Friends and MLM recruitment. HELP!

Nutritional supplements are a pretty bad example, since they're mostly the same value (zero) no matter what brand you buy.

Right. Some people call them "urine" supplements.

The fact that some advocate for MLM must come here to explain and justify quality and pricing of these products makes it crystal clear that MLM products are not competitive in price and consumers in general are quite satisfied to go to WalMart or KMart and simply get similar or the same products cheaper. How many consumers actually care about much other than the price? It's not like you cannot get quality stuff at your local WalMart.
 
There are two ways to take this:

1) Most MLM reps are really just customers who want a discount. (I think the DSA works hard to make sure that their members do not collect any data that could show this to be true.Because then it is just a discount club and not a distribution chain.) In which case, when I buy a coke at Walmart I am not a customer, but just the "bottom" of the distribution chain.

or

2) Walmart doesn't make any money off the coke I buy there. I find that hard to believe. In fact, I think Walmart is the "bottom" of the distribution chain and I think they make tons of money from that very position.

Even if one views the cashier as the 'bottom' of the supply chain, they still get paid. Very little, but they make money.

More than 99% of MLM participants lose money for all their work. Regardless of whatever the business model is 'supposed' to do, what it actually does is almost universally, abysmally bad. There is no amount of 'accuse the lazy' handwave that can fix that.

There are direct marketing and sales that are not MLM of course, and they're annoying for many of the same reasons but at least some of them don't have the issues of recruiting your own competition. Door to door sales...
 
Even if one views the cashier as the 'bottom' of the supply chain, they still get paid. Very little, but they make money.

More than 99% of MLM participants lose money for all their work. Regardless of whatever the business model is 'supposed' to do, what it actually does is almost universally, abysmally bad. There is no amount of 'accuse the lazy' handwave that can fix that.

There are direct marketing and sales that are not MLM of course, and they're annoying for many of the same reasons but at least some of them don't have the issues of recruiting your own competition. Door to door sales...

That's the trouble with MLMs, the model is perfect, it's the people that are flawed. :rolleyes:
 
There are two ways to take this:

1) Most MLM reps are really just customers who want a discount. (I think the DSA works hard to make sure that their members do not collect any data that could show this to be true.Because then it is just a discount club and not a distribution chain.) In which case, when I buy a coke at Walmart I am not a customer, but just the "bottom" of the distribution chain.

or

2) Walmart doesn't make any money off the coke I buy there. I find that hard to believe. In fact, I think Walmart is the "bottom" of the distribution chain and I think they make tons of money from that very position.

#1 hits the nail on the head, for pretty much the whole discussion.
 
There are two ways to take this:

1) Most MLM reps are really just customers who want a discount. (I think the DSA works hard to make sure that their members do not collect any data that could show this to be true.Because then it is just a discount club and not a distribution chain.) In which case, when I buy a coke at Walmart I am not a customer, but just the "bottom" of the distribution chain.

I'm not sure why you think the DSA and member companies "work hard" not to show this is true, considering they all often say as much. For example -

Herbalife Income Disclosure -

People become Herbalife Distributors for a number of reasons. The majority (73%) primarily join us to receive a wholesale price on products they and their families enjoy.

FTC discussion paper on proposed new business opportunity rule -

many individuals use their distributorship as a “buyers club” and are only interested in purchasing goods at a wholesale price for their own use, not for resale. eg Shaklee (stating that 85% of individuals who sign up with 75 Shaklee do so as “wholesale buyers” rather than distributors) Quixtar (Amway), Herbalife

The "bottom of the distribution chain" is the end user. When you buy a coke from Walmart, unless you plan on reselling it then you are the bottom of the distribution chain

2) Walmart doesn't make any money off the coke I buy there. I find that hard to believe. In fact, I think Walmart is the "bottom" of the distribution chain and I think they make tons of money from that very position.

Again, the consumer is the "bottom" of the distribution chain.

Even if one views the cashier as the 'bottom' of the supply chain, they still get paid. Very little, but they make money.

See above. The bottom of the distribution chain is the end consumer.

More than 99% of MLM participants lose money for all their work.

Given most MLM participants don't do any work, nor have expenses outside their membership fee how have you come to this conclusion?

Regardless of whatever the business model is 'supposed' to do, what it actually does is almost universally, abysmally bad. There is no amount of 'accuse the lazy' handwave that can fix that.

