MLM Math

[Joecool]

The problem with MLM is that it may look legit on paper or in theory but in real life, it just doesn't work. Overall it probably does more harm than good to have MLM around..

While there might be some legitimate companies and some honest MLMer's, the industry is chock full of unethical folks selling false hopes and dreams to those who are gullible, needy, and unable to properly evaluate a business opportunity.

It also seems that regulatory agencies are quite lax in monitoring and going after the illegal MLM's.

 

[Jhau]

[Snip]

Of the 15-20% "active" a survey reported by Coughlin & Grayson (1998) in the International Journal of Research in Marketing found the "average" distributor spent 34 hrs a month on their business and earned around $418 ($12/hr) - 2.5 times what Stomatopoda's McDonald's job would have paid at the time.

Top distributors worked, on average, 4 times as much and earned 6 times as much. There was huge variability in the top earning group though, with some working as little as 11hrs/mth and one reporting 500hrs/mth (!). I'm guessing this reflects some relatively "new" distributors working extremely hard to develop an income quickly and the more "mature" businesses that generate significant incomes for less ongoing time investment. Average is a very unreliable statistic for groups like this.

Thanks for the detailed post.

Basically, looking at the above figures, it appears that someone working full-time selling Amway will earn less in gross earnings in a month than I earn, nett, in a fortnight - and I don't consider myself to be particularly well-paid.

I guess that it might be a viable career path for someone who is good at selling/marketing and who doesn't mind hitting up friends and acquaintances for sales, but it certainly sounds, from the above figures, that it's far from the norm for someone to make a decent living selling Amway products.

 

[icerat]

Thanks for the detailed post.

Basically, looking at the above figures, it appears that someone working full-time selling Amway will earn less in gross earnings in a month than I earn, nett, in a fortnight - and I don't consider myself to be particularly well-paid.

Those figures weren't from Amway. I believe it was a selection of different direct sales companies.

When I work I usually charge a lot more than that per hour too. There's lots of ways to make more money on a per hour basis than those averages.

But here's something for you to consider, and why network marketing is attractive to many people -

How much do you get paid when you don't work?

 

[Joecool]

But here's something for you to consider, and why network marketing is attractive to many people -

How much do you get paid when you don't work?

I get paid my normal salary when I don't work. It's called vacation credits.

Also, the same folks who pay me during my vacation also pay for my health insurance. Does your MLM cover medical, dental and vision?

 

[tyr_13]

Not true.



I'm fairly confident that will be overturned on appeal, but the judge's reasoning was that it was a pyramid because it didn't operate like Amway, which is self-evidently an MLM.



Do you believe people should steer clear of joining gyms, since for any individual just joining, getting fit is a long shot?

Do you believe people that should steer clear of dating sites, since for any individual just joining, meeting your life partner is a very long shot?

Do you believe people that African Americans should steer clear of college, since for any individual just joining, odds are you won't graduate?

Do you believe ill people should not bother getting prescription pharmaceuticals - because if they don't take them they don't work?

Seriously Adman, I don't get the logic of advice that says you shouldn't even consider something because if you don't do it you'll "fail".

How does that make sense?

None of those things are within an order of magnitude of the failure rate of MLM.

 

[icerat]

None of those things are within an order of magnitude of the failure rate of MLM.

Really?

So you believe if someone signs up for law school, and then doesn't go to lectures and doesn't graduate, that is evidence that law school doesn't work?

So you believe if someone gets a prescription medicine, and then doesn't take it, and doesn't get better, that is evidence that the medicine is ineffective?

That's really what you believe? Because that's how you're judging MLM.

The mantra of the anti-MLM crowd -

MLM doesn't work because people who don't do it don't succeed.

It's almost like you're disappointed it requires hard work over time and isn't some "get rich quick" ponzi scheme.

 

[maximara]

Only if you don't care about things like, oh facts.

