Strength and Weakness of MLM Companies
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Hi Networkers,
How about highlighting and sharings some good or bad points of any MLM Companies you know to help each other ?
By sharing the good, we help them to promote.
(Lets not be selfish, good things should be proudly shared. Duck eggs are less popular than chicken's because duck kept quiet when they hatch)
By sharing the bad, we prevent each other from being victimised.
(Now, please don't tell me that we should not bring down others or I am anti-mlm, isn't it a good deed to prevent each other from losing ?) -
wtf, my sis kena jioed down to ntiparis..
luckily i explained the whole thing to her, else die liao... -
i personally feel there's always good and bad points to any company.
but choose one that is Stable, Financially sound, Good company management, and of course an easy to work with Comp plan. Last but not least, the basic building block would be a good product backed by 3rd party verfification. A good internet system will definitely help and do wonders too.
All in all, Choose a Wave 4 Network Marketing Company.
Those who are not in the know, do read up on this book by Richard Poe: 'Wave 4: Network Marketing in the 21st century'.
All these factors will cut down on rejection, dejection, and makes your company and product easy to market. Do not go with a company that sounds great today, but is gone tmrw... -
Gebryl,
So which Company you think is good and why ?
Don't be fooled by terms like "Wave 4" "Wave 5" or "New Wave", it still meant nothing if they don't sell value for money products.
There is no such think as an easy to work Comp Plan. Every MLM Company requires you to build at least 2 or more network in order for you to make money. If any Company tell you you just need 2 persons to be successful, no MLM Company would have ever closed and everyone in a MLM Company would be successful. The fact is, majority of members in every MLM Company are not making money. -
The key is "VALUE FOR MONEY PRODUCTS".Originally posted by Experienced:Gebryl,
So which Company you think is good and why ?
Don't be fooled by terms like "Wave 4" "Wave 5" or "New Wave", it still meant nothing if they don't sell value for money products.
There is no such think as an easy to work Comp Plan. Every MLM Company requires you to build at least 2 or more network in order for you to make money. If any Company tell you you just need 2 persons to be successful, no MLM Company would have ever closed and everyone in a MLM Company would be successful. The fact is, majority of members in every MLM Company are not making money.
How many products sell by MLM can be clasified as "value for money" from layman point of view.
I do not see any yet. -
A person that hasn't seen a product value for money doesn't mean that it isn't available. Weakness of a network marketing company, someone not able to do the work and bad mouth the company. If you will to be employed, doubt anyone will do that or dare to do that.
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Once upon a time, multi-level marketing was a legitimate business which provided a way for small companies to get their unique products to consumers in small towns and rural areas which had no access to these products. At this time, the products sold themselves, and the multi-level aspect was a way of giving a small reward to those who had worked hard to build the organization. But the focus was always on the product.
Today, and especially with the growth of the internet, it is possible for consumer to get about whatever they want at competitive prices. There is simply no real need for distribution “systems” as there once was, and indeed the focus of all the programs is not on the products they sell -- which are usually either bogus or are available somewhere else to the public at the same or lesser prices. Instead, the focus now is solely on recruiting new people to either buy into the program or else to buy products that are grossly overpriced (i.e., a $1 bottle of “herbal shampoo” for $26), with the idea that those people will recruit additional people who will also buy into the program or themselves buy the grossly overpriced products.
Thus, today just about ALL of the multi-level marketing programs are scams. In todayÂ’s internet economy, there is simply no need for multi-level marketing or the overpriced products that they sell -- meaning that the only thing they are selling are memberships in anticipation that future memberships will be sold in the future, which is the classic definition of a pyramid scheme, and thus a fraud.
The poster boy for all MLM 's companies is Amway, the oldest MLM which was founded in 1956. The Amway website claims that it has annual sales of US$6.2bn sold through some 4m distributors (meaning each distributor had average sales of US$1000 annually).
Four years after Amway, Sam Walton founded Wal-Mart, a conventional retailer, in 1960. Walmart reported sales of US$256bn (41 times larger than Amway), employed some 1.3m people and profits of around US$8bn. Wal-Mart is the LARGEST company in the world in terms of sales, larger than BP, Shell, Texaco and almost 10 times the size of Microsoft.
The battle for MLM has been lost where it matters most-in the marketplace. -
the strength of MLM is that you can rip off a lot of people very quickly....
the weakness of MLM is that you better get out of the country fast before the aforementioned people you ripped off, try to rip your arms off... -
I know this reply is rather late but I have watched the rise and fall of GoldQuest in Sri Lanka and can confirm that this is a pyramid scam.
It is almost identical to a scam that ran in the US called Gold Unlimited - you can read the full text of the US court of appeals judgement at the following address:
http://www.law.emory.edu/6circuit/may99/99a0170p.06.html
Note the similarities in the compensation plan of what the court described as Gold II (the binary compensation plan which involves payments of similar sums of money and pays similar 'compensation - recruitment fees for getting new people into the "downline".)