Why do you believe that someone who joins an MLM primarily to get discount pricing is "lazy"?
 
I'm not sure why you think the DSA and member companies "work hard" not to show this is true, considering they all often say as much.

Many MLMs don't collect this data because then the MLM company would have to collect sales tax and be a licensed retailer in many states. Some may take this burden on but many do not. B2B transactions sidestep many consumer regulations, especially on the local level. The B2B construct streamlines the regulatory hurdles by dumping them on the reps, who frankly are less likely to be harassed by local authorities.


The "bottom of the distribution chain" is the end user. When you buy a coke from Walmart, unless you plan on reselling it then you are the bottom of the distribution chain.

There are two things that are funny about this to me:

1) It is an admission that MLMs are not business opportunities, but just buying clubs with very limited selection. Wow, that is not much of a sales pitch.

2) Many people actually make money buying coke from walmart and reselling it at events such as garage sales and flea markets for far better margins than most MLM participants. So walmart is the ultimate MLM?


Again, the consumer is the "bottom" of the distribution chain.

No, the consumer is the endpoint the distribution chain is trying to reach, the bottom of the chain is the person giving the customer their product.

You are trying to claim that my cup is part of our municipal water system. It doesn't make sense. At least not outside of the MLM construct where the company only cares about selling to reps and doesn't really care if the reps sell anything so long as they keep buying.
 
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The "bottom of the distribution chain" is the end user. When you buy a coke from Walmart, unless you plan on reselling it then you are the bottom of the distribution chain


The consumer is, the consumer and the end point of the distribution. If you want to get into a meaningless semantic argument so be it, it's red herring from the fact that the people 'selling' things overwhelming almost to a person loses money. Thus, it's not a business.


Again, the consumer is the "bottom" of the distribution chain.


Which says nothing about the criticism.

See above. The bottom of the distribution chain is the end consumer.

See above.


Given most MLM participants don't do any work, nor have expenses outside their membership fee how have you come to this conclusion?


Well first that's a lie. Who joins a club to buy things and then never buys things? Second, that's they 'don't do any work' or 'lazy' argument. 99.98% of people are so lazy they can't make any money at a prime business opportunity?

I'm so glad you asked how I came to that conclusion. The businesses through discovery forced by the state set out numbers, numbers that exclude many participants, and still come to numbers north of 99% of people losing money and many not making a single sale.

US Bureau of Consumer Protection. "Multilevel Marketing Plans." Federal Trade Commission (US). US Federal Trade Commission, 24 Apr. 2009. Web. 7 Nov. 2009. <http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv12.shtm>



Why do you believe that someone who joins an MLM primarily to get discount pricing is "lazy"?

This loaded question presupposes that that is the reason people join MLMs, which are marketed and distributed as business opportunities.

You have to show that is what a large minority of people do. It is certainly not what the majority do.

If you want to join a discount club, join a discount club. There are many of them, they are marketed as such, and are not MLM. Costco, Sam's Club, book buying clubs, prescription discount plans... none are MLM.
 
Many MLMs don't collect this data because then the MLM company would have to collect sales tax and be a licensed retailer in many states. Some may take this burden on but many do not.

Collection of sales taxes is normal for MLM companies.

Your views seem to be based on a small sample of probably quite insignificant companies.

B2B transactions sidestep many consumer regulations, especially on the local level. The B2B construct streamlines the regulatory hurdles by dumping them on the reps, who frankly are less likely to be harassed by local authorities.

Again, you seem to be basing your views on relatively minor players in the MLM field.

1) It is an admission that MLMs are not business opportunities, but just buying clubs with very limited selection. Wow, that is not much of a sales pitch.

This is something I'v never understood from the MLM crowd - the belief that it can't be both. Did you know you can go to CostCo and buy something and then eat it - or you could take it to your lemonade stand and sell it. Both a buyers club and a business opportunity!

Could you explain to me why you think it can't be both? Every government authority that's examined the industry has acknowledged a large percentage treat it as a "buyers club" and have never raised concerns about this, or indicated it can't be both.

2) Many people actually make money buying coke from walmart and reselling it at events such as garage sales and flea markets for far better margins than most MLM participants. So walmart is the ultimate MLM?