Seriously, where do you get your info? From websites like Jokefool's? That's like getting info on the odds of alien life from Above Top Secret

Actually they more then likely got the information from The Times, Inter press service, Newsweek, Business Students Focus on Ethics, USAToday (citing the DSA's own figures), A System Dynamics Model for Studying the Structure of Network Marketing Organizations, Wiley, and McGeorge Law Review ie REPUTABLE publishers.

Scheibeler, a high level "Emerald" Amway member: "UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, 'only about 90 made sufficient incomes to cover the costs of actively building their business.' That's a 99.7 percent loss rate for investors." (Berkowitz, Bill (Jan 28, 2009). "Republican Benefactor Launches Comeback". Inter press service.)

Based on Mona Vie's own 2007 income disclosure statement "fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week." (Tony Dokoupil (August 2, 2008). "A Drink’s Purple Reign". Newsweek)

"In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)" (Business Students Focus on Ethics (2000))

"While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400." (Peterecca, Laura (September 14, 2009). "What kind of business do you want to start?". USAToday (Gannett Company). pp. 4B)

"It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers. And big money is what recruiters often allude to in their pitches." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much".)

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much".)

"Even if a [MLM] program isn't fraudulent, from a business point-of-view, MLM programs share the same fundamental flaws, including:

•Recruiting competitors. No one in legitimate business wants competitors. In MLM programs, your goal is to get lots of others selling the same product or service. In real businesses, you'd pay for exclusive territories. In MLM, you recruit competitors from among those nearest to you — in your church, neighborhood, friends – your best sales targets.

•Pay to be a customer. You'll buy products or services you sell as well as training materials. Overwhelmingly MLM revenue comes from those recruited to be 'business owners' within a program. I view most MLM programs as thinly-disguised schemes to find customers, not build businesses.

•You'll face pressure. Expect to be required – or pressured – to buy samples, marketing materials, training courses and tapes, attend seminars, and more. You're very likely to spend far more than you'll ever bring in from sales.

•You turn your friends and family into "prospects." MLM programs typically suggest you sell to – and recruit – people you know well. Do you really want to be constantly beseeching those closest to you?" Abrams, Rhonda May 8, 2009 "Strategies: Is multi-level marketing a good choice for you?" USAToday)

"It is considered that 99% of NMOs’ distributors lose profits because the costs associated with building the business exceed the returns." (Cruz, Joan Paola; Camilo Olaya (2008) "A System Dynamics Model for Studying the Structure of Network Marketing Organizations")

 

[maximara]

MLMs are like Homeopathy in that they made legal by powerful lobbying groups and in reality neither works as presented and cannot work as presented.

 

[maximara]

(snip)

Of the 15-20% "active" a survey reported by Coughlin & Grayson (1998) in the International Journal of Research in Marketing found the "average" distributor spent 34 hrs a month on their business and earned around $418 ($12/hr) - 2.5 times what Stomatopoda's McDonald's job would have paid at the time

Ah yes let's talk about the "Newwork Marketing Organization: Compensation Plans, Retail Nework Growth, and Profitability" paper shall we?

"The data were collected through a survey sent to the presidents of 150 NMOs" That is like sending a survey to foxes on how chicken coops should be designed. And they admitted that of that 150 only 32 bothered replying to the full survey, seven couldn't be sent in the first place (address was invalid) and three weren't MLMs anymore.

So the survey suffers from the same problem the Nielsen's rating systems does; it is not random in the statistical sense of the word. And that fact renders it totally useless.

And it claims are refuted by the later Cruz, Joan Paola; Camilo Olaya (2008) "A System Dynamics Model for Studying the Structure of Network Marketing Organizations" which states "It is considered that 99% of NMOs’ distributors lose profits because the costs associated with building the business exceed the returns."

 

[icerat]

Scheibeler, a high level "Emerald" Amway member: "UK Justice Norris found in 2008 that out of an IBO [Independent Business Owners] population of 33,000, 'only about 90 made sufficient incomes to cover the costs of actively building their business.' That's a 99.7 percent loss rate for investors." (Berkowitz, Bill (Jan 28, 2009). "Republican Benefactor Launches Comeback". Inter press service.)

