What is the difference between a piramid scheme and Tupperware’s business?
In: 6
Tupperware actually has a product that’s actually better than virtually any of it’s competitors. The company is not dependent on recruiting new members to stay in business.
## Tupperware is what is called a Multi-Level Marketing Scheme.
## Not all MLMs are Ponzi – here are some tests
**1. Focus on Products or Services** – The primary focus of the MLM company should be on selling products or services to customers outside the company. If the emphasis is primarily on recruiting new members and making money through their fees, it may be a red flag.
**2. No Buying-In** – Members should not be required to pay large fees or purchase large amounts of inventory in order to join the MLM company. The focus should be on selling products or services, not on buying in or recruiting others to do so.
**3. Legitimate Products or Services** – The products or services offered by the MLM company should be legitimate and in demand, with a fair price and good quality. If the products or services are overpriced or of low quality, it may be a red flag.
**4. Clear Compensation Plan** – The MLM company should have a clear and transparent compensation plan that outlines how distributors can earn money and the requirements for doing so. It should be fair and achievable, with no hidden or undisclosed terms or conditions.
**5. No Guaranteed Income** – There should be no guarantee of income or earnings in the MLM company. Members should be aware that their income will depend on their own efforts and the sales they generate, not on promises made by the company.
**6. Open Books** – The MLM company should be open and transparent about its financials, including revenue, expenses, and profits. Members should have access to this information and be able to verify its accuracy.
**7. Reasonable Income Claims** – The MLM company should not make unrealistic income claims or promises of quick and easy money. Members should be aware that building a successful business takes time, effort, and dedication.
Tupperware checks off most of these criteria so is not a ponzi scheme.
## Tupperware is what is called a Multi-Level Marketing Scheme.
## Not all MLMs are Ponzi – here are some tests
**1. Focus on Products or Services** – The primary focus of the MLM company should be on selling products or services to customers outside the company. If the emphasis is primarily on recruiting new members and making money through their fees, it may be a red flag.
**2. No Buying-In** – Members should not be required to pay large fees or purchase large amounts of inventory in order to join the MLM company. The focus should be on selling products or services, not on buying in or recruiting others to do so.
**3. Legitimate Products or Services** – The products or services offered by the MLM company should be legitimate and in demand, with a fair price and good quality. If the products or services are overpriced or of low quality, it may be a red flag.
**4. Clear Compensation Plan** – The MLM company should have a clear and transparent compensation plan that outlines how distributors can earn money and the requirements for doing so. It should be fair and achievable, with no hidden or undisclosed terms or conditions.
**5. No Guaranteed Income** – There should be no guarantee of income or earnings in the MLM company. Members should be aware that their income will depend on their own efforts and the sales they generate, not on promises made by the company.
**6. Open Books** – The MLM company should be open and transparent about its financials, including revenue, expenses, and profits. Members should have access to this information and be able to verify its accuracy.
**7. Reasonable Income Claims** – The MLM company should not make unrealistic income claims or promises of quick and easy money. Members should be aware that building a successful business takes time, effort, and dedication.
Tupperware checks off most of these criteria so is not a ponzi scheme.
## Tupperware is what is called a Multi-Level Marketing Scheme.
## Not all MLMs are Ponzi – here are some tests
**1. Focus on Products or Services** – The primary focus of the MLM company should be on selling products or services to customers outside the company. If the emphasis is primarily on recruiting new members and making money through their fees, it may be a red flag.
**2. No Buying-In** – Members should not be required to pay large fees or purchase large amounts of inventory in order to join the MLM company. The focus should be on selling products or services, not on buying in or recruiting others to do so.
**3. Legitimate Products or Services** – The products or services offered by the MLM company should be legitimate and in demand, with a fair price and good quality. If the products or services are overpriced or of low quality, it may be a red flag.
**4. Clear Compensation Plan** – The MLM company should have a clear and transparent compensation plan that outlines how distributors can earn money and the requirements for doing so. It should be fair and achievable, with no hidden or undisclosed terms or conditions.
**5. No Guaranteed Income** – There should be no guarantee of income or earnings in the MLM company. Members should be aware that their income will depend on their own efforts and the sales they generate, not on promises made by the company.
**6. Open Books** – The MLM company should be open and transparent about its financials, including revenue, expenses, and profits. Members should have access to this information and be able to verify its accuracy.
**7. Reasonable Income Claims** – The MLM company should not make unrealistic income claims or promises of quick and easy money. Members should be aware that building a successful business takes time, effort, and dedication.
Tupperware checks off most of these criteria so is not a ponzi scheme.
