From my basic knowledge of mlm, you are basically just recruiting more people to work in a particular company, right? Why are so many people against mlms if you’re just helping people get jobs?
Edit: Okay I understand now
In: 2
They convince people of unrealistic income potential, forcing them to buy a surplus of product to vend that never sells.
MLM’s are predatory as fuck that usually target women and minorities for one and they’re not real jobs with real benefits or promotional potential. You’re just a contractor shill for a company with garbage products. MLM’s are also notorious for being disingenuous about the income potential, most people that join don’t make any money let alone a living wage.
Source: https://opportunity.herbalife.com/Content/en-US/pdf/business-opportunity/StatementAverageCompensation2011EN.pdf
It’s not a typical job, but rather a job that you have to pay to get, and hope that you can make the money back by selling the product or selling membership. Basically, the top people of the MLM will attract investors. They will tell the investor, “with small price of $10,000 per month you can become a member of the MLM family, and become a salesperson for Snake Oil.” Now, they may not charge you $10,000 upfront, but disguise that fee in other ways. They might say that you have to pay for “training” or that you need to buy a certain amount of product from the top dogs for month in order to remain “licensed.” The idea is that you pay them $10,000 per month because you expect to make more than that in sales of Snake Oil per month. However, Snake Oil is garbage and nobody buys it, so you have a real hard time selling it. The only way they can really make money is buy selling memberships themselves. So, the middle people go to other lower people and give them the same spiel. For every $10,000 investment they sell, the middle people get to maybe keep $1,000 of it, while the rest goes to the top dogs.
This is basically a pyramid scheme, but has the slightest hint of real business. Technically, you *could* sell $10,000 of Snake Oil per month, but is realistically not going to happen. The only way to avoid going bust is to get others to invest their $10,000.
Because the concept behind MLMs is to make people pay to get that job, pay for the training, the tools needed and product samples. And the products they are tasked to sell is so bad that they have a very hard time selling any of it unless they exploit their friends and family by emotionally manipulating them into buying it. The only way to make the money back is to recruit others who will spend similar amounts of money getting the job as this gives some kickback to the ones referring them. So basically it is a trap and most of the people given a job just end up with less money then before.
The income for the “job” is usually some form of commission on products sold, including your own purchases. A lot of them have certain purchase requirements as well. Those commissions vary but rarely generate enough income to cover the required purchases. This means you need to recruit people to be part of your team and once they’re linked to you, you get commissions on their sales too.
But now those people you recruited need to recruit others to make purchases to stay ahead of the purchase requirements. And then another level of people below them. The people at the lowest level are always putting in more money than they’re getting out.
The real problem is that in a given area, you will eventually run out of people willing to join at the bottom level. And then the people at the bottom level who are recruiting start to get disillusioned because they’re not making money so they quit. Which reduces the earnings of those above. And so on. And so on. Eventually, the whole pyramid collapses.
MLMs had another name before. we called them Pyramid Schemes.
the issue remains the same on both, they effectively dont sell to actua lconsumers, they are selling to other “salesman” that is under them, they dont care if those ppl actually sell or not as long as they keep coming back to buy more and recruit more ppl down the line ot force more purchases. they dont care if you sell your stock, they just want you to buy more off them.
they had to rebrand ot MLMs because its was the legal way to avoid the folly of pyramid schemes..a pyrmaid scheme is illegal because nothnig is being sold, an MLM tries ot dodge this by selling something…just not ot end consumers(as often the goods they sell are worthless)
Most mlm are scams. Basically using social pressure and Facebook algorithms to sell more product to make the owners of the brand lots of money.
A lot of them require you to buy product in order to become a salesman, but in the end a lot of the brands income is from people who bought into it for the purpose of becoming a salesmen but never turned a profit. They make more money selling the idea that you could be a salesman than they do actually selling product.
When you work for a mlm no one is paying your hourly wage, you are slave labour for that brand.
Some mlm that were actually profitable for everyone involved decide to cut out all the middle men. Lia Sofia was a jewelry mlm that decided to just drop all their mlm people one day and sell directly via their website/Amazon so all the mlm people were basically fired with no ability to claim unemployment, no ability to be reimbursed for unsold show products they were left with, etc.
Look at Amazon delivery drivers and other jobs that are contracted out. Brands contract out work instead of paying employees to do it because it is more profitable for the brand that way. If there was lots of easy money to be made they wouldn’t be contracting it out.
Think of every MLM as a scam. Multi level marketing is supposed to “make you rich” by convincing you to sell these products and trap your friends.