For those who may be under the delusion that the gold "coins" sold by GQ have some instrinsic value, please note the following facts:
1. The price paid per troy ounce of gold bought in the form of Gold Quest's "coins" is around US$1,500.00 (most "coins" are less than one troy ounce so you need to convert grams to troy ounces at the rate of 31.10348grames to one troy ounce). The TEN year HIGH for gold is about US$450 per troy ounce.)
2. The so called "coins" are issued on dubious or non-existent states (The Knights of Malta,(a Christian order which in anycase has nothing to do with GQ-check their website) the Somali Republic (which ceased to exist years ago - now it is split between Somalia and Somaliland), the Cook Islands (NZ protectorate, does not issue currency), The Northern Marianas (US protectorate, does not issue currency). What they mint is what collectors refer to as fantasy coins or medallions which have no real numismatic value, apart from some curiousity value.
3. GQ is not tregistered with any numismatic association of any repute, which is rather strange given the puff that they put out claiming to be the largest numismatics dealer in the world!
4. GQ DOES distribute a few genuine coins (the Olympic coins, FIFA coins etc) BUT contrary to their claims, they are not AUTHORISED distributors, Please visit the relevant websites of the organisations concerned and find out the real distributor - MDM Münzhandelsgesellschaft GmbH Deutsche Münze ("MDM") - the world's largest private numismatic trade company in the case of the two institutions named above.
5. Further, the genuine coins distributed by GQ are available about 30% cheaper from official distributors (such as MDM) and from proper coin dealers who are registered with recognised numismatic associations.
In sum:
1. GQ medallions are priced at about 300% of their intinsic gold value.
2. The few genuine coins sold by GQ are available at a 30% discount from other sources.
3. The medallions have no numismatic value and possibility of appreciation is non-existent. (anyone intending to invets in coins is advised to read the advice given by the US Federal Trade Commission (jointly with the American Numismatic Association - available at the following link
http://www.centercoin.com/coin_information/collecting/consumer_alert_investing_in_rare.htm
(also at the US FTC site)
In short, no real market exists for the products, there is no possibility of appreciation in value. Money is made by recruiting ever invcreasing numbers of gullible people (who buy only once-the recruitment fee; they almost never buy again, which is why you need to recruit another person to "sell" another product, in other words a classic pyramid scam.
Please report this to the Singapore authorities : one of the flawed arguments tha t they use to convince people is "we operate in Singapore that has tough anti-pyramiding laws, therefore we are legitimate". -
python, i've tried to explain to the pro-pyra... uhh.. pro-MLM people...
they refuse to listen and have sewn their eyes shut....
profits from their transactions spur them on... -
strength : good at taking your money
weakness : bad at giving you back money -
While I do agree there are faults in MLM, in theory and practice, as well as the case on Godlquest, I must point out Python argument does not really point out the real flaws in MLM, as well as there are unfair comparisons with different companies with different products targetting different markets.
Companies like Shell, BP, Microsoft and even the mentioned Amway are selling specialised products to smaller, but not neccessarily small market of consumers, while in marketing sense, Wal Mart are like our local Giants and Shop n Save, providing mostly convenience products to the whole population at hand.
Wal Marts convenience products are classified as cheaper goods, and most are essential daily neccessities. Marketingwise, all they got to do is to widen the reach of their stores with little advertising. And you gotta appreciate the fact Sam Walton has management style different from other company CEOs, and improve company inventory system, customer feedback program and so on befitting the company product lines.
On the other hand, companies like Microsoft, Shell, Amway etc are providing specialised items like PC softwares, petrol and nutritional products that not only require a lot of selling and marketing ,but they have to bear in mind other equally competitive market players like Linux, BP and Nuskin for examples...They build brand around their products, and each product they produce and sell are subjected to intense comparison with other products by customers who have great deal of knowledge in them. And this market is definitely smaller than Wal Mart target market segments, which can possibly include the whole population, while the other companies market segments are smaller, for Microsoft ,its actually consumers who do own computers...and for Shell, its people who own cars.
Another term for what Microsoft or Amway products are called unsought goods. Generally, it doesnt take much for the general consumers to learn how to choose which better brand of canned soup products like Campbell, but it does take a lot for even for consumers with specialised knowledge to choose between different costlier PC softwares, petrol for their cars and even slimming pills. Anything that are new, along the likes of technology or nutrition, takes a lot of effort for companies to market and sell.
Therefore, its not surprising Wal Mart overtakes Microsoft and others in terms of sales and profits. Sam Walton put in a lot of effort to reduce cost of his stores distribution and stocktaking system, but nobody can say the same for Microsoft R & D programs or Shell deep sea drilling in the North Sea.