There you go - Walmart as both retail store and business opportunity! :)

No, the consumer is the endpoint the distribution chain is trying to reach, the bottom of the chain is the person giving the customer their product.

Fine, if you want to choose that description go ahead. But don't then simultaneously complain that the end consumer is part of the distribution chain but not making money.

You are trying to claim that my cup is part of our municipal water system. It doesn't make sense.

What? Don't be ridiculous. The cup is not part of water distribution. I buy pasta from Amway. When I take ownership of the pasta I'm the end point of the distribution chain, not my plate.

At least not outside of the MLM construct where the company only cares about selling to reps and doesn't really care if the reps sell anything so long as they keep buying.

This is, at least partly, a valid criticism. If people are purchasing out of loyalty (not necessarily a bad thing, all companies want brand loyalty) then it's difficult for companies to assess their pricing model. A smart company is going to care about what the reps are doing, because you'll obviously be far more successful if you can lower churn rates, and churn rates will be lower if people are (a) happy with the products they buy and/or (b) making money.

MLMs, including Amway, have certainly had the problem of people encouraging "just support your own business!" without question. Joecool (who I have on ignore, but I know his story well) was part of an Amway group that encouraged that kind of behaviour. It's not smart business, either for an individual rep or the company as a whole. It's important that reps don't support products they think are poor value.
 
The consumer is, the consumer and the end point of the distribution. If you want to get into a meaningless semantic argument so be it, it's red herring from the fact that the people 'selling' things overwhelming almost to a person loses money. Thus, it's not a business.

Have you got any evidence to support that claim?

Which says nothing about the criticism.

What? A complaint that a consumer isn't making money?

Well first that's a lie. Who joins a club to buy things and then never buys things?

Who suggested people join a club and then don't buy things? I certainly didn't. Or are you again suggesting that people who buy things for personal consumption should consider this "work" and somehow be profiting from it?

Second, that's they 'don't do any work' or 'lazy' argument. 99.98% of people are so lazy they can't make any money at a prime business opportunity?

You're calling me lazy? I'm registered with Amway, I'm not building an Amway business. Is it because I'm lazy? Or is because I'm working 80hr weeks on other projects that I've chosen to prioritise?

I'm so glad you asked how I came to that conclusion. The businesses through discovery forced by the state set out numbers, numbers that exclude many participants, and still come to numbers north of 99% of people losing money and many not making a single sale.

And here am I, having been researching and writing about this industry for a decade and I've never been able to find this evidence!!

Care to share it?

US Bureau of Consumer Protection. "Multilevel Marketing Plans." Federal Trade Commission (US). US Federal Trade Commission, 24 Apr. 2009. Web. 7 Nov. 2009. <http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv12.shtm>

link doesn't work.

This loaded question presupposes that that is the reason people join MLMs, which are marketed and distributed as business opportunities.

and simultaneously marketed as a way to get the products cheaper!

You have to show that is what a large minority of people do. It is certainly not what the majority do.

I already provided you with the links to the FTC assessments that included this information from multiple companies. The FTC had no problem accepting it, why do you think they are wrong?

If you want to join a discount club, join a discount club. There are many of them, they are marketed as such, and are not MLM. Costco, Sam's Club, book buying clubs, prescription discount plans... none are MLM.

So here's the same issue that arose with Dr Keith - this belief that it cannot simultaneously operate as both?

Can you explain why not?

Can you explain why you and Dr Keith have an issue with this possibility, but official bodies do not?

Do you know that you can buy stuff from Costco and Sam's club and resell it? Do you propose they should somehow ban this? Why?
 
Well first that's a lie. Who joins a club to buy things and then never buys things? Second, that's they 'don't do any work' or 'lazy' argument. 99.98% of people are so lazy they can't make any money at a prime business opportunity?

I'm so glad you asked how I came to that conclusion. The businesses through discovery forced by the state set out numbers, numbers that exclude many participants, and still come to numbers north of 99% of people losing money and many not making a single sale.

US Bureau of Consumer Protection. "Multilevel Marketing Plans." Federal Trade Commission (US). US Federal Trade Commission, 24 Apr. 2009. Web. 7 Nov. 2009. <http://www.ftc.gov/bcp/edu/pubs/consumer/invest/inv12.shtm>

This loaded question presupposes that that is the reason people join MLMs, which are marketed and distributed as business opportunities.

