MLM - Very Possibly the perfect Business

[Dave A]

With all due respect, KevM, that's ducking the issue. If your business is supplying 100 households you're well on your way to some reasonable commissions.

My question on the retail aspect is: Are customers a viable profit centre for the individual distributor?

No leverage, no commissions, just straight markup - Is it a profit centre that could put food on the table on its own?

[Kevm]

Hi Dave A,

Yes supplier more households as customers can help add to profit. It will help increase your turnover then providing you with a greater rebate.
However as the only source of income. You could do it if you really wanted to. I dont think it would be able to fully support you. If you want to do all that running around just for the retail then I would suggest rather joining a Direct Sales venture. The main reason for a Network Marketing venture is passive income.

So to answere your question, no. Customers are not a viable profit centre for a distributor. The product and the structure is designed for a Network.

So you cant really blame a Networker for wanting to build a Network. Thats the point of it.

[Dave A]

Customers are not a viable profit centre for a distributor. The product and the structure is designed for a Network.

Hooray - an honest answer.

So you cant really blame a Networker for wanting to build a Network. Thats the point of it.

Aha! Now that's where the problem starts.

The original MLM concept did involve a viable retail markup for profitable (and competitively priced) retail selling. Unfortunately with most of the international MLM schemes this element is lost due to the Big Mac index factor.

What we see here is the result of perverting the purpose to suit penetration of markets despite the weaker buying power of their currencies. The concept has lost a leg, and is the poorer for it.

Consider this - Is Mary Kay a direct selling operation because it has a viable retail margin?
And if so how different is it to the Amway reward structure?

Sidenote - for Amway and Mary Kay distributors in first world countries who happen to read this, you won't understand this question.

[Jaq]

I believe in MLM, particularly as a solid sales network - as long as those who enter it do so after having made a solid business decision rather than an emotional one based on pitches to become a member.

One of the things that bugs me about the Network 21 is that although my hubby has been approached, been to the introduction evenings (yes, plural), been given 'info' on the products, and gone through their materials - I still haven't managed to find someone in my area that is just willing to sell me the products that I want!

I don't want any sales speeches, invites to attend any get togethers to get to 'know more about our products' or 'to learn more about the best business opportunity on the planet'. I just want to know how much the washing powder is going to cost, how long it will be for my order to be delivered, and someone who can answer my specific questions without giving me the business equivalent of a religious revival meeting sermon... (And don't try to sell me their toothpaste, especially when I have already said "no".)

I also don't have the inclination, time or contact network in my area to become a member, so don't even ask me (let alone pester me).

A few months ago I asked again for a catalogue or at least just a price list. I was sent a humumgous (many MB sized) file - still without any prices or order form!

Why must I have to run around just to get the basics of service when I can go down to my local supermarket and buy similar products (and, yes, I know some of their products are great, which is why I was interested in the first place) at SA, rather than US, prices.

The end result: Still no purchase to date!

In my opinion the MLM business model is all about the network-building and the income from that. The products for sale seems to be a side issue.

In as far as it's someone's chosen way of maiking money, it's fine, but I feel that in difficult economic times (like we are experiencing now), many will be drawn with promises of easy riches, and end up spending a lot of their time making money for those higher up the pyramid without seeing income equal to time spent.

What I dislike most about MLM businesses is how it can potentially ruin relationships, where people are so driven to build their network that everyone they know it a new prospect... and a new prospect for extending the network. People who miss-use firendships or family relationships to recruit new people to their network.

Hi Dave A,

Yes supplier more households as customers can help add to profit. It will help increase your turnover then providing you with a greater rebate.
However as the only source of income. You could do it if you really wanted to. I dont think it would be able to fully support you. If you want to do all that running around just for the retail then I would suggest rather joining a Direct Sales venture. The main reason for a Network Marketing venture is passive income.
So to answere your question, no. Customers are not a viable profit centre for a distributor. The product and the structure is designed for a Network.

So you cant really blame a Networker for wanting to build a Network. Thats the point of it.

To say that the main reason for Network Marketing (or MLM) is for passive income, does not seem to be linked to reality.

Network marketing is anything but passive... even for those higher up the pyramid.

Those at the bottom have to constantly find new network members, and those at the top have to keep on convincing their downline that they will also one day get to that level.

Why, if a product is so good, would regular stores not want to stock it?
Why, if it's such good value, is there at least four levels of commission built into the price?
Why are people mostly approached about the income prospect and not the product itself?

While typing this I'm using a VOX wireless router (and phone) that is also sold through Network Marketing, and I'm even a passive part of the network, but I do have to wonder how much cheaper this product could be without the MLM element?

Does Network marketing simply feed off our need to "get rich quick" while only really financially benefitting a few at the top?

One can of course argue that the shelf-packer at Pick n Pay works very hard to make those at the top of that empire very rich, but the difference is that the shelf-packer does not try to recruit his friends and family as fellow shelf-packers with promises of riches.

Or perhaps a more fair comparison: The sales person at Hifi Corp normally does not try to recruit those around him to also work for the company. He might tell them though if there's a good deal.


....sorry for the wordy post!

[IanF]

In my opinion the MLM business model is all about the network-building and the income from that. The products for sale seems to be a side issue.
.....
Why are people mostly approached about the income prospect and not the product itself?
.....
Does Network marketing simply feed off our need to "get rich quick" while only really financially benefitting a few at the top?

....sorry for the wordy post!

Jaq
This is a must read for anyone trying MLM. That old saying "If it seems to good to be true it is!" Anyway anyone here with a regular passive income selling reasonable products.