A political opinion piece citing a former distributor in a legal dispute with Amway. A dispute he lost, and during which he had to apologise for misleading the press. Anyone who wants to can read the court case themselves and learn that Scheibeler lied. He's reporting a hypothetical situation using hypothetical numbers that the judge used as an example as if it was the reality.

Based on Mona Vie's own 2007 income disclosure statement "fewer than 1 percent qualified for commissions and of those, only 10 percent made more than $100 a week." (Tony Dokoupil (August 2, 2008). "A Drink’s Purple Reign". Newsweek)

Remember my first step in evaluating an MLM? Are they a member of the DSA? MonaVie is not. I don't agree with a lot of what they do, no interest in analysing it.

"In the USA, the average annual income from MLM for 90% MLM members is no more than US $5,000, which is far from being a sufficient means of making a living (San Lian Life Weekly 1998)" (Business Students Focus on Ethics (2000))

You're quoting an article by a Chinese student citing a media article as if it's factual? Really? Did you ever go to college, is that the kind of sourcing your professors supported?

Even then, the vast majority of MLM members aren't attempting to make a living, so what's your point?

Disappointed you can't make money for doing nothing?

"While earning potential varies by company and sales ability, DSA says the median annual income for those in direct sales is $2,400." (Peterecca, Laura (September 14, 2009). "What kind of business do you want to start?". USAToday (Gannett Company). pp. 4B)

Yup, and the vast majority put less than 10 hours a week of work in. What's your issue?

Disappointed you can't make money for doing nothing?

"It can be very difficult, if not impossible, for most individuals to make a lot of money through the direct sale of products to consumers. And big money is what recruiters often allude to in their pitches." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much".)

A media report that is clearly false. It is obviously possible to make "a lot of money" through this, many people have.

"Roland Whitsell, a former business professor who spent 40 years researching and teaching the pitfalls of multilevel marketing": "You'd be hard-pressed to find anyone making over $1.50 an hour, (t)he primary product is opportunity. The strongest, most powerful motivational force today is false hope." (O'Donnell, Jayne (February 10, 2011). "Multilevel marketing or 'pyramid?' Sales people find it hard to earn much".)

We already covered Whitsell's complete lack of credibility, and I've already provided a peer-reviewed published academic article with actual survey data showing he's wrong.

This shows your bias. You consider an unpublished "retired professor" from a community college, cited in a newspaper, to be a better source than peer-reviewed published data by established independent academics.

•Recruiting competitors. No one in legitimate business wants competitors.

ROFLMAO!!! Virtually *every* large business "recruits" competitors. Coca-Cola sells coke to consumers. They also sell coke to wholesalers, dsitributors and other retailers who on-sell the products to the same consumers.

Coca-cola recruits competitors!!!

This is one of the most idiotic criticisms of MLM I've ever read. It's just ridiculous.

•Pay to be a customer. You'll buy products or services you sell as well as training materials. Overwhelmingly MLM revenue comes from those recruited to be 'business owners' within a program. I view most MLM programs as thinly-disguised schemes to find customers, not build businesses.

Many MLMs are free to join. Statistics from companies like Amway and Herbalife conclusively show that the vast majority of MLM revenue comes from people *not* operating businesses.

You'll face pressure. Expect to be required – or pressured – to buy samples, marketing materials, training courses and tapes, attend seminars, and more. You're very likely to spend far more than you'll ever bring in from sales.

The statistic are clear. An independent analysis of Amway and affiliated training companies conducted for the Pokorny Class Action Settlement found that fewer than 18% of registered distributors even had $100 of expenses.

Internal statistics compiled by these training organisations show the same thing, the vast majority of people who register *do not* spend money on these things.

You turn your friends and family into "prospects."

A potential issue with any business. As long as you have an ethical product or service and are providing value to your customers, there's no problem.

