If a company ever has to tell you in their pitch why they aren’t a multi level marketing company, then they are a multi level marketing company.
We found this thought provoking heading on the website Reddit and just had to agree!
MLM, also called Direct Marketing, Network Marketing and various other titles is a business model that is prevalent in the world of diet pills. However, sometimes it can be hard to spot.
So what is MLM and how do you get into it?
The idea always sounds so simple. You like the product so you join the company and start selling it yourself via your own network of friends. What could be more simple?
You pay for a pack of products, establish your own client base and start selling. At the same time, you try to sign up other people to become distributors so you establish a downline of sellers who are answerable to you.
Your downline is your own group of other people also selling the product out of which you receive a percentage of their profits plus a joining fee. Cash back!! You have your own retail business and you are at the top of the chain.
What is wrong with that?
So what is wrong with MLM?
Think about it. With a conventional retail business, your chosen suppliers sell you your stock of products that you then sell to your customers how and where you like. Your sales are the basis of your business. You don’t want anyone else moving in on your sales territory.
You want to keep your own customers and you don’t want competition.
Where MLM differs from a usual retail business is that this is precisely what you want.
Nobody in the real business world would encourage a bunch of competitors selling the same product in the same area. Yet this is the life blood of MLM. When you can no longer find anyone to buy your products in a heavily saturated market, the only way you can make any money is getting other people to sign up as sellers and pocket their joining fees.
When the people become the product and not the thing you are really trying to sell, the MLM scheme has turned into Pyramid selling.
Pyramid Selling, what’s that?
Pyramid selling is illegal. It is defined as an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the scheme, rather than supplying any real investment or sale of products or services to the public.
The Federal Trade Commission warns:
It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products.
A cult you say?
MLM businesses are generally very motivational. Join and you can expect to attend seminars and company rallies that are often accused of using brain washing techniques.
Often the products are given almost miraculous powers. Once you are in the cult it seems that you lose all sense of perspective. It’s just a diet pill or health drink or a cleaning product but once you are involved it becomes so much more.
Many people lose friends by getting caught up in MLM schemes. MLM distributors are well known for badgering people relentlessly either to buy the product or to sign up as a distributor in their downline.
So how can you tell if a business is an MLM business?
Do your homework first. Investigate the company you are interested in online and among the glowing reports of how you can get rich, you will always find plenty of true-life stories from people who have been there before you.
Don’t write off their accounts as sour grapes. There may be an element of that of course but they were probably once just like you and they have the benefit of experience behind them.
Keep an eye on the Watchdog site. We sometimes cover supplements that operate MLM and in most cases the comments are extremely interesting.
The Federal Trade Commission gives you 8 steps to follow
- Find—and study—the company’s track record.
- Learn about the product.
- Ask questions.
- Understand any restrictions.
- Talk to other distributors. Beware of shills.
- Consider using a friend or adviser as a neutral sounding board, or for a gut check.
- Take your time.
- Think about whether this plan suits your talents and goals.
Not all MLM businesses are bad. Some people actively search for MLM businesses and enjoy being involved with a company. Some people can make a profit too. However it is important to stay safe. As one contributor on Reddit put it,
If you have to pay an upfront cost of a couple hundred to get your kit it’s probably a MLM scheme. You’re the product at that point
Who are the most well known MLM Companies?
There are so many MLM companies out there, but we’ve decided to tell you about a few so it gives you a better idea of what to look out for.
With headquarters in Los Angeles, Herbalife International is an American multination MLM corporation that develops, markets and sells nutrition supplements, weight management, sports nutrition and personal care products. Established in 1980, it now employs around 7,400 people around the world, all of them promoting and selling the products.
There are approximately 3.2 million independent distributers around the world, with 62,000 out of the 526,000 in America earning commissions and bonuses on sales from Herbalife.
Their products range from protein shakes, nutrition bars and protein snacks to personal care products such as shampoo and conditioner. Some of them are kosher, vegetarian, allergen free or halal to suit all consumers.
Before the ingredient was banned by the FDA, Herbalife used ephedrine in their products as it was an appetite suppressant. There has been some controversy in the past regarding the products as in 2004 Israel’s Health Minister bean an investigation after 4 people gained liver problems after using the products.
They were accused of selling products containing toxic ingredients such as Qua-qua, Kompri and Kraska. 3 people resumed using the Herbalife products after recovering and liver injury symptoms came back near enough straight away. One woman in 2009 even sued the company. A University Medical Centre in Israel found a connection between Herbalife products and hepatitis, although Herbalife claim there is no definitive proof that the products cause hepatoxicity.
However, nowadays thanks to social media, Herbalife is a booming business, gaining respect from celebrities and athletes such as Lionel Messi and Cristiano Ronaldo. Many of the distributers use Instagram as the main platform to boost sales, show off results and the products. With so many followers it isn’t surprising that word is spreading like wildfire and more people are getting on board every day.
For more information visit the website: http://www.herbalife.co.uk/
Avon was founded in 1886 by David H. McConnell who was a struggling door-to-door salesman who used to sell books in New York. Then he decided to sell perfume instead calling the company the California Perfume Company after joining with a business partner who lived there. It was changed to Avon in 1932 and began to include more products such as powder and rouge compacts, lipsticks and toiletries.
Nowadays, products are sold in over 100 countries, with Brazil as the largest market, passing the United States in 2010. They use door-to-door sales people, “Avon ladies” primarily, and brochures to advertise. There are training centres for potential representatives, which also have a retail section with skin care products of a wide variety. Avon considers each representative to be running his or her own business.
With over 5 to 6 million sales representatives all over the world, it is a well-known company that is trusted. To find out more visit the website: http://www.avon.uk.com/PRSuite/home_page.page
Founded in Santa Monica, California in 1998, Beachbody if an American multinational corporation which uses MLM to sell fitness, weight loss and muscle building home exercise DVDs. The most famous of those being Tony Horton’s P90X and Shaun T’s Insanity. Beachbody combine challenging DVD-based workouts with easy-to-follow diet guidelines, nutritional supplements, a 21 day cleanse and great customer service.
Their support system is in the form of their other website Team Beachbody which has thousands of independent “Coach” distributers as well as online support and community. They want to help people achieve their goals and allow people to see results online to show that their products work.
With over 400,000 page views daily it is clear that they are popular among the public and receiving a lot of interest. One of the main points that make them good are the message boards which have over 1.26 million members which offers support and help, as well as people’s success stories. Not to mention the fact that they gain a lot of publicity from the infomercials that run frequently in the US.
To see more on the products see our investigation into HIIT training here: https://www.dietpillswatchdog.com/hiit-do-you-know-what-it-is/
It seems that some MLM companies are genuine and have the evidence to prove it and there are some that are a bit shady. You must remember that becoming a part of something that is MLM is risky as you often have to pay for the training and products meaning that you have to invest before you can earn.
You have the live and breathe the product you are promoting, which is why a lot of distributers use Instagram, Twitter and Facebook as a platform to do this. They can reach a wide audience and show exactly what the product does. MLM can work for people with busy lifestyles or mothers with kids and looking for a bit of work on the side. But you must be careful with the company you choose to work for.
Disclaimer: Our reviews and investigations are based on extensive research from the information publicly available to us and consumers at the time of first publishing the post. Information is based on our personal opinion and whilst we endeavour to ensure information is up-to-date, manufacturers do from time to time change their products and future research may disagree with our findings. If you feel any of the information is inaccurate, please contact us and we will review the information provided.