby aren't MLM, for example, but they're both shady as hell.

kite

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #33 on: June 16, 2016, 06:01:58 AM »
...Trump's ACN is one of the ones I've had some contact with...
*SNIP*

Just as insane, is the highly revered Warren Buffett Berkshire Hathaway, getting intimately involved with Pampered Chef - a company my wife was introduced to by a pastor's wife.

Yep. Anyone have thoughts on why it seems there is a higher percentage of "religous" people involved with MLM companies?

I would guess that it's because a level of trust and obligation is requisite in getting others to buy in. When you belong to the same faith, there are components of both.

People sell to and recruit those they know.  A faith community has deeper ties between members than most every other kind of group.  Ie.. you might belong to the PTA with people, but it will be for a more limited duration and with less regular interaction than church, synagogue or mosque attendance.  The closest thing in the secular world (Crossfit) has the same dynamic as a religion.  And it does seem like the more recent wave in MLM is fitness with personal trainers as pushers. 

I sold Pampered Chef.  No complaints.  Was profitable within a month, averaged $25/hour for the time I put in, and never was pressured to recruit. So I don't find WB'S interest in PC to be objectionable.  It's a successful and profitable business for him to own a piece of.  He's invested in McDonald's and Coca-Cola too.  I patronize neither of those businesses, but recognize that many people want to do so on a regular basis. 

Making Cookies

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #34 on: June 16, 2016, 08:53:02 AM »
Do any of these companies offer a product that people NEED vs want? To me it seems like a bunch of people who are buying stuff b/c they like shopping.

Everything can be purchased locally or over the 'net without going through sales reps and I'll bet the prices can be beaten too.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #36 on: June 16, 2016, 10:10:08 AM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

You're splitting hairs on this.  If most MLMs are unethical or encourage unethical behavior (exploitation of social networks, high pressure sales, absurd promises of wealth) then MLMs should be considered broadly unethical.  Defenses of "not all MLMs are bad" and  "its about having the right people" are not only weak tea, they shift the onus to behave away from the company.  If an MLM promises wealth for only a few hours a week (something which is a blatant lie) the consumer should be wary, but also the MLM shouldn't be lying. 

If I bought oceanfront property in Kansas, I'd be dumb; but the person who sold it to me would still be committing fraud.  That ethical breach isn't wiped away by my lack of due diligence.

MLM is a business structure. There's nothing inherently bad or dishonest about a business structure. We've all seen dishonesty in other kinds of business including retail, restaurants, E-commerce, and medicine. The onus of staying honest is strictly on the people at the top, who create the catalogues, sales pitches, incentive structure, product selection, and pricing scheme. When any of those things are done badly, the only way to sell the product is to either exaggerate its merits or guilt-trip someone.

Part of the complaints against MLM should rightly be directed against direct or network marketing. Not all direct marketing or network marketing is MLM. Vector (Cutco) and Kirby aren't MLM, for example, but they're both shady as hell.

TheGrimSqueaker, I disagree with your line of reasoning.  There are business structures that are inherently bad and dishonest - have you heard of pyramid schemes? Ponzi schemes?  Most (if not all) will agree that pyramid and ponzi schemes are inherently bad and dishonest.  Maybe you think that pyramid and ponzi schemes are not business structures? (because there is no product exchanged?)  I'm curious how you would differentiate pyramid or ponzi schemes from MLM schemes?

I've looked at a couple MLM company income disclosures and I found the following to be shocking - nobody except those at the top level (top 0.4-1.0%) make a living in MLM companies.
I've read that the losses incurred from people taking part in pyramid schemes are around 90% - and the losses incurred by those taking part in MLM companies are over 99%.  In other words, a person has a greater chance of making money in a pyramid or ponzi scheme than in a MLM company. 

I'd agree with gillstone, the MLM business model is bad and unethical.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #37 on: June 16, 2016, 10:44:55 AM »
Quote
The network marketing part of it is of course horrible too. In the last three years I've been solicited for: Scentsy, Tastefully Simple, 31 Bags, Jamberry, It Works!, Norwex, Just Jewelry, YoungLife*, Usborne Books, Younique, Mary Kay, and Advocare. I'm a 26 year old woman who goes to church, so I guess I'm the prime target! But it really sucks to be in a position where you feel uncomfortable saying no. I'm not sure what my excuse will be once we're debt free, but I'm never going to another party again. It honestly feels like a thinly veiled gofundme rather than a "business" with the way people beg for you to buy crap so they can stay at home with kids. IDK, maybe plan ahead a little bit if you want to stay at home?

ETA: Young Living not Young Life. Also remembered I've been solicited for doTERRA and Stella & Dot
Well I'm (almost) 46 and I can relate.

