Multi Level Marketing
(MLM)
Multi Level Marketing
also known as network
marketing, began with
Amway Corporation back
in 1959. According to
the company's website,
the founders' concept
for an innovative
business opportunity
centered on
"person-to-person
marketing," a concept
that has evolved into
what is now called MLM.
MLM is a system of
distributing goods on a
person-to-person basis;
but unlike direct
selling, which was
popularized by companies
like Avon and
Tupperware, it allows
the distributor to earn
additional income from
the recruitment of other
people into the network
and from the sales that
these "downlines" would
make. The original
distributor can profit
further from the sales
of other persons that
his first line of
recruits would, in turn,
bring into the
organization , and so
on.
This network of
distributors would look
like a pyramid when
drawn on paper. the
structure is really no
different from that used
by illegal pyramid
networks, the only
difference being the
legitimate MLM firms
distribute products that
are proven to have real
value for money. And a
big chunk of the
revenues generated by
the distributor comes
from sales of goods and
services, not from
recruiting other
distributors. In the
United States the
acceptable ratio for an
MLM firm to be
considered legitimate is
70:30 - 70% of revenues
must come from actual
sales of products and
only 30% from the
recruitment of people.
But most, if not all,
MLM firms require would
be recruits to purchase
products - sales kit,
starter kit, etc. - to
join the network.
This structure guarantee
the original distributor
almost unlimited income
simply by recruiting as
many distributors as he
can and motivating them
to do the same. Hence
the sensational success
stories of people who've
made millions without
really putting in much
effort - at least not
the kind of hard work a
traditional business
would require for the
same amount of income.
Of course, these success
stories come from
distributors who are at
the top of the pyramid.
|
