Back up a ways. When I mentioned that my cousin tried to drag me into Arbonne, I pointed out that she had already contacted the majority of my friends and family. Were I to become an Arbonne sales person under her, I would be trying to compete with her already established business. This would be problematic.
Well, without knowing how Arbonne operates, my personal experience is that people buy off you not the company. Some people who wouldn't buy off your cousin will buy off you, and vice versa. Having said that, what business of any type grows to any significant sized through only selling to friends and family? That's fine if you want a hobby to maybe earn some pocket money, but if you actually want to develop a business then your friends and family are not your market.
You compared it to Pepsi. But that still doesn't make sense. Pepsi has a recognized brand with an existing market. Pepsi limits the number of sales people to the amount that any area can support.
Sorry, but I disagree with this assertion. There is nothing that I'm aware of stopping me opening up a store and selling Pepsi pretty much anywhere I'm allowed to open a store. Pepsi isn't going to go "sorry, the store over the road already sells Pepsi, so we're not going to let you". It simply doesn't happen.
Arbonne does not. In fact, quite the opposite. In addition to my cousin, I would also be competing with anyone else she managed to wrangle AND, presumably, the people under me.
As already pointed out, "the people under you" are no more your competitor than I would be a competitor of Pepsi, or a Pepsi wholesaler I buy off, and selling the Pepsi through my store.
In order for the Arbonne model of income to work, I would need to start with a very limited amount of consumers and then work very hard to limit that amount even further by recruiting more competition.
You're missing something quite fundamental in the model here. Your sentence there made no sense. You're essentially complaining that you selling more products is a bad thing, because then there are more people using the products so it's harder to sell more products! You do understand that when your downline buys a product, they're effectively buying it off you? That when they have a new customer, *your sales* increase?
Even if I branch out beyond my immediate friends and family, I am bringing in competition in these new areas.
Again you're saying "if I increase my sales, I'm just making it harder to get more sales!"
No No No. Yes, theoretically getting more wholesale sales makes it harder to get retail sales, but so what? You *want* to expand your wholesale sales as it's less work. Say you're making say 25% margin on your retail sales, and 5% on your wholesale sales. You're retail sales is naturally limited by how many people you can contact and how much you can personally sell and manage. You wholesale sales have no such limit. 5 wholesaler customers selling the exact same retail sales volume as you will make you as much money as if you did it yourself -
but for less work. If they do more than that in retail, or create wholesale sales themselves, or you expand to 6 wholesale customers you're making MORE money than from your retailing for a lot less work.
If we go back to Pepsi again - how much do they make selling direct to the consumer (retailing), and how much do they make selling to wholesalers, franchises etc etc.
I'd venture to suggest that >99.999% of the sales volume comes from wholesale sales, not retail sales. Yet you think wholesaling is a bad idea because doing so is competing for the same retail space? I don't get it.
And the competition brings in their own, etc until the amount of potential consumers is very, very small.
So find a wholesale customer in another town. Voila, your sales increases and there's no issues at all of potential consumers in your local area - you've expanded out of your local area.
So, how is this different from a pyramid scheme? And, can you illustrate this difference without using the analogy of a company that uses a completely different marketing technique?
How is this different to a pyramid scheme? Well for a start, by definition in a pyramid scheme you make money through recruiting, not through sales of products to end users. Recruit a million people into Arbonne or Amway but nobody buys any products, you don't make a cent. Recruit a hundred people into a pyramid scheme make a bucketload. Then you'll get sent to prison!
What you seem to be missing is that network marketing involves a mix of creating wholesale customers and retail customers. While with the right products and in the right market place you can create a pretty decent income as a retailer, the idea for people who want to expand and create a significant business is to be primarily a wholesaler, not a retailer. The margins are less, but there's also a lot less work once it's setup. I can spend 10 hours a month getting $100 profit from a retail sale, or 10 minutes a month to get $20 profit from a wholesale sale.