Young Living, doTerra, Beachbody, 31 Bags, Jamberry, Pampered Chef (I do like their products), Norwex, Usborne book, Advocare, Stella & Dot, CAbI, another skin care line that is escaping me right now...

mm1970

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #38 on: June 16, 2016, 10:53:27 AM »
Do any of these companies offer a product that people NEED vs want? To me it seems like a bunch of people who are buying stuff b/c they like shopping.

Everything can be purchased locally or over the 'net without going through sales reps and I'll bet the prices can be beaten too.

Hmm...I don't know.

I will speak personally for the few items I've bought from MLM companies -

1. Pampered Chef.  I do like their products.  I have a few of them that I use religiously (garlic press, microwave steamer, etc), and ... I'm sure they exist over the 'net, and maybe even at the same quality and price, but maybe not.  At least locally, I haven't found a convenient place to get cooking tools of this quality and price.  I've been using my (few) items for years.

2. Beachbody workouts.  Same price online as if you buy from a coach.  I like the workouts, had my spouse buy me P90X probably 6-7 years ago when he started traveling a lot and I couldn't get to the gym in the morning on his travel days.

3. CAbi clothing.  I'm not really into clothing and fashion. I have to say I did enjoy the house-party method (no shopping), trying things on, getting other women's opinions.  And honestly, the clothing has lasted me years, is of high quality, and flatters my figure.  I've gotten more wear out of these items (which are about 3x more expensive that I would normally pay) than any other item in my closet.

Much of the others are easy for me to completely ignore.  I don't wear makeup, have a skin routine, do my nails, believe in essential oils being a panacea, etc.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #39 on: June 16, 2016, 04:43:38 PM »
I've had knee problems for years, and my supervisor recommended a supplement that might help that his wife sells.  I hadn't wised up quite yet because a) I was spending money on a supplement which as an industry is just as shady as what we're discussing here and b) it didn't set off alarms that his wife was a distributor.  I ordered a bottle of pills and some drink powder.  I can't recall their selling point (this was 4 years ago), but it was some crock about rebuilding you from the cells up and their products had to be taken as cocktails of multiple items together.  I received my six ounce bottle of pills and powder bags, and a medium pizza-sized box (I'm dead serious) worth of literature and CDs for how I could become a distributor of their products as well.  He never mentioned that being part of the package, and I never asked for it.  The company is called Univera if you're curious.

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #40 on: June 16, 2016, 10:18:09 PM »
I think there are plenty of solid, legitimate mlm opportunities out there.  The point is to move product, and they move product very effectively and efficiently by incentivizing wholesale discounts and mandatory monthly automatic purchases. 

The business model behind MLMs is totally flawed. By constantly recruiting new salespeople, they multiply the number of middlemen and increase competition among sellers. This requires the products to be marked way up, often to a much higher price than comparable products sold in stores. That makes them that much harder to sell. As a result, a new recruit has almost no chance of earning a living by selling product. That's why they focus on recruiting new marks. The new recruits are the ones who buy most of the product and keep the people on top making money.

If these companies really wanted to move product, they'd make their sales force no larger than it had to be and they'd flatten out management to reduce cost and lower prices. That they do the exact opposite should tell you something.


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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #41 on: June 17, 2016, 12:25:01 PM »
I'm not saying that some, perhaps many, aren't pyramids.  You've got to do some due diligence to study the compensation plan to see if the funding is coming primarily from distributors or end consumers (and nobody ever does due diligence before signing up with their neighbors MLM, lol).  But again, you can't lump all the companies together.  THere are some, plenty, that make enough money from the end consumers that it's not a pyramid.  And, again, I still say that if the distributors are buying product, then it's product sales that are funding the company.  But, yes, I do get the distinction.  I mostly trying to make the point that the business model of MLM isn't illegal, unethical, or unprofitable.  It's uncomfortable for most people (as is entrepreneurship in general), and there are plenty of scammers and overpriced, crappy products in the industry.  But, not all of them.  Don't throw the baby out with the bathwater.  For 1-3% of the population, it's a well-suited business model.

You're splitting hairs on this.  If most MLMs are unethical or encourage unethical behavior (exploitation of social networks, high pressure sales, absurd promises of wealth) then MLMs should be considered broadly unethical.  Defenses of "not all MLMs are bad" and  "its about having the right people" are not only weak tea, they shift the onus to behave away from the company.  If an MLM promises wealth for only a few hours a week (something which is a blatant lie) the consumer should be wary, but also the MLM shouldn't be lying. 

If I bought oceanfront property in Kansas, I'd be dumb; but the person who sold it to me would still be committing fraud.  That ethical breach isn't wiped away by my lack of due diligence.

