Multilevel marketing (MLM) Pyramid scheme - exposed

[Goshawk]

So this weeks. LAST WEEK TONIGHT with John Oliver went into depth to expose how Multilevel marketing schemes work and focused on herbal life.  this one hits home as my SO was once a big participant in this.  many relatives have been involved with Mary Key cosmetics, and also with various Motor Oil selling groups (AMWAY), etc. 

the big focus is always

1)  sell the product - okay according to federal trade Commission
2)  sell the selling process to others - not okay as its a hidden sale process and reeks of pyramid scheme process.

Here is the link, that he wants all to share to get bigger exposure than the MLM companies.



While I try to not fault companies for wanting to make a profit, its just too easy to burn out the ignorant lowest level newcomers to the MLM and basically never get them to make any money (and to make them loose a lot of money when they stockpile goods that expire and never get sold).  It only takes 14 levels of MLM to cover the whole planet, so it really does not work.

So if you are out there thinking you can support yourself on the road via some MLM, please beware that they are a trap most of the time.

 

[MrNoodly]

Just like the lottery, MLMs are the price you pay for being bad at math.

 

[Goshawk]

Just like the lottery, MLMs are the price you pay for being bad at math.

Think they are also MLMs in the finance industry and the medical dollars-insurance industry.  They are so attractive.  And all it takes is some complexity of process to baffle the customers enough into thinking they have found a miracle money machine.

 

[TMG51]

These can make money for some people, but you have to do it by getting others to buy into your situation and eventually someone gets screwed

 

[sushidog]

That's a funny video. Thanks. Like any business model MLM can be done ethically or unethically. The problem is that many would be distributors over sell the opportunity and undersell the work involved. It takes years of hard work for little pay - like any business - to get long term residual money. The newbie is never told that but instead the "opportunity" is sold to them hard pressure style like a get rich quick scheme.

I had some success with one a long time ago, but it had a unique business model. Instead of loading up it's distributors with product that they must purchase and maybe or maybe not resell, it was a food MLM that had local grocery stores each distributor could go to and buy just what they wanted - no over buying required or even encouraged. Sadly they went out of business in a couple years due to poor business management. There is nothing like it today. The food was great too. Too bad. I guess it's much more profitable to rip people off than to treat them fairly and honestly present the good, the bad and the ugly of a business opportunity.

In my opinion, if you wouldn't buy the product at the price it's offered at retail without the business opportunity attached then run, don't walk away, cause it's probably a disguised pyramid. BTW the pyramid like structure of a MLM is not unique. Every major corporation uses the same pyramid shaped organizational chart. The difference is they never tell you it will be easy to reach the top rung of the ladder as few do. Whereas in a MLM they make it sound far to easy, with their pie in the sky, get rich quick sales pitch they give you that almost guarantees that no one will. If it sounds too good to be true, guess what? It is.

Chip

 

[frater secessus]

Just like the lottery, MLMs are the price you pay for being bad at math.

At least with the lottery you don't alienate your friends and family.

 

[sushidog]

At least with the lottery you don't alienate your friends and family.

You're right. I never did understand the concept of trying to recruit your friends and family as those like Amway (and others) suggest you do. I can see selling to friends and family if they want your product, but I wouldn't be running after them, making a nuisance of myself. They would have to come to me first. It reminds me of car dealerships trying to hire any and everyone as commissioned salesmen - just to use their personal contacts to sell cars. When these amateur car salesman exhaust their list of friends and family (which is all the dealership wanted anyway) they realize they can't make a decent living at it and quickly quit. When anyone wants you to market exclusively to your personal contacts (or even mentions you contact them, for that matter) that should send up a red flag as this is not a legitimate business/job.

Let's look at it another way, If I had a vending machine franchise and I wanted to recruit people to buy, place and service my vending machines, would I look at cold calling people who showed no prior interest in a business of any type? Wouldn't it be better to buy a mailing or calling list of people in similar types of businesses or who expressed an interest in going into business for themselves? Wouldn't my time and money be far more productively spent doing some targeted free or low cost advertising to generate warm leads and working those leads exclusively, rather than cold calling people unlikely to have any interest in any business opportunity whatsoever, let alone my "deal?" The problem with most MLM opportunities is that it's the blind leading the blind. No one has a clue about how to market the products or the opportunity, effectively, yet most pretend they do, with the worst imaginable advise I've ever heard, "Fake it before you make it!" Unbelievably stupid and disingenuous!  

Now that there's the internet, it would seem far easier and more productive to market this way - less rejection too, especially from friends and family. Plus it's easily duplicable, which is the whole concept of MLM. What are the odds your friends and family are great salesmen like you, who are going to go out and recruit a bunch of equally great salesmen? Uh, zero. With that business model you are doomed to fail before you start - which is why so many do. 

Chip

 

[Ken in Anaheim]

At least with the lottery you don't alienate your friends and family.

Until you win it and have to say NO !! to all the gold diggers ( and i DON'T mean HighDesertRanger).

 

[Wanderer]

Just like the lottery, MLMs are the price you pay for being bad at math.

Yeah, got bit by one a long time ago. Said "If I'm selling something, I'm going to be the ONLY one making the profit"