If you get paid to bring people in under you, it is a pyramid scheme. Someone is getting rich over your short sightedness. You are not an entrepreneur or a business person you are making money by increasing the traffic and most cases increasing the financial purse when the person referred pays a particular amount of money.
MLM known as Multi-level marketing is a marketing strategy used by companies to get their products sold by non-salaried workers who buy the products with their money and sell the products with the aim climbing a ladder as they get more goods and bring more people in the system. The workers get their earnings from a pyramid or binary compensation commission system. MLM salespeople are to sell the products to end users and also convince them to become a part of the system so they can have down lines.
Multi- level marketing is sometime referred to as a Pyramid schemes and is often thought by some as illegal, while others say it is legal. MLM are highly profitable for the people making the money at the top of the tree, no two ways about it. So many companies disguise their practices just to remain in the game and make money.
There are so many businesses which uses MLM to sell their products for example, Tupperware, Usana, Mary Kay, New skin, Amway and a few others. The companies listed generating over 20 billion dollars in revenue yearly. Most of this companies have been tagged illegal in so many countries and have had to fight several legal cases in hundreds of millions in dollar. In 2010 Amway paid about 100 million dollars to settle a case, a court in Belgium ruled Herbalife a pyramid scheme in 2011 and in 2016 they settled a case for over 200 million dollars. The major advantage this companies have is that tell the court their revenue is generated from product.
Companies like this have a kind of scheme that doesn’t pay their representative that distributes for them, rather this distributing representatives spend money to purchase product from the company on discounted hyper inflated prices and sell them. From studies, a salesperson do not make much money from selling the product, rather they make money from recruiting people under them.
I had two friend who sold products for Golden Neo Life Diamite (GNLD) as sales people but currently aren’t selling again. When they first started, they came to me to sell the products and asked me to become a down line to one of them. They were good at promoting the products but the products weren’t things I wanted so I didn’t buy any. Being curious I asked if they had sold a reasonable amount of the product and the response was negative. Then I knew there was a problem, I asked them how a company makes much sales if 3 out of 5 people can’t buy their products, it was then they told me they already bought the product from the company and are either going to sell it or loss their money while they keep the product. To cut the long story, they ended up looking for ways to recruit people to sell the products to. After a period of time, they came back saying they were no longer interested and had product worth thousands that they could not sell.
I started asking myself;
- Why will a company sell what is not generally needed?
- Why do they need much down line salespeople?
- Do this sales people make good money?
- Is MLM worth the stress at all?