"It is considered that 99% of NMOs’ distributors lose profits because the costs associated with building the business exceed the returns." (Cruz, Joan Paola; Camilo Olaya (2008) "A System Dynamics Model for Studying the Structure of Network Marketing Organizations")

Again, false. Independent actual data analysis, such as done for the Pokorny Class Action settlement, shows the majority have very few expenses.

Bruce, you're anti-mlm obsessiveness is one of the reasons why I gave up trying to improve wikipedia. You pick and choose your sources with zero interest in the quality of those sources. Heck, you even consider a book on discourse analysis citing a web page as a discussion point for students as a "peer-reviewed" document providing a factual assessment. You'll then drive anyone trying to provide factual data into a state of dispair

 

[icerat]

Ah yes let's talk about the "Newwork Marketing Organization: Compensation Plans, Retail Nework Growth, and Profitability" paper shall we?

"The data were collected through a survey sent to the presidents of 150 NMOs" That is like sending a survey to foxes on how chicken coops should be designed. And they admitted that of that 150 only 32 bothered replying to the full survey, seven couldn't be sent in the first place (address was invalid) and three weren't MLMs anymore.

So the survey suffers from the same problem the Nielsen's rating systems does; it is not random in the statistical sense of the word. And that fact renders it totally useless.

And it claims are refuted by the later Cruz, Joan Paola; Camilo Olaya (2008) "A System Dynamics Model for Studying the Structure of Network Marketing Organizations" which states "It is considered that 99% of NMOs’ distributors lose profits because the costs associated with building the business exceed the returns."

ROFLMAO!!!!!

There you go. In your world a scientific survey published in a peer-reviewed journal by credible published academics, yes, suffering all the weaknesses that surveys suffer from, is "refuted" by a self-published ebook by a career anti-MLM zealot who comes to his conclusions through a complete abuse of statistics and promoting the idea that, for example, when I want to was my hear and I buy shampoo from Amway I should consider it a business expense!!!

What's your experience, Bruce, that led you to such passion defence of this kind of thinking?

 

[Joecool]

Really?

So you believe if someone signs up for law school, and then doesn't go to lectures and doesn't graduate, that is evidence that law school doesn't work?

So you believe if someone gets a prescription medicine, and then doesn't take it, and doesn't get better, that is evidence that the medicine is ineffective?

That's really what you believe? Because that's how you're judging MLM.

The mantra of the anti-MLM crowd -

MLM doesn't work because people who don't do it don't succeed.

It's almost like you're disappointed it requires hard work over time and isn't some "get rich quick" ponzi scheme.

Really?

So you believe if someone signs up for law school, and then goes to lectures and doesn't graduate, that is evidence that law school works?

So you believe if someone gets a prescription medicine, and then takes it, and doesn't get better, that is evidence that the medicine is effective?

The mantra of the MLM zealot crowd:

MLM doesn't work because people do nothing. The fact is that you don't know what people do. They may not qualify for bonuses or make sales. Doesn't mean they did nothing.

That most distributors really just signed on as business owners for a discount
on products. That's just a convenient way to say they failed as business owners and occasionally buy some products. And even that claim in nebulous as again, nobody really knows.

Hard work and MLM success have no correlation. Seems that lying and deceiving are qualities that are more conducive to MLM success.

 

[JoeTheJuggler]

It's also the principle behind MLM.

No it's not. It's one of the sources of profit behind MLM, but it's not what distinguishes MLM from plain old M.

What does that is the business of getting income off the salespeople you recruit to form your downstream.

I note also that at best your claim here is that there is nothing unique or special about MLM. (And that's a false claim since it is characterized by the ability of getting a share of profits from the salespeople you recruit as well as from your sales.) Is that the case?

 

[icerat]

No it's not. It's one of the sources of profit behind MLM, but it's not what distinguishes MLM from plain old M.

What does that is the business of getting income off the salespeople you recruit to form your downstream.

I note also that at best your claim here is that there is nothing unique or special about MLM. (And that's a false claim since it is characterized by the ability of getting a share of profits from the salespeople you recruit as well as from your sales.) Is that the case?

