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A good number of years ago, when I first had internet access, the internet was quite young and was limited in resources. Google had not begun, and the search engines that were available only had a limited number of selections for you to choose from. Some searches would even come up bare! Now you can hardly find a subject that will not pull up 6 or more digits of responses.
But, one of the major listings of websites were...MLM, Multi Level Marketing. Man! I thought I had hit the mother lode! Spam was rampant then and not much was being done about it. So it wasn't long until I was overwhelmed with MLM offers. Some were obviously schemes and others, pure scams.
But some were so enticing, so alluring, or maybe beguiling is the best word. Would I ever love to have an income of $35,000 per month for less than 4 hours work per week! Man, I'd love to have half that for 60 hours per week! So guess what? I decided to get involved. First I tried to get into the ones which required the least out of pocket monies. I tried one or two that required a $10-15 dollar initial investment, they died in their tracks. Not even a red cent back. So, I became more selective and would not consider one unless it really looked good.
I found one that did indeed look good. It cost nothing to begin and no fees ever, but, you were required, in order to stay active, to sell $30.00 worth of their products per month. And if you signed up many more people under you, you would receive a portion of their profits. That on top of the profits from any of your personal sales, or purchase would be your earnings, but JOY, this went down five levels and you would draw a smaller amount from each of your downline.
Now the products were household items of very good quality and such that people used every day. So I purchased the required amount of goods monthly and spent hours and much postage sending out U.S. mail letters, besides emails. I even got several complaints of spamming, even though I purchased names and addresses which were supposedly opt in for such. I was able to sign up 3 new members which I just knew would sign up additional ones and I would soon be rolling in the money. Wrong!
I really thought this one had the products and would certainly grow. And I tried to figure out why it did not. Then I began to see that the products themselves, even though high quality, had their prices so inflated (in order to pay out all of those down line percentages and still make the company money) that no one would buy them. So, you see, we did not draw from our downline personal purchases since self purchases were discounted. So, even though I lost no money except for buying products that I really didn't have to have, I never received one dime.
So if you are new on the internet and these pyramid schemes, and that is exactly what they all are don't get involved. Amway products were the first really successful Multi Level Marketing organization and they are still in business. But what happened with them was, they too had high quality household products, very expensive but good enough to cause some people to purchase them on a limited scale. Plus, they recruited people who could SELL. They pressured their way and the business blossomed. Some of the more successful salesmen, sold products and recruited others under him also who could sell, and some (few) literally became millionaires.
But here is the story behind the theory of MLM. It sounds good. But it is bad. Amway is a perfect example of a successful one. Product prices must be inflated, an absolute requirement. No company can manufacture a product and pay their salesmen 15% commission on their personal sales, 10% on their first level of recruited salesmen, 8% on the next level (those recruited by their first level) and then 5% on the next 4 levels without inflating their prices drastically. That is the equivalent of 53% paid out each product. This was only an example, I have no idea what Amway or any other companies are paying, but the principle is the same.
Also, some people, somewhere, sometime, are going to be hurt. Some will be able to recruit and sell, and therefore earn money, some may work just as hard but make no money. But let's again look at the possibility of such a plan working well. If it blazes up and encompasses the world as Amway has, the top people in the organization may become wealthy and some of the great producers may earn big money as did happen in that large organization. But as the thing grows and numerous people find that they are paying far too much for the products, and therefore business drops. Recruiting becomes more and more difficult and therefore, some on the bottom rung, simply cannot survive, after having worked so hard.
Not only should the individual never expect to earn many thousands of dollars in one or two months, but should be very wary of all offers. Many of the plans being offered are actually illegal and there have also been many who were prosecuted for those schemes. Certainly, if a legitimate plan exists, there must be a source of good, high quality products to sell. And then remember that sell, you must. Your only hope of a decent income is to sell and not depend upon your downline. If you are unable to sell, they likely will be also, if indeed you are able recruit any.
The old saying, "There is no such thing as a free lunch" is very accurate in almost all cases. Maybe at the Salvation Army but not many other places.
Author Biography: Joel Hendon was born September 20, 1930 near Gadsden Alabama. He attended public schools in Cherokee County, Alabama and after serving a tour of duty in the U.S. Army during the Korean War, attended Jacksonville State University, Jacksonville, Alabama majoring in Business Administration. He became a Christian in 1948, and although he followed secular work as a career and retired from Allied Signal Aerospace in 1997, he is an avid student of the Holy Bible and related works as well as biblical history. He has an extensive website of religious and political conservative articles and links to many other sites. http://hebronics.org/index.html
Joel, MLM, your list of 100 who provide their list of 100 and so on and so forth. recruiting the name of the game not product. Yes and they call those involved small business owners. really. Good job.
Very good article Joel. I think many if not most of the writers on SearchWarp have at least experimented with MLM programs in the hopes of Internet riches, but many are embarrassed to write about it because of their failure to produce results. (What does that say about the MLM programs???)
SearchWarp has a strict policy against articles which promote MLM schemes, but I would love to see more people write about their experiences with them.
Hi Bruce, thanks for the comment. Yes, I can understand why people don't like to even mention them. But I don't really mind. I acknowledge that I was as naive as a small child when I first started browsing the internet. But, fortunately, they made a veteran of me before I went broke with their schemes. Hmm, how does one go broke when he is broke to begin with?
What a great write! Thank you for sharing such an informative article. And I definitely agree with this: "...The old saying, "There is no such thing as a free lunch" is very accurate in almost all cases..."
Another outstanding article! MLM sounded great in the old days, but only the ones that had a lot of contacts, and like you say were "salesman" made it.
Hi Thom, yes it is a pity I could not have gotten in on the ground floor with Amway. But the fact of the matter is, I could have, except for one thing...I couldn't have given away those products. People would have thought there was a catch to it. A salesman, I 'ain't'. Thanks for the comment.
» left by Jonathan Ya'akobi from Israel (294 days 15 hours ago.)
Thanks Joel. I thought I was alone as an ex-MLM "failure". Apparantly not.
I'm not sure though, that the prices of an MLM product have to be inflated in market terms. The figure of 50% or so, being distributed upwards through the levels of distributers, can be offset by the savings in advertising (virtually none) and other distribution costs, i.e. manufacturer-wholesaler-retailer.
I think the real problem with MLM is the hype and the disillusion that follows afterwards.
Thanks for making me feel better about myself, although I don't agree with you on every point.
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