Why network marketing is bad

They make far below minimum wage with the HOPE of making tips based on the level of their service. Why is this? Because to be a server requires little risk and investment to train. Just like when I went to college for Computer Program, very few had the ability to actually graduate. If everyone did, I would have not found a job as the job market would be saturated. I counted on the fact that many would fail, and that is why the pay is high. Few can do it. What happens if his team does poorly?

He loses his job. A middle class person may make K a year, but most likely, unless certain risks are taken, he will never make the millions the CEO makes, or the owner of a small business. If open a business that is Non-MLM, then I have to invest a lot of money to get that business up and running. How do I make a passive income? Buy hiring people to run that business for me.

I pay them based on what the market rate is. If MLM does not work, and it saturates the market, then explain to me how Avon has been in business since ? Is an Avon rep raking in millions? No, but they earn an income based on the amount of work they put in, how good they are at selling the products, and how well they train and motivate their people… just like a sales manager does.

To address the cult like approach you claim they have, consider this. You are the sum total of the 5 people you associate with. I back away from those people. Yes, but will I listen to them? If we did not distance ourself from naysayers, America would never have been founded.

Steve Jobs would have never created the products that he did. You really should think about this a little deeper in the context of sales, capitalism, risk vs. It is a mathematical fact. You can fact check me by using the sources that I provided, or by doing your own research. You will find that every income disclosure statement out there backs up my research. I would love for you to show me something similar. Your wife making 30k a year after investing 60k is actually very successful, no?

In 2 years, she would have earned back her initial investment. The two are not comparable. You mention paying people what the market rate is.

It may not get them rich but they are paid minimum wage, or more. Because THAT would be insanity. MLMs do this. And yes, you speak about people working in hospitality in the US people from America seem to have this strange assumption that everywhere in the world operates just like they do, lol.

Again, not comparable. So, I think that it is YOU who should do a little more research. Look at the numbers. Or better still, join an MLM and let me know how it works out for you! If I buy a subscription for a product off of a website, then I am paying for that product because that product is of value to me. It is no different if it is being done within the structure of a MLM that offers a legitimate high quality product.

Being someone that truly cares about people I can totally see your perspective on how such models can become predatory. And this is something that is unfortunately a consequence of greed, in my opinion. Participants in mlms are trying to make money off of those below them, not just use the product. And if the product is good then great, but most mlms require that participants buy the products in bulk for a high price. Does the participant need dozens or more of the same thing?

Probably not- her aim is to sell. Losing money is the simple act of spending more money than the MLM compensates you in commissions. Product consumption is not the only cost. Apart from the sign-up fee and starter packs, MLMs will also sell you marketing and training materials, monthly online access subscriptions, seminars, conferences and even tickets to national conventions.

They all followed that same formula in which the successful recruiters were mostly attractive young women promising great things. A lot of them were pushing the same products that were available at Vitamin Shoppe or GNC for about the same price. Amazing post! They have aggressive marketing campaigns to silence folks like you trying to warn people. Keep up the good work! I love everything about this post! LOL I am living for your responses to all the negative comments! This was so well written.

I really enjoyed reading your post. Lol sorry just venting but I really hate these companies so much and how they seem to target SAHMs from my perspective and like you mentioned — other vulnerable populations. Sorry the huns are coming for you.

Great article! Soooo disingenuous. MLMs are literally the greasiest. Yesssssssss this is spot on! Before I get accused of being burned by an MLM for supporting your writing, let me assure you that this is not the case. They made me smile while tightening and shaking my fist at my computer screen whilst cheering you on.

Haha, this comment made the day. My aim is to make people smile whilst also shaking their fists at the computer screen hahaha. Well-written article. Thank you! And I enjoyed the memes also! Once when I lost my job, a client of the place where I had worked invited me for coffee.

She was going to talk to me about another job. She ended up trying to get me involved in her MLM. I was so confused and taken aback. It was one of the most awkward moments ever. But she was an MLM sales rep. I became aware I was the intended audience for her and her colleague.

It was the most awkward thing ever. She messaged me later about a product I expressed a vague and obligatory interest in. I never bought anything from her. Oh god, both of those experiences sound so horrendously awkward!