The basic MLM compensation plan is the "stair-step breakaway" developed by Van Andel for Amway, building on the earlier plan by Mytinger and Casselberry for Nutrilite.

It's the plan used by the majority of the major MLMs. There's been many variants put under the same "MLM" umbrella since, more than a few of which I'd consider questionable.

The basic model has over the years evolved and had features added which mostly make things better and easier for distributors.

I think it's a useful exercise to go through the model historically to understand it, but the stair-step breakaway plan remains essentially "buy in volume, get a discount, sell at a markup".

If we go back to Amway in 1959, the difference cf with traditional business is as follows -

[TABLE="head;width=50%;valign=top"]traditional| |MLM
purchase in bulk to receive a wholesale price discount| |register as an agent to receive a wholesale price discount
buy greater volumes, receive a volume discount at purchase| |buy greater volumes, volume collated at the end of the month, receive a volume rebate
sell product to consumers with retail markup, earn immediate profit| |sell product to consumers with retail markup, earn immediate profit
sell product @wholesale in smaller volumes to other wholesalers or retailers with a wholesale markup, earn immediate profit| |sell product @wholesale in smaller volumes to other wholesalers or retailers, collate their volume at the end of the month, pay them a volume rebate, profit the margin
significant volumes needed to obtain a discount| |low volumes needed to obtain a discount
few levels of volume discounting available| |numerous levels of volume discounting available
recruit wholesale (ie resellers) & retail customers| |recruit wholesale (ie resellers) & retail customers
recruit staff to help increase sales volume, pay wages etc| |recruit new independent agents to help increase sales volume, pay them the same volume incentives you get
[/TABLE]

The first significant difference was that in MLM you calculated volume discounts at the end of the month and paid them as a rebate rather than calculate them at purchase time and give immediate discount.

The second significant difference was that the volume discounting began at a much lower level than was typical in traditional business, and more graduations, meaning it became possible to profit from wholesale markups on sales to other resellers with a much smaller business than was traditionally the case, which is why recruiting other resellers became a profitable option.

It remains though, that in this traditional MLM form profit is earned by buying in volume at a discount, and selling at wholesale and retail with a markup to earn profit.

 

[marplots]

Icerat,
Is the volume discount the same (for the same number of units) no matter where I am in the chain? I don't see how that could be made to work, unless the parent company is keeping all the usual credits.

But if that isn't the setup, and at each level there is retail sales, wouldn't someone getting a better volume discount be able to undercut the prices of people below them on the chain?

Or, is it the case that retail prices are fixed by the parent organization - something you didn't mention in your comparison with traditional businesses?

 

[icerat]

Icerat,
Is the volume discount the same (for the same number of units) no matter where I am in the chain? I don't see how that could be made to work, unless the parent company is keeping all the usual credits.

Yes, it's the same scale for everyone.

And yes, it works. Not sure what you mean by "keeping all the usual credits"

But if that isn't the setup, and at each level there is retail sales, wouldn't someone getting a better volume discount be able to undercut the prices of people below them on the chain?

Yes, just like Coca-cola could sell direct to the public cheaper than they sell to big retail chains. Or indeed any manufacturer, distributor etc.

In general though, you avoid doing this because by having additional distribution channels you get higher sales volumes. The smaller margin on downline (wholesale) sales is easily made up for by the larger volumes, thus overall higher profit.

Or, is it the case that retail prices are fixed by the parent organization - something you didn't mention in your comparison with traditional businesses?

In theory the prices are not fixed. In practice back in 1978/79 when Amway was investigated by the FTC as being a pyramid scheme, while they were cleared of being a pyramid, they were found guilty and fined for price fixing because through various monitoring mechanisms the court believed they pressured supposedly independent distributors to sell at the recommended retail price.

Today in places where Amway requires registration of customer sales they do not ask the final sale price. For many years Amway wouldn't even print the recommended retail price in print catalogues for this reason, leaving irritated distributors to go through hundreds of pages writing in their own pricing.