Here’s the catch you make more money for every person you refer. So in a perfect world. You will sell then get your friends on board to sell. In turn you will receive a portion of their sales profits and you will get big. Right.
Nope what happens is you pay an up front fee. Say 500$ plus a business license. Then you can sell these products that few people actually want.
Once your done selling crap to all your friends your customer pool has dried up to nothing. Usually this happens before you even make the initial start up costs back. Then the only way to make money is get more signups by hosting meetings.
In the end everyone loses except the few high ranking lifetimers that sold you on this lie.
lol
In a normal company, if you work hard, you get promoted. And when you get promoted, there are some laws that dictate you should be paid roughly the same as other people who have had that position. We consider this fair. If you start as a worker then become a manager, there’s not a good reason why some managers should make 10x the money you do for the same amount of work. At the same time, if you work harder you can argue you deserve a promotion. You make more money by doing the thing you were hired to do.
In an MLM, you make money based on how much money the people you recruited are making. This is a very different kind of promotion scheme. Often to get promoted you don’t just have to sell the product, you ALSO have to recruit a certain number of people. After that promotion, the people you recruited have to get promoted before you can get promoted.
The first bad situation this creates is it means two people in different cities can have the same job title but be making dramatically different amounts of money. A “manager” in one city might only have 100 people to sell to and recruit, so they’ll NEVER make as much money as a “manager” in a city that has 1,000 people. This is NOT the same as “commissions” because you aren’t just paid based on your sales but on how many people you recruit. So even if you’re killing it in sales, if you have fewer recruits you make less money.
That leads another reason MLMs are considered unfair. If you need to sell to 10 people and recruit to 10 people for your first promotion level, you need at least 10 friends to get promoted. If you can’t get promoted until 5 of them are promoted, that means they each need to make 10 sales and 10 recruits. So for you to get promoted, you need a NEW 10 people to recruit and your old 10 recruits need to find 50 total people to recruit: 60 people. This is the “multi-level” part, watch how it works.
After that, you have to sell 10, recruit 10, and you need 5 people double-promoted under you. So:
* You need to find at least 10 people to recruit.
* Your first layer of 5 level 2 sales staff needs to find 50 people to recruit.
* Your second layer (the 50 people level 2 promoted last time) needs to find *500* people to recruit or they don’t get promoted so you don’t get promoted.
As you can see this snowballs fast, and by the time you get a few layers deep there need to be thousands of new recruits for you to get promoted. Since some of your recruits are likely to drop out, you’ve also got to frequently be recruiting *in addition to* the sales.
This is compounded by *another* shady tactic.
If I work for a company that sells shoes and I make commission, I’m paid based on how much I sell. If I have a “bad” month and my sales are low my check is small, but even if I make $0 in sales I’m not *in debt* to my company (and I probably have a small salary to compensate for this.)
MLMs almost always make you up-front BUY the product you are supposed to sell for the month, usually at least $10,000 or some other large sum. If you do not sell all of that, you make NO money AND you can’t get promoted. And when the next month comes along, you either buy a new $10k worth of stock or you are fired. So you can’t have a bad month then spend 2 months selling off the rest of your stock. If you have a bad month you LOST money and you’re going to have to find a way to make it back or quit.
So think about that combined with how quickly you might run out of customers because you’ve recruited too many of your friends. You can end up in a situation where you either go into debt and travel to a new city in the hopes you can drum up more business and recruits (or, you start social media campaigns) or you have to quit.
So in short, this is why MLMs are generally illegal and even the “good” ones are seen as shady:
* You are required to pay for your merchandise up-front and can go into debt if you don’t meet your goals.
* You are usually not allowed to skip a pay period without losing several “ranks” thus having to redo all of your work when you start over.
* You are often pressured more to recruit people than to sell merchandise.
* Since those people also have to recruit more people you very quickly get “stuck”.
The other name for these is “a pyramid scheme” and it’s because of how the network of recruits “fans out” when you draw it. The people at the top who got there first make TONS of money, at each layer beneath them people have to work harder to get promoted to the same level, and at some level it becomes mathematically impossible for a person to EVER be promoted.
*(There are a few MLMs that have lasted a long time because they try their best to stay on the legal end. While they may still require you to buy your merch before you sell it, the “good” ones don’t obligate you to buy more with a deadline. They still stipulate you can’t be “promoted” until you reach certain goals, but since you can take your time to do it they are not considered to be pressuring you to go into deeper debt.)*
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