Besides, no offence, companies themselves dont really bother to compare sales and profits across the board. Much more time and money is better spent benchmarking against industry standards. Only newspapers and magazines like Times like to put these companies from different industries on ranking for the amusement of their readers. Its best to compare MLM companies against those in the same industry, like Nuskin versus Loreal. Specific and better comparison can be achieved, like who has better sales, profitability, distribution system, marketing techniques..If one want to generalise the MLM industry, I think one will be understating as well as overstating many pro and cons.
I think, if I am Amway boss or Bill Gates, I wont bother competiting with Sam Walton. It wouldnt help to increase the profitability of my company. -
There are twelve tests that can be applied to an MLM "opportunity" - click the above post - it is too long to display
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The following tests should help you avoid programs in which you will only be wasting your money, time, and effort.
THE OPPORTUNITY TEST
Were you approached primarily on the basis of the actual value and need for the products—or for the “opportunity?” If the latter, the program may be actually a pyramid device for enriching the company and a small group of upline distributors.
Another red flag to look for is promoters who talk of “getting in on the ground floor” or “riding the wave” of opportunity. Usually, the bulk of the income in these cases is already locked in by the founding distributors in the pyramidal hierarchy.
THE MARKET REALITY TEST
Many MLM recruiters point to the huge growth potential of their programs without considering the normal dynamics of supply and demand. Without adequate controls, saturation in any given market may soon be reached—at least in peoples’ minds.
Are numerous levels of distributors allowed—more than is needed to get the products out to customers? Also, ask if the company allows unlimited recruiting of distributors in an area—with no territorial protection or other provisions for preventing market saturation? If so, you may be buying a ticket for a flight that has already departed. You could be left holding a bag of empty promises
and a worthless ticket.
THE PRODUCT TEST
Review the products offered and ask yourself:
Is it likely the products could be sold successfully on their own merits without going through a MLM distribution system? If nothing comparable is on the market, find out why.
Does the MLM company focus on legitimate products of value to consumers, or does it emphasize fleeting trends and timing, and exotic or secret formulas? Are products of consistently high quality, and do they carry a buy-back guarantee? Can all product claims (such as health claims) be backed up by reliable research? Are orders filled and shipped promptly?
And are manufacturing and expiration dates printed on consumable products?
THE COMPENSATION TEST
Can you as a distributor make a good income for the time you spend selling the products—without recruiting a single person? Or is the commission paid by the company for selling the products so low that you have to recruit a downline in order to earn a significant income?
Would distributors several levels above you—who had nothing to do with the sale—receive as much or more total payout per sale (including commissions and bonuses) from the company as you would get for selling the product or providing the service?
If the latter is the case, the emphasis is on income from a downline of distributors (that you would have to recruit), not on the sale of products. Even though such a MLM program may have escaped prosecution as a pyramid scheme, it may still be a de facto pyramid scheme (or PPS).
Your odds of success in such a program will not be favorable. While a few distributors at the top of the pyramid will be rewarded handsomely, as many as 99% (over 99.9% in some programs) of distributors beneath them will come away empty—most actually losing money, after subtracting expenses and product purchases. Also, in some programs, your quitting merely enhances the income of your upline—because income from your downline “rolls up” to those above you. Don’t fall for the line that it takes months or even years for most businesses to show a profit and that if you just “work hard and hang in there” you will make lots of money in this MLM program.
Be aware that in other comparable settings, sales distributors usually show a respectable income within a couple of months, or they turn to something else. Ask distributors who have been with the company for two or three months if they are turning a respectable profit—after operating expenses and product purchases are subtracted. If not, they are only fattening the pockets of their upline. -
THE INCOME DISCLOSURE TEST
If an MLM recruiter touts huge income figures of top distributors, request that the company disclose average payout to distributors by percentiles (highest 1%, second highest 1%, and so on to the lowest 1%), so that you can determine your chances of success.
Ask for net payout (after subtracting product purchases) for all distributors who ever signed up, including those not now active. If they fail to furnish such data, they are not providing the balanced information you need to make an informed decision.
Estimate the operating expenses for building your distribution network. For anyone serious about building an MLM business, a significant amount will be spent on telephone costs, travel, samples, sales materials, office supplies, mailing costs, printing and duplication, and (when friends and family donÂ’t respond) some advertising.
Most distributors wind up spending far more money on products and
operating expenses than they bring in. The best source for expense information is ex-distributors, not current distributors who are in denial about how much they are actually spending. If less than 1% of all distributors earn the equivalent of a minimum wage for their time (after subtracting all expenses and MLM products purchased), you might want to consider a more profitable use of your money, time, and energy. (Some researchers estimate that for most MLM programs, less than 1% of distributors ever turn a profit.)