 

[xjx388]

You don't need studies to show MLMs don't make sense as a, "business opportunity."

1. There is no disputing the fact that most people who join an MLM system never make a dime. Spin that fact how you want, but it remains a fact.
2. You can't really make money selling the products at a retail markup. Well, you could theoretically, but the MLM system puts up barriers to making this a viable option: You can't sell in a retail store, you can't profitably undercut competition, etc. Therefore, your customer base will always be your friends and family -and how much can you really make that way?
3. True success depends on converting your customers into "distributors." What this translates to in practice is your family and friends buying products for themselves and you getting a chunk of that money. And that only lasts until your, "distributors," get tired of paying the still-exorbitant prices for the very ordinary products.
4. The products are crap. There is absolutely nothing available in an MLM that isn't available elsewhere, usually your local grocery/department store, for a much lower price. To say nothing of the fact that most of these products are pure snake oil. Eventually, people get tired of shelling out the big bucks for the MLM products.
5. The only people making real money are the people who got in early. The efforts of all the newbies, in 99% of cases, gets them nothing in profit but still lines the pockets of the upstream. How is that not a pyramid?

 

[tyr_13]

Really?

So you believe if someone signs up for law school, and then doesn't go to lectures and doesn't graduate, that is evidence that law school doesn't work?

So you believe if someone gets a prescription medicine, and then doesn't take it, and doesn't get better, that is evidence that the medicine is ineffective?

That's really what you believe? Because that's how you're judging MLM.

The mantra of the anti-MLM crowd -

MLM doesn't work because people who don't do it don't succeed.

It's almost like you're disappointed it requires hard work over time and isn't some "get rich quick" ponzi scheme.

Again, none of those have anywhere near the failure rate. Neither does any other type of business. What is unique to MLM that makes people work less than in ANY other field?

It's a special pleading, and a transparently silly one at that. That so vast an amount of the people joining a business simply aren't working isn't credible in the least. MLM has an absurdly high failure rate for some reason, and we can be almost certain it isn't because everyone doesn't work because that's not a problem any other businesses have to that level. If people don't work with MLM, then it's something to do with MLM that makes them not work more than any other way of making money.

Or people who join MLM are lazier than thieves.

 

[maximara]

You don't need studies to show MLMs don't make sense as a, "business opportunity."

1. There is no disputing the fact that most people who join an MLM system never make a dime. Spin that fact how you want, but it remains a fact.
2. You can't really make money selling the products at a retail markup. Well, you could theoretically, but the MLM system puts up barriers to making this a viable option: You can't sell in a retail store, you can't profitably undercut competition, etc. Therefore, your customer base will always be your friends and family -and how much can you really make that way?
3. True success depends on converting your customers into "distributors." What this translates to in practice is your family and friends buying products for themselves and you getting a chunk of that money. And that only lasts until your, "distributors," get tired of paying the still-exorbitant prices for the very ordinary products.
4. The products are crap. There is absolutely nothing available in an MLM that isn't available elsewhere, usually your local grocery/department store, for a much lower price. To say nothing of the fact that most of these products are pure snake oil. Eventually, people get tired of shelling out the big bucks for the MLM products.
5. The only people making real money are the people who got in early. The efforts of all the newbies, in 99% of cases, gets them nothing in profit but still lines the pockets of the upstream. How is that not a pyramid?

This is pretty much what Ogunjobi said though he only called the products 'overpriced'. He made some very relevant comments about MLMs today:

"Today, and especially with the growth of the internet, it is possible for consumer to get about whatever they want at competitive prices."

"In today's internet economy, there is simply no need for multi-level marketing or the overpriced products that they sell -- meaning that the only thing they are selling are memberships in anticipation that future memberships will be sold in the future, which is the classic definition of a pyramid scheme, and thus securities fraud.

Because products are available over the internet to everybody at lower costs than ever before, claims that "Multi-Level Marketing will take over the World!" are completely bogus."

