I absolutely loathe multi level marketing. If you're unfamiliar with the term, multi level marketing (MLM) is a business model that relies on recruiting as the primary basis of their sale structure. MLMs are like pyramid schemes, the loophole being that they sell specific products as a means of masking their true intentions. They pretend to function as a regular business that merely sells products to their customers. It's shocking that these companies can get away with this. But there are many that still function to this day.
You may have even heard of one.
Some of the most notable include Amway, CutCo, Monat, Arbonne, and Herbalife, just to name a few. They all sell products and most importantly -- they all sell "the opportunity."
"The opportunity" is really what recruits are selling you -- not their product. They sell the dream that you can become your own boss. You can make money at your leisure. You can clock in and out when you please. You can live a lavish lifestyle and get a company car and go on company vacations and go on company retreats without lifting a finger or working off your couch.
You get a direct message in your personal Instagram account, "Want to become your own boss babe?" You get excited. You need a side hustle. You're regular job doesn't pay much and it's alot of work. You've never run a business before but now you can! You jump at the idea because maybe, just maybe, you could be the 1% of sales rep that makes thousands. You could win the boss babe lottery.
Unfortunately, "the opportunity" is slim to none.
According to the data, 99% of people who join MLMs do not turn a profit. But how is this possible? How can a business still function when 99% of their sales people do not make money? To put it simply, it is because YOU are the customer. Yes, boss babe, you! Recruits are prompted to purchase company products, because how can you represent a brand without knowing their products, right? Some even require you to buy the products first so you have inventory to sell. This is the case for MLMs like LulaRoe or Herbalife. In essence, you are a wholesale retailer. You're told to buy and buy and sell and sell - but you've never done this before, you've had limited training, you aren't business savvy, you've never run your own store or built a strong list of sales leads or influenced other people to follow your risky career path... But those things don't matter. Those things make you perfect. You are the ideal recruit.
Some MLMs don't even require you to have physical product like Monat or Younique, you're simply given a link to your own online store where you can have your customer to purchase directly. Think Shopify drop shipping. But how can you really sell a product without ever using it? You can't, or at least you shouldn't. Maybe you swear by your Avon moisturizer and already are familiar with the brand. Most likely you're looking for a simple side hustle and have never used the product. Let's face it, you will buy product regardless– for yourself or to sell.
So now you've purchased a fuck ton of Shein-quality polyester leggings to start your business, paid a ridiculously large business start-up fee, and now you're ready to start selling! The recruit who signed you up (called your Up Line) told you that this job is a great side hustle-- you have super flexible hours and you can make your own schedule. They forgot to mention the daily company meetings you'd have to attend as well as mandatory training sessions that are completely unpaid...
In these top secret company Zoom meetings, top sellers will motivate the team with some pep talk.
"If you're not making money it's because you're not working hard enough!"
"It's your negative energy getting in the way of sales."
"You guys need to be investing in your future!"
A month in with two sales to your parents and you're down on yourself. This endeavor has proven you may not be the boss babe you thought you could be. But I'm here to tell you - this time, you're not the problem! There's plenty of reasons you can't sell these products.
They're Expensive: Most MLM products are sold at a much higher mark up than other normal store brands. This is because people are purchasing the products through individual retailers (like yourself) that are making commission. But in our world where you can just about get anything from the internet or a store without having to pay an up charge to the middleman... why the heck would you buy a product from an MLM? Look at Monat haircare. Their classic shampoo is sold for $38 not including shipping. The average bottle of shampoo in the US ranges from $3-30. It's a ridiculously steep price for a product with little to no cred and much less than stellar reviews...
Some Products Do Better Than Others: Not all MLMs are like Monat. Some actually do have good name-brand recognition and have done very well selling via this business model. Take Cutco for example. My family personally owns a knife set from them and I know plenty of people who do in our upper-middle class suburban area. Their knives are actually pretty good. Sales reps will sell door-to-door and have a pretty decent conversion rate. Maybe it's the knives, or the more personal sales, or maybe it's because Cutco got pretty popular before Amazon was a thing. But don't let this fool you. Cutco is not the norm, and finding a decent or reputable MLM product is few and far between. Also keep in mind just because you are selling a good product doesn't necessarily ensure success. Most people simply do not know the product or trust the brand. Some products don't really need brand trust but rely heavily on over exaggerating their product's benefits. For that reason, MLMs that sell health and wellness products take up the majority of the market. Popularly recognized MLMs like Herbalife, BeachBody, and Arbonne sell meal replacement shakes, vitamins, and supplements. YoungLiving and DoTerra sell essential oils. Because health claims can be extremely vague and subject to easily false claims, the FDA does not actually have to approve every wellness product sold in the US. How would you define a product as healthy? If you work for Herbalife, it's most definitely different than mine.
