What You Need To Know and Avoid in Multi-Level Marketing
Multi-level marketing is a very popular term right now. Chances are you received an
invitation to join one by a friend or relative. You probably received an email
or two from multi-level marketing companies. The idea seems simple enough and
the opportunity to make a decent profit is too good to ignore. Just buy the products at wholesale price and
sell them to your relatives, friends, and even strangers.
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On the other hand, you also receive warnings about
the dangers of joining such enterprise. Many multi-level companies are exposed
as nothing more than pyramiding schemes. If you earn more in convincing other
people to sell the product instead of selling the product yourself, then it’s
more likely a scam. In a pyramiding scheme, the recruiter earns commission from
the products that his or her recruits bought from the company. Nevertheless, a
lot of popular companies use multi-level marketing to sell their products. Here
is a list of the most successful ones.
The cosmetic company started network selling as far back as the late 19th
century. Avon started the direct marketing plan as a way to generate sales and
profit. Avon is probably the oldest and most popular multi-level marketing
company in the United States. You probably have met or seen one of these “Avon
Amway is one of the first companies to adopt multi-level marketing as its business
model. The company sells a variety of products ranging from beauty, health, and
home care products. Amway was started by two business partners, Jay Van Andel
and Richard DeVos in 1959. It started in Michigan but the company now has
offices and distribution centers all over the world. Amway’s global annual sales
are estimated to be around $10 billion.
Amway was also accused several times of running a pyramiding scheme but the Federal Trade
Commission disagrees. The company do not pay its distributors to recruit others
nor does it require them to buy a large inventory that couldn’t be sold easily.
Distributors also need to maintain a certain amount of retail sales in order to
stay with the company.
Herbalife is another multi-level marketing business that sells nutrition supplements,
weight management, and personal care products. The company was started by the
late Mark Hughes in 1980. Hebalife is now present in almost 100 countries with
more than 3 million independent distributors worldwide.
Distributors earn profits through product sales and commissions from the MLM compensations. For
example, a distributor gets a cut for every sales made by the people who he
recruited. In the United States, around 60,000 Herbalife distributors received
some kind of income from their sponsored recruits.
Tupperware started by selling plastic containers as food storage. The idea was new back
then but you can see how popular it is even today. In the 1950s the company did
not sell their wares in stores. Tupperware instead recruited independent
distributors and sell the products at home.
They invite potential customers by hosting “Tupperware parties”.
currently, the company has now made its products available in stores. Still, “Tupperware
parties” still accounts most of its sales. Independent sellers also earn
commission from recruiting other people but they still earn a lot from the
How to Tell if the MLM is Legitimate
The FTC considers the multi-level marketing as a legal business model but not pyramiding
schemes. How can you tell if the company
is legitimate or not? The FTC has made a list for you to watch out for.
- If your profit mainly relies from the number of people you recruit and the money
they pay, it’s most likely a scam.
- The company forces you to purchase a lot of inventory that will take a while to
- To remain in the good graces, of the company, you have to buy a lot of unwanted
- The company make claims of selling miracle products or high profits, you should ask
the marketer to back-up their claims.
- Watch out for fake references some unscrupulous promoters use to promote their plan.
The important thing to remember is you can make money selling the product alone. On
the other hand, if you only get paid from the people you recruit, then it’s
better to walk away.