Simple basic logic. If you can order directly from those that manufacture the goods then why do an MLM? All an MLM does is add to the middleman issue and that is what you are trying to get rid of.

Let's face it, mention MLM and most people hear "pyramid scheme". It certainly doesn't help that some MLMs describe themselves as "pyramid selling" which the online BusinessDictionary defines as "Illegal type of network marketing in which recruits pay an admission fee to join the scheme to earn commissions on persuading other people to join the scheme, but little or no product of any real value is exchanged."

MLMs are doing the same thing patent medicines companies were doing before the FDA existed and need the same reaction--wholesale regulation.

 

[icerat]

You don't need studies to show MLMs don't make sense as a, "business opportunity."

1. There is no disputing the fact that most people who join an MLM system never make a dime. Spin that fact how you want, but it remains a fact.

Most people who join a legitimate MLM system and then actually work that system make a lot of dimes. Spin that fact how you want, but it remains a fact.

2. You can't really make money selling the products at a retail markup. Well, you could theoretically, but the MLM system puts up barriers to making this a viable option: You can't sell in a retail store, you can't profitably undercut competition, etc. Therefore, your customer base will always be your friends and family -and how much can you really make that way?

As pointed out above, of course you can "undercut competition". There's also no reason inherent in MLM why you can't make money simply through retail markup, the question is - why would you limit yourself to that when the system is designed to make it easier to move from retailing to wholesaling?

3. True success depends on converting your customers into "distributors." What this translates to in practice is your family and friends buying products for themselves and you getting a chunk of that money. And that only lasts until your, "distributors," get tired of paying the still-exorbitant prices for the very ordinary products.

If this is correct (it's not) then the issue is poor quality products and/or pricing, not the MLM system.

4. The products are crap.

MLM distributed products win awards around the world. Are some crap? Of course, just like in traditional retail. Again though, there's nothing inherent in the MLM compensation plan that says it has to have poor products.

5. The only people making real money are the people who got in early. The efforts of all the newbies, in 99% of cases, gets them nothing in profit but still lines the pockets of the upstream. How is that not a pyramid?

It's completely false for a start and shows a complete lack of understanding of the business model. These guys qualified "Crown Ambassador" with Amway in the United States last year. Several years ago it was reported that the average income for a Crown Ambassador was over $1,000,000/yr. They joined Amway in 1995 - thirty six years after Amway began in the US. None - I repeat none of the 20 biggest Amway businesses in the US joined in the first few years after Amway began. None of them. Most didn't even join in the first decade.

It's a special pleading, and a transparently silly one at that. That so vast an amount of the people joining a business simply aren't working isn't credible in the least.

What isn't credible and transparently silly is this belief that they are! Even if we ignore clear independent research that refutes your belief, so does common sense. Do you know people die as a consequence of obesity. They. Die. Yet they still don't exercise!

What do you lose if you register with an MLM and then don't build a business?
Nothing.
What do you gain if you register with an MLM and then don't build a business?
The products at distributor pricing.

MLM has an absurdly high failure rate for some reason

The "reason" is people like yourself impose arbitrary definitions of success on other people, ignoring what they actually set goals and worked towards to achieve.

, and we can be almost certain it isn't because everyone doesn't work because that's not a problem any other businesses have to that level.

If people don't work with MLM, then it's something to do with MLM that makes them not work more than any other way of making money.

Now you're getting somewhere! It *is* (typically) different. The prime thing is that just signing an MLM app doesn't make you a business. It gives you the right to start a business and promote particular products. If I sign up as an Amazon affiliate, does that suddenly mean I'm in business? Without even setting up web links, or working? Of course not! Yet MLM critics like yourself have this ridiculous notion that simply signing a contract that gives you the right to start a business means you're actually running one.

I'm an authorised Microsoft reseller. I've never sold any Microsoft software. I have no store selling software. I have no website selling software. I have no staff selling software.

xjx388, why on earth do you think I have a business selling Microsoft software and should be making money from it?