Do mlm businesses work?

[Panky123]

Does starting a multi-level marketing business work?

What are the pros and cons?

 

[Jim2k]

I'd assume the person who makes the most out of a MLM business is the one who starts it. Never been involved myself so couldn't give you the pros n cons I'm afraid.

 

[midnight_caller2002]

Yes. End of.

It doesn't work for lots of people for lots of reasons. But it definitely works.

 

[garyk]

Scheme creators and early adopters yes.

Breadcrumbs for the rest.

Its a tired and dated concept now.

 

[STDFR33]

You make money by recruiting new people. The only products that get sold are to newbies as stock.

 

[Ashley_Price]

I believe MLM can work... however, because it has so much negative press, you're going to have to choose the company and the product carefully to have any success. You are also more than likely going to have to work twice as hard to get over people's negativity to MLM.

There are businesses out there that appear to be MLM but don't fit the exact description. The main one I am thinking of is Avon, which has been going since 1886 - so long before the term MLM was ever even known.

You make money by recruiting new people. The only products that get sold are to newbies as stock.

MLM is often mistaken for the now illegal "pyramid schemes", which is kind of what is being described above.

Pyramid Schemes appeared in the sixties and seventies and the idea was you would buy stock and then sell it on to the next person, for a higher price than you paid. Of course, the ones who got in early were the ones to profit the most, those further down the chain found they had bought the product at such an inflated price they couldn't sell it on.

With most reputable MLMs you only order stock when you have a sale (apart from those items you need for your presentation case, or whatever). You don't have to buy a lot in advance. You (usually) buy the stock direct from the company, and all reps pay the same price (although you may get discounts if you buy significant quantities).

You can get others involved in selling the products, etc., and they become your "down line" and then you get a percentage of all the sales they make. But just like you, they buy the products direct from the company, not from you.

So, take your time and research the company fully. I would also research your local area to check if there are already one or two reps selling the same stuff. I go to networking events and can sometimes bump into two or three reps from the same MLM (Forever Living, Herbalife, etc.). Speak to other reps and see what their experiences are. But, you have to remember to balance out all the negative views.

 

[webgeek]

Virtually every sale of goods type business is a MLM venture.

People buy from A and sell to B who sell to C who sell to D.

If products are only sold to fuel the organisation, and not used by anyone in the course of their lives otherwise, it's a scam to be avoided unless you enjoy messing about those you know and trust.

 

[Ashley_Price]

Virtually every sale of goods type business is a MLM venture.

People buy from A and sell to B who sell to C who sell to D.

As I have said in my post, this doesn't happen in "reputable" MLM companies, you buy the products direct from the company - not from the person one up from you in the chain. This was the pyramid schemes of the 1960s & '70s.

 

[webgeek]

I'm agreeing with you Ashley. The 'average' MLM is a thinly guised Ponzi scheme.

 

[Ashley_Price]

Sorry, @webgeek. It just surprises me how many people have the wrong idea about MLM but that's mainly because of what they have read on the internet and in the media.

Of course, there are going to be disreputable firms but the majority are legal and respectable (otherwise they wouldn't have been trading so long).

 

[STDFR33]

Sorry, @webgeek. It just surprises me how many people have the wrong idea about MLM but that's mainly because of what they have read on the internet and in the media.

Of course, there are going to be disreputable firms but the majority are legal and respectable (otherwise they wouldn't have been trading so long).

You only have to look on social media to get an idea of who the only winners are.

The people pushing the likes of Forever Living, Juice Plus, Nu Skin, Herbalife etc are not selling products, they are usually advertising 'fantastic opportunities'.

If they recruit another distributor, that distributor buys stock, and in turn the person who has recruited them gets a cut.

Lots of people end up giving it up and using the products themselves.

 

[Ashley_Price]

The people pushing the likes of Forever Living, Juice Plus, Nu Skin, Herbalife etc are not selling products, they are usually advertising 'fantastic opportunities'.

If they recruit another distributor, that distributor buys stock, and in turn the person who has recruited them gets a cut.

I do mention in my post above that a rep gets a percentage from the sales of their down-line.

As I also mentioned in my post, you usually only buy the product when you actually have an order for it.

As it happens, my niece is a rep for Juice Plus and if you followed her on Facebook you would see she does sell the products. I was in networking group and a fellow member was selling Synergy products - rather than trying to build a down-line. You will find different people doing what suits them in MLM.

However, I think there are always going to be those who think it is a get rich quick scheme. All they have to do is get other people selling the products and then they reap the rewards. So, when they realise they actually have to put a lot of work into it (whether it's selling the product or trying to build a down-line) they give up.

When you think about it, in theory I could turn Pavilion into an MLM - hey, now there's an idea!

 

[webgeek]

Despite having 100,000+ reps, being publicly traded and to many a household name, Primerica Financial Services and their mantra of selling to all your family, then friends - is not a model that's conscionable, for me. Then again, I'm not a hard sell, take it whether you need it or not, kinda guy.

 

[Ashley_Price]

Despite having 100,000+ reps, being publicly traded and to many a household name, Primerica Financial Services and their mantra of selling to all your family, then friends - is not a model that's conscionable, for me

Oh, I completely agree. There are always going to be firms like this whose only interest is getting as much money as possible, without actually considering who promotes their products or service.

It's why I say anyone considering MLM should research the companies carefully, and not just pick the first one they come across that promises the earth.

 

[Chicharito]

I agree with @The Accountancy Lab 100%.

Most of the main MLM companies are disguised pyramid schemes. It is disguised by the product for sale but nobody cares about selling products. To make money you must sell the 'opportunity' and recruit new sellers loading them up with demonstrators taking your cut every time. Sure you can sell product to end users but you won't make good money this way.

In my opinion you can make money from it but it is very unethical especially as people tend to involve their friends and family. From what I have seen, people involved in MLM are brainwashed and believe they are offering value and even think they are improving lives but the reality is they are involved in a cash pyramid scheme.

 

[garyk]

Virtually every sale of goods type business is a MLM venture.

People buy from A and sell to B who sell to C who sell to D.

If products are only sold to fuel the organisation, and not used by anyone in the course of their lives otherwise, it's a scam to be avoided unless you enjoy messing about those you know and trust.

Yes although there are typically only 2/3 levels as opposed to MLM where there could be 3, 5 even 7 levels, hence the price of the product is normally much higher.

As I have said in my post, this doesn't happen in "reputable" MLM companies, you buy the products direct from the company - not from the person one up from you in the chain. This was the pyramid schemes of the 1960s & '70s.

Actually it does, most MLM companies, even the 'reputable' ones will have an 'autoship' where each distributor agrees to 'buy' X amount of product each month. Now you don't *have* to pay each month but the T's and C's will typically state that if you don't you will not receive commission from others in your network. So what happens? Everyone is paying for autoship product every month.

Its a great way for the creators of the scheme to get guaranteed sales.So I think you will find most distributors are paying out each month.

 

[billmccallum1957]

Does starting a multi-level marketing business work?

What are the pros and cons?

Yes, it can work, but much depends on what you want to sell, Kleeneze have been in business 80 years and many of the early starters made a great deal of money.

Pro's... a team of sales people who don't get paid unless they sell.

Con's... lots of people give up early.

 

[webgeek]

Odds of getting the right solution when your salesperson is starving from no commission? Zero.

Franchise vs MLM - the line gets grey and blurry.