You have to show that is what a large minority of people do. It is certainly not what the majority do.

If you want to join a discount club, join a discount club. There are many of them, they are marketed as such, and are not MLM. Costco, Sam's Club, book buying clubs, prescription discount plans... none are MLM.

I think it's clear that Icerat is misrepresenting to make MLM look good, for whatever reason. His assertions have been clearly debunked and he is pinpointing semantics and other tricks to sway the discussion.

This is absolutely right and the only way the MLM companies can make their numbers look better is to exclude various portions of their population. Then Icerat will chime in that these IBO's (Independent Business Owners) are really just buying club members, but cannot explain why someone would join a buying club where you pay more than a retailer. Indeed why not join Costco or Sam's Club.

This is the pinpoint truth:

The businesses through discovery forced by the state set out numbers, numbers that exclude many participants, and still come to numbers north of 99% of people losing money and many not making a single sale.
 
I think it's clear that Icerat is misrepresenting to make MLM look good, for whatever reason. His assertions have been clearly debunked and he is pinpointing semantics and other tricks to sway the discussion.

I'd be more impressed with Icerat if she / he stopped bickering about terminology and gave some cold, hard numbers on what they did to make a profit selling Amway, and how many hours a week it took.

Enough with the semantics and tautology, let's get to the math!

Icerat, how much were you making per hour when you sold Amway products?
 
This is absolutely right and the only way the MLM companies can make their numbers look better is to exclude various portions of their population. Then Icerat will chime in that these IBO's (Independent Business Owners) are really just buying club members,

I'm suddenly reminded of Ekonomikrisis, the Phoenician merchant from the Asterix comics. Next think is they've won a tombola? :)
 
I'd be more impressed with Icerat if she / he stopped bickering about terminology and gave some cold, hard numbers on what they did to make a profit selling Amway, and how many hours a week it took.

Enough with the semantics and tautology, let's get to the math!

Icerat, how much were you making per hour when you sold Amway products?

That's a reasonable question, but it's not actually a sensible question. How much did Ingvar Kamprad make per hour when he was selling furniture?

Some people treat Amway as a sales job, but I wasn't - I was doing it to build a business. Neither I, nor anyone else, has done any work in the network I built for about 15 years, and it continues to generate an income because there's a solid core of customers who continue to purchase products from Amway, order on the website, get them shipped home to them. We (well, mostly my former wife, but that's another story) get a percentage from Amway for being the ones who first introduced them to the products. Some months it's single figures, some months it's been 4 figures, all depends what people are buying. I don't think there's been a month it's been zero though. If I drop dead tomorrow it will still generate income. There's no real way of calculating an "hourly rate" that was earned until it stops paying. And of course, as any entrepreneur will tell you, when you're involved in a startup you don't clock in your hours! Put it this way, I've been working on another business project the last few years and I've put in at least 50 times more hours in to it than I did in to Amway, and tens of thousands more dollars, and it's yet to generate any income. That's life as an entrepreneur! :)

So, what did I do? Varied from month to month, but I found when I was doing what was recommended, the business grew. In short, learn what to do and show the business and products to at least 15 people a month consistently and it will grow. A few people will be interested in trying the products. A few people will be interested in trying the business side. That's exactly what I found happened, and I reached break even point within a few months, working maybe 10-15hrs/wk on average.

What I didn't do was do that for long enough to develop a solid core group of people doing the same, for their own reasons. If I had then the network (and my income) may have continued to grow. My sponsor, an old friend, stopped building their Amway business when they moved countries and started a chocolate factory, something they'd always wanted to do. At the time their Amway business was generating about $25,000 worth of sales a month. Now it does at least 20 or 30 times that volume. How? Another friend of theirs that they introduced continued to develop their business. Their friend, working part-time, makes a solid full-time equivalent income from it, they continue to earn a small percentage for finding him, training him, and helping him get started.

It's really not that complicated. The problem is, as I've seen so much here is that people make certain assumptions about the industry that just aren't true. Probably the biggest assumption is that the products have no legitimate market demand, and then they move on from there to make various conclusions. False assumptions lead to false conclusions.
 
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Enough with the semantics and tautology, let's get to the math!

Let's use the Amway 6-4-2 plan. The assumption is that I sponsor 6 people, (who do less than me) who sponsor 4 who then sponsor 2 each. In the end there are 79 Amway distributors, each who did 100 points.

