When the economy is uncertain and massive lay-offs occur, many ordinary people turn to multi-level marketing (MLM) as a form of a financial bail-out. MLM basically involves getting more downlines to sell the product. The more people whom you convince to sell, the earlier and bigger your capital returns. Many people fall prey to MLM’s promises of quick and easy cash, as they don’t have the luxury of time and money to sit down and think it over rationally.
Here are a few things that multi-level marketers will often try to have you believe and why you should think otherwise:
Big Talk No. 1: It’s better to earn in MLM than in conventional ways
Real Talk: Barely 1% of MLM distributors break even with the model. Why this dismally low figure? The first reason is that convincing people to buy products is hard. How much harder would it be to get them to sell? Chances are that only a few people will be willing to become your downline, and even if you manage to get ten or more people to become distributors, how many will be willing to buy those outrageously-priced products that purport to have some heavenly quality?
Because it takes time and a lot of convincing to sell and acquire downlines, the MLM business structure is too top-down heavy. In a structure of one million distributors, only the first 1,000 can earn a sustainable income. MLM is unable to adapt to changing market demands because it’s primary purpose is to get as many people as possible to sell. Since MLM does not impose a limit on the number of distributors in an area, the same ones compete for a share of the market in the same area, reducing its effectiveness.
The problem with MLM is that it takes on a structure and behavior that resembles gambling instead of marketing, with the percentage of winners much smaller than most people thought. In fact, a researcher from the Consumer Awareness Institute found out that you are 22 to 286 times more likely to win a game of roulette in Las Vegas than to profit in an MLM distributorship.
Big Talk No. 2: Many people do network marketing to sell products
Real Talk: MLM’s touted advantage is it taps the power of network marketing through personal retailing. However, with the advent of the internet, personal retailing, which includes face-to-face network marketing and door-to-door selling, is increasingly becoming obsolete. The internet has changed the way people buy things, and network marketing appears as a less convenient way for most people to purchase a product. They can simply go online and click! In addition, there are many cheaper alternatives to the products that MLM firms sell. For these reasons, most distributors find it difficult to sell. They, therefore, sell their products to their friends and relatives instead. Only so much income can be generated here.
Big Talk No. 3: MLM is the marketing of the future
Real Talk: Even if you do your MLM online, there is a lot of competition. Both online and offline alternatives often provide cheaper and more convenient options for consumers. Therefore, don’t expect MLM to displace online retail stores and shopping malls any time soon. In fact, proof of MLM’s lack of competitiveness is MLM’s measly less than a 1% share of the total US retail market. The rest came from – you guessed it – malls and retail stores, offline and online.
However, even this 1% figure does not account for the fact that the sales MLM makes mostly come from the money of the distributors who buy their own products to secure their position in the MLM’s sales structure. Also, notice how MLM promoters spin their reason to have you onboard. They make you hope that you’ll pick up someone rich enough to buy your expensive, exclusive products. That hope turns out to be a false one as MLM’s share of the US retail market tells you.
Big Talk No. 4: There is fulfillment in MLM
Real Talk: Face the hard figures–95% of those in the MLM industry eventually quit within ten years, while less than 1% profit from MLM. Compare those rates with 64% of small business owners who close shop within the same span. Confront MLM firm’s promises of gold and glitter with these hard facts. What would make those 95% leave so early in the trade? Aside from not really earning anything, the reason the 95% left is that they found out for themselves how impossible earning prospects are in MLM. This means their efforts are going to waste. This, in turn, speaks volumes about whether or not you will really find meaning and fulfillment as an MLM distributor. We provide extensive analysis of products & services that we think might be a scam, check out our content today to ensure that you stay safe.