Another acid test of the profitability of an MLM distributorship is to ask the person recruiting you to show you his/her last yearÂ’s tax return. It has been found that it is extremely rare for network marketing participants to show a profit for their networking efforts on their annual tax returns.
THE “PAY TO PLAY” TEST
Find out how high the expectation is for you to purchase products, services, training, etc., over a period of time, in order to be a serious participant. In other words, what will it cost you to “play the game?” Don’t be fooled by a simple request for a small sign-up fee, soon to be followed by endless invitations for specials on purchases of samples or inventory, accelerating bonus levels for higher sales plateaus, paid seminars, and training sessions or retreats.
This requirement (or strong suggestion) that you make large purchases of products over a period of time to qualify for increasing bonus levels or purchasing discounts is one sign of a product-based pyramid scheme. After months or years of fruitless effort and a garage full of products, some participants come to
realize they have merely been paying into a pyramid scheme in the form of payments for unneeded products.
THE PRICE TEST
Are the company’s wholesale prices low enough to allow a respectable profit when marking up for resale—at a retail price that is still competitive with comparable products through other sources? Or are retail prices so high that they must be sold at wholesale to achieve any volume?
If products are priced at a premium to support a large network of distributors, then the premium portion of the price could be considered the pyramid portion. So if a MLM product sells for $40 and a comparable product would sell for $20 at a typical retail outlet, the $20 premium may be deemed the pyramid portion of the price and would flow to top distributors in typical pyramid fashion.
THE GOLDEN RULE TEST
How did you feel about the way you were recruited to do the business, and how do you feel about approaching your family and friends in the same way? How important are your relationships to you?
Are you offended when they attempt to exploit your connection with them for monetary gain? Would you want to do the exploiting?
THE TIME FREEDOM TEST
The perennial dream of those with a pyramidal mentality is to be successful at recruiting a downline that will bring in enough money to support them so they won’t have to work themselves—thus giving them “time freedom.” They can then “leverage” their time by living off the efforts of others.
If a recruiter promises that by working hard for a brief time period you will never have to work again, ask what percent of their top distributors are no longer actively involved with the company—and never attend opportunity meetings.
Ask veteran distributors when they last took an extended vacation. Were they able to do so without significant losses for not tending their downlines? And did any of them quit or scale down without experiencing major financial losses?
Better yet, ask for a copy of the recruiter’s downline and upline. Contact distributors at several different levels to see if any have achieved “time freedom.”
And if you know the spouse of any of the distributors, you might ask what problems the family has experienced due to MLM participation (intrusive phone calls, untimely visits to the home, and neglect of family and other duties by
the distributor).
THE HONESTY TEST
Has the recruiter been devious or up front in his or her inviting attempts? And can the products and “opportunity” be sold without making exaggerated product and income claims? Ask for validation of each of the claims made.
If you find the truth frequently distorted, powerful and escalating incentives may be driving the recruitment. If normally honest persons feel the need to exaggerate
claims to sell the products and the program, you may find yourself having to do the same.
THE CREDIBILITY TEST
MLM promoters who don’t command respect themselves may lean heavily on the “credentials” or “character” of others involved in the “opportunity.” If such references are used to excess, watch out.
Such credibility links can be deceptive. Why? Because the ethics of MLM are so tricky to sort out that respectable and high level people have been drawn into the most problematical of programs.
THE SUPPORT TEST
Does the company offer an adequate support infrastructure to handle a temporary burst of volume? Will your upline be there when you need them, or do they have a history of jumping ship when the next hot MLM deal comes along?
Are conferences and training programs, audio and video tapes, etc., free of charge (as is the case elsewhere for company sponsored programs), or are you expected to pay for them—as another revenue source for the company and upline?
A FINAL WORD
If you have found this helpful in deciding about participation in MLM, you could be doing your friends and family a favor by sharing this information with at least five of them. Then ask each of them to share it with five more persons, and suggest they tell each of them to share it with five more, and . . . ....:-) -
again, python, these were told to them.. still they persisted..
you can't talk to those who do not want to hear the truth -
Not really. Many werent told.Originally posted by the Bear:again, python, these were told to them.. still they persisted..
you can't talk to those who do not want to hear the truth
A lot of people didnt do research before they join in, whereas what Python posted can be easily found on the net, but its too simplified.
Many scams system i see exposed loopholes in Singapore laws, but without specific regulations, its very hard to define what is really an illegal business. Because of such loopholes, many scams readily hold up literature on the MLM law and declare they are legal, and worse some claimed to be backed up by many well known local legal firms.
Besides, by the time you analyse one coy and decided its a scam, and tell it to your friends, it mabbe too late, coz they would have been brainwashed.
Sad but true.
And one more thing, scamsters are very clever and work fast. You and I could well be in one, and we wouldnt know or feel it. It need not be in MLM.