As the top dog, I am a platinum making about 2-3K per month with an annual bonus from Amway. The layer of 6 each earns about $200 to $250 a month. The layer of 4 (24) earns about $40 a month and the bottom layer (48 distributors) earns about $10 a month.

We know that there's no group of Amway distributors where everyone moves volume. Icerat himself admits that "most" just buy a few products and many do nothing, "indeed" don't even order a product. Thus a real life group of a platinum distributor is maybe 150 to 200 people. There's one platinum and a handful that might make $200 to $250 gross income.

Factor in business expenses and some training costs (cds, functions) and very likely everyone except the platinum loses money (net). If the group is 150 to 200 people, that's a fraction of 1% making a modest profit, although some data suggests that platinums can and do lose money when tools and training are factored in.

There's the math.....
 
Still find it amusing how "platinum" isn't even lower-middle-class income.

They have to keep making up newer, even higher sounding levels.
Double Diamond!
Triple Diamonds!
Quadruple Diamond with Platinum Bacon on the side!
Mega Penta-Platinum Impregnated Golden Ruby Level with Diamond Dust, Squared!

Yes, they are just about that silly too.
 
That's a reasonable question, but it's not actually a sensible question. How much did Ingvar Kamprad make per hour when he was selling furniture?

Some people treat Amway as a sales job, but I wasn't - I was doing it to build a business. Neither I, nor anyone else, has done any work in the network I built for about 15 years, and it continues to generate an income because there's a solid core of customers who continue to purchase products from Amway, order on the website, get them shipped home to them. We (well, mostly my former wife, but that's another story) get a percentage from Amway for being the ones who first introduced them to the products. Some months it's single figures, some months it's been 4 figures, all depends what people are buying. I don't think there's been a month it's been zero though. If I drop dead tomorrow it will still generate income. There's no real way of calculating an "hourly rate" that was earned until it stops paying. And of course, as any entrepreneur will tell you, when you're involved in a startup you don't clock in your hours! Put it this way, I've been working on another business project the last few years and I've put in at least 50 times more hours in to it than I did in to Amway, and tens of thousands more dollars, and it's yet to generate any income. That's life as an entrepreneur! :)

If your startup has been running for years and you're putting 50 times more hours into it than Amway (so I'm assuming at least 40 hours per week) and you've invested tens of thousands of dollars and it still isn't generating any income perhaps it's not a viable business OR a good use of your time.
 
Let's use the Amway 6-4-2 plan. The assumption is that I sponsor 6 people, (who do less than me) who sponsor 4 who then sponsor 2 each. In the end there are 79 Amway distributors, each who did 100 points.

As the top dog, I am a platinum making about 2-3K per month with an annual bonus from Amway. The layer of 6 each earns about $200 to $250 a month. The layer of 4 (24) earns about $40 a month and the bottom layer (48 distributors) earns about $10 a month.

We know that there's no group of Amway distributors where everyone moves volume. Icerat himself admits that "most" just buy a few products and many do nothing, "indeed" don't even order a product. Thus a real life group of a platinum distributor is maybe 150 to 200 people. There's one platinum and a handful that might make $200 to $250 gross income.

Factor in business expenses and some training costs (cds, functions) and very likely everyone except the platinum loses money (net). If the group is 150 to 200 people, that's a fraction of 1% making a modest profit, although some data suggests that platinums can and do lose money when tools and training are factored in.

There's the math.....

And Amway is one of the more reputable MLM programs!

That explains a lot of the motive behind the recruiting schemes. Ultimately, everyone selling Amway is your competitor, but you get a percentage of their income if they're in your downstream.

Some people treat Amway as a sales job, but I wasn't - I was doing it to build a business. Neither I, nor anyone else, has done any work in the network I built for about 15 years, and it continues to generate an income because there's a solid core of customers who continue to purchase products from Amway, order on the website, get them shipped home to them.

How many people are in your downstream?

How many levels of people do you have below you?

I would argue that you certainly CAN calculate a earnings per hour value now. For the last year it sounds like you've earned a considerable sum per hour for little to no maintenance work. How many hours were you putting in a week when you had your peak earnings?

Refusing to calculate your income per hour is a troubling thing to hear, as doing so is one component of figuring out if your current venture is worth pursuing. Do you have any formal business training?
 

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