MLM is a business structure. There's nothing inherently bad or dishonest about a business structure. We've all seen dishonesty in other kinds of business including retail, restaurants, E-commerce, and medicine. The onus of staying honest is strictly on the people at the top, who create the catalogues, sales pitches, incentive structure, product selection, and pricing scheme. When any of those things are done badly, the only way to sell the product is to either exaggerate its merits or guilt-trip someone.

Part of the complaints against MLM should rightly be directed against direct or network marketing. Not all direct marketing or network marketing is MLM. Vector (Cutco) and Kirby aren't MLM, for example, but they're both shady as hell.

TheGrimSqueaker, I disagree with your line of reasoning.  There are business structures that are inherently bad and dishonest - have you heard of pyramid schemes? Ponzi schemes?  Most (if not all) will agree that pyramid and ponzi schemes are inherently bad and dishonest.  Maybe you think that pyramid and ponzi schemes are not business structures? (because there is no product exchanged?)  I'm curious how you would differentiate pyramid or ponzi schemes from MLM schemes?

I've looked at a couple MLM company income disclosures and I found the following to be shocking - nobody except those at the top level (top 0.4-1.0%) make a living in MLM companies.
I've read that the losses incurred from people taking part in pyramid schemes are around 90% - and the losses incurred by those taking part in MLM companies are over 99%.  In other words, a person has a greater chance of making money in a pyramid or ponzi scheme than in a MLM company. 

I'd agree with gillstone, the MLM business model is bad and unethical.

I differentiate Ponzi and pyramid structures from MLM by pointing out that Ponzi and pyramid schemes require constant new investors in order to keep the business going and to pay the existing investors. It's mathematically impossible for everyone to the their money back out or to earn money. The math blows up. It's unsustainable, and if you enter the game late your odds of getting your money back are 0.

A MLM, by contrast can be set up to run sustainably, to not deliberately saturate the market, to not require new downline investors, to emphasize product sales as opposed to recruitment, to split off the downline instead of expanding forever and kicking money back up to the top, and to allow a new recruit with the appropriate sales skills, advertising skills, and social network to make money or occasionally even earn a full-time living without being involved at the top of the company. Few actually meet these criteria, but whilst looking for a side hustle 15 years ago I found a couple I actually considered.

High risk and unregulated does not equal bad and unethical (even though high risk, unregulated environments attract a lot of bad and unethical people: consider hedge funds, for example).

The fact you were given those disclosures indicates, to me, that those particular companies were *not* being fraudulent in their interactions with you. Of course, you had the skills to understand the disclosures and to rightly conclude that you were being offered a very high risk investment. Most people being offered those opportunities don't have the analytical skills to draw that conclusion. That's something I blame on the lack of regulation.

Other industries that have a lot of high risk investments require sellers to offer them only to investors who are qualified (typically with income, net worth, and investment experience). But because MLM is mostly unregulated, nobody checks to make sure people who lack a reasonable sales infrastructure aren't being recruited to sell.

You are 100% right in noting the widespread dishonesty in MLM, but I think that a lot of it is due to the fact there's no regulation in the industry and therefore no consequences for egregious lying or deliberate sales of high risk investments to the unsophisticated. Back when the medical and pharmaceutical industries were similarly unregulated, there was a lot of snake oil being sold.

Goldielocks

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #42 on: June 18, 2016, 01:14:52 AM »
Other poor business models include vacuum cleaner sales, knife sales, etc.,   where recruiting people just for their potential sales to grandma or other relatives is the main purpose.  hmmm  maybe financial advisors / sales are sometimes here too?

carlo319

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #43 on: June 18, 2016, 03:40:19 AM »
MLM in itself is not unethical for me. 
But most "successful recruiters" are unethical.
They abuse social networks - civic and religious groups, etc.
They victimize people who cannot say no, or are too lazy to do due diligence.
Almost all are overpriced.
I was a "gullible victim" before. 
Never again!!!

I prefer "direct marketing", like avon.  not pyramid style.

But as a mustachian, who are on anti consumerist culture,
and in the age of internet where you can find other alternatives,
its hard for them to sell to me...

LadyMuMu

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #44 on: June 18, 2016, 06:42:50 PM »
I believe that the products of MLM vary widely. Some are good quality (Pampered Chef, Norwex) but pricier than you would pay in a specialty shop. Others are just meh (Mary Kay, Thirty-One), and some are fine products just with claims that defy sense or just flat out snake oil sales (Young Life, Rodan & Fields). If you want a good look at the interior life of a MLM-based company, check out pinktruth.com. It was founded by former Mary Kay directors but the concepts apply to many MLM.

While technically a MLM can be legit, it usually isn't--they are ponzi schemes disguised as business opportunties. If they were legit, there's no way they would allow (much less encourage) multiple sales reps in the same territory with little to no required training. Even worse, many actively encourage their reps to recruit other reps--why? So they can build their "start up" store with training and supplies. In exchange the recruiting rep gets a portion of their commissions for life. In no other sales field that I know of are reps encouraged to recruit other reps to compete in the same territory--but perhaps I'm wrong on that one.