They Rely on Network Marketing: The products sold via MLMs are not any different than anything else out there. They rely on their recruits to personalize their sales pitch, better described as Network Marketing. Essentially, people are more likely to purchase something from someone they know and trust rather than a random sales person. This is how MLMs build a strong network of reliable followers. You've already trusted your recruit to bring you into this incredible "business opportunity." Influencers or affiliates seek brands they want to work with. They get a commission alone. But an MLM isn't usually something you found. It's something you were advertised. Its entire business model relies on networking-- interpersonal relationships that build trust and inform decision making. But this can lead recruits into bad territory. MLM recruits will say that their job is simply network marketing since they're just promoting a product that they love. But that's not really an accurate comparison... If you love a mascara and you tell your friend to buy it, you're not directly profiting off of that sale. Not everything you market is a sales pitch. We've seen this become a huge problem within the influencer community. Several years ago, YouTubers would promote products they loved on the internet to share advice with their followers. But since the capitalization of social media, YouTubers must now blatantly disclose when they are marketing a product through a paid promotional ad. It is much harder these days to find influencers that are not swayed by money to promote products and much harder to find honest, unbiased reviews. How can you trust someone loves the product when any random person can get paid selling it to you? MLMs rely on network marketing to be successful, but what happens when you run out of people to network to? There's only so many aunts and uncles that can buy your protein shake supplement once a month... Recruits then push outside of their personal networks and the real grimy sales work begins...
Selling is Hard: Your Up Line told you you're simply not working hard enough! If you wanna be a boss babe you have to put in the time and hard work! But didn't they tell you the hours were flexible and this would be an easy side hustle? The reality is that the vast majority of recruits cannot sell product because they are unequipped to do so. Your Up Line will tell you that the business will train you and with their special expertise they will set you on the path to success. But you are asked to purchase your own product and training materials, work without a base pay, and are not eligible for any employee benefits other than a silly meager product discount... Sounds like a shitty proposition to me. MLMs make it seem like anyone can be a sales person. Anyone can run a business. Anyone can be their own boss. Unfortunately, sales are difficult-- especially with poor training, poor products, and little to no leads. Recruits have been found to say just about anything to sell their products even if it isn't true. Herbalife has dealt with numerous lawsuits regarding false product claims made by sales reps. PureRomance, an MLM that sells sex toys to women has had similar problems with reps making ridiculous claims about their products. The natural conclusion-- numerous, expensive, relentless lawsuits and interpersonal deception.
It's Not About the Products Anyway: The main reason you can't really sell product is probably because the company doesn't actually care if you sell product. They want you to sell "the opportunity". They want you to recruit more people, to create your own Down Line sales team, and get more and more people to purchase starter kits and attempt to run their own businesses. The company zoom meetings I was telling you about focus primarily on recruiting rather than individual product sales. You then will collect commission from recruits and their sales in addition to your own. The 1% of reps with a substantial downline will receive much more from the work of other people than of their own. Sounds like... capitalism!
The truth of the matter is that MLMs sell a dream. A dream that only a mere 1% of reps will ever reach.
I've always wondered why people would ever join such a scam. A simple Google Search will pretty much discredit any reps promise of financial stability-- just check any MLM's income disclosure statement online... But the fact is, the stats don't really matter. It's the same way people continue to pour hundreds of thousands of dollars into the lottery. Or gamble their precious savings in online poker games. Even when the chances of winning are so ridiculously slim, there's always a chance to win. And when it comes to entrepreneurism, the opportunities this country was founded upon, why wouldn't you take a chance to succeed? If your friend, if someone, if anyone can start their own business, why can't you?
MLMs pose a striking similarity to the way our country operates. The winners win big and the losers lose hard. The winners shine bright in the spotlight. They are worshiped, adored, and cheered on by their downline of loyal followers. They are treated to grandiose vacations and luxury cars. They are leaders of the cult-- the poster children of success-- the kinds of people 99% of recruits consistently strive to be. But they are met with a much different fate. Hundreds and thousands cheer from the sidelines, doe eyed and bushy tailed, hungry for their ticket to success. They listen closely and intently to the people who's salary is made up of their hard earned cash. They are supported by peers alike-- working hard and struggling together-- sharing the same near-impossible dream of one day become the rich white lady on stage.
And if one fails, because the system failed them, move on over!
There will always be another hopeful person to take their place.