The reason why most MLMs are said to be pyramid schemes is that their business model relies more on attracting new salespeople who will then purchase thousands of dollars of items to sell, rather than selling products to end-market consumers. But often the products are crappy or a lot of the products are crappy, or the market is oversaturated, meaning that ultimately, it’s not possible to sell a lot of items. So the salespeople are convinced to purchase products so that they can have their own business, yet it’s extremely obvious that this whole process is a lie because like 98% of these folks lose money, and like 90-something percent of all the company profits come not from end-consumer purchases but from these other salespeople lower down in the pyramid being convinced by those higher in the pyramid to purchase items. But no new money is being generated, it’s just salespeople buying products they can’t sell.
Tupperware was created with a different model. Initially it started in the 1950s because people were unfamiliar with this type of plastic and how to use it. At Tupperware parties, the Tupperware ladies (almost invariably women; stay-at-home mothers would couldn’t otherwise work) would show other women how to use the Tupperware. How long the food would last. What to put in it. Those kinds of things. And then there would be a payment sheet where customers would pick items for purchase and pay for them. So the Tupperware salesperson wasn’t buying $2000 worth of inventory, usually without being allowed to chose what items they wanted, and then hoping that the market would be there for the products, or else they’d be out $2000 but their “upline” person would be making a profit from their purchase. Instead, the salesperson would only be ordering items that had already been ordered by customers. They wouldn’t end up with massive amounts of unsold inventory. Tupperware was a popular product that people wanted. So in these ways, you could make a profit.
In contrast, you have some of these MLMs like LuLaRoe where you had to pay them X amount of money for a starter kit of leggings that you can’t choose. You’d get whatever sizes, patterns, and amounts they sent you. Maybe hideous patterns no one would want, or sizes few could wear. That’s ideally not how retail clothing places operate. You have buyers whose job it is to pick items to order because they know their customers and will purchase items they think their customers will like. And also since LuLaRoe or whichever MLM is encouraging as many sales people as possible, you inevitably end up with an over-saturated market with too many salespeople and not enough customers. Because the salespeople ARE your customers–you make a lot more money by recruiting “down-line” people to buy $2000 starter kits in bulk than you do trying to find someone to buy your $20 pair of hideous leggings that you only have in sizes that are too small, and that 5 other people are trying to sell as well.
Those problems are avoided by having people only order the items they want, that there are guaranteed customers for, with Tupperware.
The reason why most MLMs are said to be pyramid schemes is that their business model relies more on attracting new salespeople who will then purchase thousands of dollars of items to sell, rather than selling products to end-market consumers. But often the products are crappy or a lot of the products are crappy, or the market is oversaturated, meaning that ultimately, it’s not possible to sell a lot of items. So the salespeople are convinced to purchase products so that they can have their own business, yet it’s extremely obvious that this whole process is a lie because like 98% of these folks lose money, and like 90-something percent of all the company profits come not from end-consumer purchases but from these other salespeople lower down in the pyramid being convinced by those higher in the pyramid to purchase items. But no new money is being generated, it’s just salespeople buying products they can’t sell.
Tupperware was created with a different model. Initially it started in the 1950s because people were unfamiliar with this type of plastic and how to use it. At Tupperware parties, the Tupperware ladies (almost invariably women; stay-at-home mothers would couldn’t otherwise work) would show other women how to use the Tupperware. How long the food would last. What to put in it. Those kinds of things. And then there would be a payment sheet where customers would pick items for purchase and pay for them. So the Tupperware salesperson wasn’t buying $2000 worth of inventory, usually without being allowed to chose what items they wanted, and then hoping that the market would be there for the products, or else they’d be out $2000 but their “upline” person would be making a profit from their purchase. Instead, the salesperson would only be ordering items that had already been ordered by customers. They wouldn’t end up with massive amounts of unsold inventory. Tupperware was a popular product that people wanted. So in these ways, you could make a profit.
In contrast, you have some of these MLMs like LuLaRoe where you had to pay them X amount of money for a starter kit of leggings that you can’t choose. You’d get whatever sizes, patterns, and amounts they sent you. Maybe hideous patterns no one would want, or sizes few could wear. That’s ideally not how retail clothing places operate. You have buyers whose job it is to pick items to order because they know their customers and will purchase items they think their customers will like. And also since LuLaRoe or whichever MLM is encouraging as many sales people as possible, you inevitably end up with an over-saturated market with too many salespeople and not enough customers. Because the salespeople ARE your customers–you make a lot more money by recruiting “down-line” people to buy $2000 starter kits in bulk than you do trying to find someone to buy your $20 pair of hideous leggings that you only have in sizes that are too small, and that 5 other people are trying to sell as well.
Those problems are avoided by having people only order the items they want, that there are guaranteed customers for, with Tupperware.
A pyramid scheme is any set-up where you “buy in” – pay some cost to get in to the pyramid scheme; then after you’ve gotten some number of other people to pay the cost to get in, you get a payout larger than you put in. The exact details vary from setup to setup, but the general pattern exists.