I am student from Malaysia. She was saying that i could get up to 6digits of salary. And of course, im an university student so i believe her and already transfer several amount of money just to attend an alone class training and entree for amway. I dont know if i am doing the right thing or the way around. She met me when im working as retail worker. Im a sales assistant for Elianto Make Up.

Im not sure if you ever heard about it. A traditional business 1. This money is used to pay salary and dividend. Investor's interest is protected by market regulators like SEBI, employee interests are protected by labour laws, consumer's interest is protected by consumer laws. Each of these stake holder have an option and flexibility of exiting any time. Good management skills are required to maintain a sustainable balance between investors, employees and customers 4.

Members pump in money, promote the business, buy the products, only to get a small fraction of money he and his down liners pump in 2. While member does all work as investor, employee and customer, his interests are protected by none and has no exit option without losing money 3.

Only motivational skills are required to ensure that new and new members continue to get recruited 4. Continuous enrollment of new members is required to keep the system running. There is no recycling of money-Only collecting it from new recruits and distributing a fraction among up-liners 5.

Demand is often created forcefully Having noted the key differences, here are some typical developments which lead MLM companies to trouble.. During early stages, all goes well and it will be difficult to sense the trouble ahead. As the idea is new it spreads like wildfire and thousands of people would sign up every day.

Obviously few early joiners make huge money in this process and seeing them buying luxury homes and cars only propels the greed of new joiners who start promoting the scheme with all new energy and aggression. This is when the trouble begins. The concept of MLM survives on the belief that the chain continues to grow sine die in a never ending fashion and existing people do not leave.

As the saturation is neared, desperate members start resorting to unethical practices with a sheer greed of making quick money. This kind of approaches may not give expected results adding to frustration. Some of these facts people will discover, sooner or later and that will give a sense of betrayal.

But more often than not, prospects are given only the positive side and are often forced to sign up on the spot. Hypnotic environment conducted by the up-line and faith in their friends may make people sign up on the spot but they may repent later for that.

But we seldom hear such news. Only when things go out of control like when someone files police complaint , they look for some scapegoats. As members get their check and product on time they build a trust and advocate on behalf of the company to their friends.

But after few years, when member base grows beyond control, some companies fail to maintain the same efficiency- Products do not reach in time and checks take forever to come.

If this happens, credibility starts falling and bad words spread real fast. Add to these, some network marketing cos have rules that stipulate that you need to keep spending a certain minimum amount every year in the name of membership fee, product purchases etc, even when you are not earning a penny out of the scheme.

Ignoring early warning signs-Because of the unquestionable faith shall I say Cultism members develop towards their company, up-line and its business model, early signs of warning, even if detected by few in time, are often suppressed and ignored. Only when things go totally out of control they wake up to the reality. Lot of trouble can be saved if members maintain an open mind to question and verify any negative news that they come across, without any prejudice.

When Questnet was banned in SriLanka, company should have offered to refund money to those who joined recently, instead they silently left and after sometime opened a new shop-Lotus marketing when Chennai Police are investigating QN, Datuk Vijay Eswaran could have flown in and explain the police and public why his company is legitimate and be allowed to operate. Instead, promoters often chose to stay away, letting some agents become scapegoats sinking huge money of thousands of people.

With the experience gained they feel like spinning off their own company- Some exit silently while few may make an attempt to spoil the name of parent company, so that the downline will be discouraged to do business with parent company and join their newly formed MLM company. Note: All companies may not face all the above issues, must most of them do at some time or the other. These are general observations-some companies may take exception w.

Update: Few former Questnet members have started blogging about their experience. Read it here , here. Business and Marketing Human Relations and People. Anonymous Friday, May 23, AM. Anonymous Friday, May 23, PM. Most people who join legitimate MLMs make little or no money. Some of them lose money. Pyramid schemes are scams. They can look remarkably like legitimate MLM business opportunities and often sell actual products, maybe even ones you've heard of.

Your income would be based mostly on how many people you recruit, not how much product you sell. Others don't read the contract they sign. Many newbies rely on the information provided by their sponsor. Gathering all of the details and reading all of the fine print before joining an MLM will help set you up for success.

AARP Foundation. Accessed March 23, Small Business Administration. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights.