The problem with multi level marketing schemes (MLMs)

I appreciate this has the potential to piss a lot of people off but this is a post I’ve been dilly dallying with for over a year now and I’m sick of it in my drafts when I’ve already spent so much time on it so it needs to be released into the wild. Multi level marking schemes (MLMs) have been around for decades, with Tupperware being the real trail blazers but quickly followed by Avon and now even the Body Shop do it too. But they’re often lickened to pyramid or Ponzi schemes, which are illegal.

So if pyramid schemes are illegal and MLMs aren’t, how are they different? Well, MLMs differentiate themselves by saying they’re selling a product, rather than a pyramid scheme, which uses investors money to pay other investors and so on and so forth. MLMs say that because they exchange goods for money they’re not a pyramid scheme, yet the main way that most sales people in MLMs make real money is not selling the product but the bonuses they receive from recruiting new members to their team. And the people with no one beneath them barely make any money at all whereas the people with lots of people beneath them make a lot more, almost like a pyramid. Got a headache yet? I know I have.

Simply put, in an MLM over half of all the money goes to the top 1% in the scheme and over 80% of people in the scheme have no one beneath them therefore aren’t earning any money, other than from sales. But it’s virtually impossible to make money on selling alone and almost every single MLM requires some kind of investment from you, usually around the £60-£70 for a starter kit. Whoever it is who has recruited you gets commission on that which begs the question, who’s the real customer here?

MLMs don’t seem to have a genuine customer base, it’s not like you can just log on to a website to get a face cream that some girl who was a dick to you in high school is trying to sell you on Facebook. You have to go through her. And she’ll have had to buy that cream up front. Plus some of her commission will go to whoever recruited her. Which makes me wonder, if the face cream is so good, why doesn’t the company just sell it direct to the ‘customer’ and cut out the middle men and women.

Could it be (and lean in closely to hear this) that the product isn’t actually the primary way the people at the top of the pyramid company makes money?!

Younique boast about 1.2 million sales rep and you’re told you can earn up to £5000 a month, you reckon all 1.2million are making £5000 a month? I’m not sure even Amazon turns over profits like that to pay their staff that much.

Full disclosure; I sold Avon myself for a short time in my 20s, and I made a couple hundred pounds profit over the Christmas period, but having to buy all your own brochures, packing bags and the like, meant outside of peak present buy season, I earned next to nothing, and it didn’t last long. I’ve even used some MLM products in the past and helped from friends promote them like Younique mascara and Jamberry nails wraps. It’s not the products themselves I have too much of an issue with, some of the products are actually decent quality.

For me, it’s the aggressive, cutthroat way in which people try and recruit you to their teams that I really hate. You can spot them a mile off on Instagram; ‘hey hun, I’ve followed you for ages now…’ – no you haven’t, you literally started following me yesterday. ‘You seem like the idea boss babe who is ready to take control of their own future, can I tell you about a business opportunity..’ First of all, vomit at ‘boss babe’ or ‘SHE-EO’ or something similar. Secondly, it’s not a business opportunity. Usually I just ask straight out whether it’s an MLM where one of two things will happen. They either don’t message back again, or they get argumentative and accuse me of being closed minded, and spot out figures of how much I could earn working for them. If the latter, I then ask them straight out how much they learned in the last month. Then they block me.

Now that’s probably me being a little bit antagonistic, I could just ignore them completely. I’m lucky, I have a good job and a successful side hustle. I already am a ‘boss babe’. But they prey on people who may not be in the same position as me by offering ‘financial freedom’. Which would be appealing to someone who is a single parent or has responsibilities which mean they can’t commit to a 9 to 5 at the moment. What these recruiters will inevitably end up doing though is encourage you to distance yourself from friends and even family who are ‘negative influences’ or don’t support your ‘business’.

To put that into context: one person I know who I think sells FM, but also some make up stuff too was bragging recently about making £138 in two weeks selling mascara. That works out at about £1.80 an hour based on a 37.5 hour working week. National minimum wage in the UK is £9.18 an hour and companies are telling people that this is a lucrative way of making a living? You’d earn more on a zero hours contract at Wetherspoons (and there you get free food when you’re on shift!)

Look, if you want to earn a little bit of extra money on the side selling wax melts, or make up, or knock off fragrances because you like the products yourself and selling them on to your family and friends gets you a nice little kickback, that’s cool. I’m not knocking that at all, just, when someone starts talking to you about quitting your full time job and telling you you’ll be driving a white lambo in Mykonos in a years time run a mile. In the opposite direction and perhaps focus on more realistic goals like getting the air con fixed on your Kia Picanto. Or maybe that’s just me!

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