Tupperware is a “Multi-level marketing” (MLM) setup. The idea of an MLM is that I have a product, and if you sell the product for me, I’ll give you a cut. Or, you can find people to sell the product for you, and give them a cut of the cut I give you. MLMs are potentially different than pyramid schemes because the money is coming from selling a product, not from getting people to buy in to the idea of selling the product.
However, many MLMs start taking in money from “sales kits” or “network training” – getting people who are in theory selling the product to buy a separate set of products. And that’s the point when they become practically identical to pyramid schemes: when the money isn’t coming from selling the product, with the “buy in” coming in the form of paying for a sales kit, paying for various trainings, etc.
The reason why most MLMs are said to be pyramid schemes is that their business model relies more on attracting new salespeople who will then purchase thousands of dollars of items to sell, rather than selling products to end-market consumers. But often the products are crappy or a lot of the products are crappy, or the market is oversaturated, meaning that ultimately, it’s not possible to sell a lot of items. So the salespeople are convinced to purchase products so that they can have their own business, yet it’s extremely obvious that this whole process is a lie because like 98% of these folks lose money, and like 90-something percent of all the company profits come not from end-consumer purchases but from these other salespeople lower down in the pyramid being convinced by those higher in the pyramid to purchase items. But no new money is being generated, it’s just salespeople buying products they can’t sell.
Tupperware was created with a different model. Initially it started in the 1950s because people were unfamiliar with this type of plastic and how to use it. At Tupperware parties, the Tupperware ladies (almost invariably women; stay-at-home mothers would couldn’t otherwise work) would show other women how to use the Tupperware. How long the food would last. What to put in it. Those kinds of things. And then there would be a payment sheet where customers would pick items for purchase and pay for them. So the Tupperware salesperson wasn’t buying $2000 worth of inventory, usually without being allowed to chose what items they wanted, and then hoping that the market would be there for the products, or else they’d be out $2000 but their “upline” person would be making a profit from their purchase. Instead, the salesperson would only be ordering items that had already been ordered by customers. They wouldn’t end up with massive amounts of unsold inventory. Tupperware was a popular product that people wanted. So in these ways, you could make a profit.
In contrast, you have some of these MLMs like LuLaRoe where you had to pay them X amount of money for a starter kit of leggings that you can’t choose. You’d get whatever sizes, patterns, and amounts they sent you. Maybe hideous patterns no one would want, or sizes few could wear. That’s ideally not how retail clothing places operate. You have buyers whose job it is to pick items to order because they know their customers and will purchase items they think their customers will like. And also since LuLaRoe or whichever MLM is encouraging as many sales people as possible, you inevitably end up with an over-saturated market with too many salespeople and not enough customers. Because the salespeople ARE your customers–you make a lot more money by recruiting “down-line” people to buy $2000 starter kits in bulk than you do trying to find someone to buy your $20 pair of hideous leggings that you only have in sizes that are too small, and that 5 other people are trying to sell as well.
Those problems are avoided by having people only order the items they want, that there are guaranteed customers for, with Tupperware.
A pyramid scheme is any set-up where you “buy in” – pay some cost to get in to the pyramid scheme; then after you’ve gotten some number of other people to pay the cost to get in, you get a payout larger than you put in. The exact details vary from setup to setup, but the general pattern exists.
Tupperware is a “Multi-level marketing” (MLM) setup. The idea of an MLM is that I have a product, and if you sell the product for me, I’ll give you a cut. Or, you can find people to sell the product for you, and give them a cut of the cut I give you. MLMs are potentially different than pyramid schemes because the money is coming from selling a product, not from getting people to buy in to the idea of selling the product.
However, many MLMs start taking in money from “sales kits” or “network training” – getting people who are in theory selling the product to buy a separate set of products. And that’s the point when they become practically identical to pyramid schemes: when the money isn’t coming from selling the product, with the “buy in” coming in the form of paying for a sales kit, paying for various trainings, etc.
A pyramid scheme is any set-up where you “buy in” – pay some cost to get in to the pyramid scheme; then after you’ve gotten some number of other people to pay the cost to get in, you get a payout larger than you put in. The exact details vary from setup to setup, but the general pattern exists.
Tupperware is a “Multi-level marketing” (MLM) setup. The idea of an MLM is that I have a product, and if you sell the product for me, I’ll give you a cut. Or, you can find people to sell the product for you, and give them a cut of the cut I give you. MLMs are potentially different than pyramid schemes because the money is coming from selling a product, not from getting people to buy in to the idea of selling the product.
However, many MLMs start taking in money from “sales kits” or “network training” – getting people who are in theory selling the product to buy a separate set of products. And that’s the point when they become practically identical to pyramid schemes: when the money isn’t coming from selling the product, with the “buy in” coming in the form of paying for a sales kit, paying for various trainings, etc.
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