I have SO many friends who try to supplement their income with these MLMs. Beyond the fact that they end up with an hourly wage for their efforts equal to pennies over time, I hate the way these have dominated social life among the mom set. No one just has a get-together anymore--there's always some sort of sales pitch/party. The worst are when you think you are going to a book club or girls night in that ends up being a bait and switch for one of these things. I no longer participate in any of this stuff simply because I hate to prolong the pain and perpetuate the fraud that this really is a legit business.

That being said, I have no problem with supporting home-based businesses of folks I know like a woman who bakes specialty cakes and cookies from home or a friend who hosts a wine tasting night. At least then all the profit goes to them.

LeRainDrop

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #45 on: June 18, 2016, 07:48:04 PM »
I believe that the products of MLM vary widely. Some are good quality (Pampered Chef, Norwex) but pricier than you would pay in a specialty shop. Others are just meh (Mary Kay, Thirty-One), and some are fine products just with claims that defy sense or just flat out snake oil sales (Young Life, Rodan & Fields). If you want a good look at the interior life of a MLM-based company, check out pinktruth.com. It was founded by former Mary Kay directors but the concepts apply to many MLM.

I was going to point out the pinktruth.com website, too.  Also, 20/20 did a great segment about Mary Kay late last year.  I'm putting the links to the two parts here, though the second part is really the expose portion.

http://abcnews.go.com/2020/video/business-mary-kay-34216449
http://abcnews.go.com/2020/video/women-left-mary-kay-disappointed-34216650

gimp

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #46 on: June 19, 2016, 01:18:42 AM »
Stealing this from reddit -

You ever have people on facebook titling themselves "CEO," writing posts about entrepreneurship and hustling and making money, because they do MLM?

Someone responded to this by saying: You can't just call yourself CEO, the MLM company has a real CEO.

Someone responded by saying: "It's CEOs all the way down!"

That's literally how it's sold. It's CEOs all the way down. You get to be a CEO of your own company. All you have to do in exchange is buy only our product, only from us, only for our rates - and also recruit some more CEOs.

infogoon

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #47 on: June 20, 2016, 08:19:19 AM »
I've posted this before, but I'd rather read a hundred misspelled and logically faulty political memes in my Facebook feed than one MLM pitch. It's terrible when someone goes completely off the rails and stops posting anything but crap from their "business" selling fingernail stickers or whatever.

Cpa Cat

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #48 on: June 20, 2016, 08:43:37 AM »
I have a friend who works successfully for a jewelry MLM, and the subject of MLMs came up. I said, "But you make a decent profit from your jewelry parties, right?" And she shrugged and said she makes some money from that, but most of her money comes from signing other people up. And this lady sells a ton of jewelry. Her goal is to do 5 parties a week. She said that the real money from the parties comes from the fact that the product is attractive, so usually at least one person expresses an interest in signing up to sell.

I have another friend, we'll call her Tina, who sells memberships (?) to Melaleuca. She's constantly posting on Facebook about all her free swag, hosting free dinners for her downline, going on cruises, etc. She told me that she started selling it basically full-time when she lost her job and has never had to look for another job. But I spoke to a member of her downline, and that person told me that it's hardly worth selling it, because Tina had basically locked down our town. She told me that if she walks into a room and someone mentions Tina's name, then she knows she's wasting her time. No one on Tina's team will ever make as much as Tina, because Tina got here first.

I do tax returns for a few of these. Some of them are staggering losses. I did a supplement Schedule C this past year and the person had spent $6000 on supplements for her family, another $5000 on conferences and training materials, and she had $500 in income. She told me that she was just waiting for this supplement to catch on and then she'd be financially secure. I'm thinking, "Lady, I know a way you can make $10,500 a year doing nothing."

On the other hand, I did a Cabi lady's return once, and she sold Cabi part time and had a real full time job. She pulled in about $20,000, only $5000 of which was downline commissions. She said she just thinks it's fun to host clothing parties. I don't know how many a week she did.
« Last Edit: June 20, 2016, 08:45:42 AM by Cpa Cat »

Frugal D

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Re: Multi-Level Marketing (MLM)/Network Marketing
« Reply #49 on: June 20, 2016, 10:18:04 AM »
And she shrugged and said she makes some money from that, but most of her money comes from signing other people up.

Haha! She may as well have said, "it's an illegal pyramid scheme so the real money comes from recruiting people who in turn recruit others, in perpetuity."

Did anyone see the Veep episode a couple of weeks ago where Andrew was pitching Mike a pyramid scheme in Brazil? Too funny.