MLM Math

[icerat]

The MLM model doesn't make sense from a logical standpoint if you think about the standard selling model (MU is mark up)

A -> (A + MU) -> B -> (B + MU) -> C and so on.

But in an MLM that chain keeps going until the MU gets insane.

No it doesn't. That's not how MLM works at all, maximara. Your views are apparently based on a thorough misunderstanding of the model.

 

[icerat]

Again, there may be. For example, doing so implies a continuing relationship because the transaction isn't "clean" - that is, it isn't completed when the merchandise trades hands. If the relationship ends abruptly, the transaction may fail due to the time delay. But, in the abstract, there is nothing wrong with doing it that way.

It also adds a layer of accounting and trust that could raise issues, depending on with whom you are dealing.

If anything, wouldn't a history of handling these payments properly and on time be a plus?

Anyway, you've agreed that

(1) there's nothing inherently wrong with buying in bulk and getting a discount
(2) there's nothing inherently wrong with calculating the discount over a period of time and returning a rebate.

So -

(3) is there anything inherently wrong with then selling those product(s) to someone else at a markup?

 

[Joecool]

If anything, wouldn't a history of handling these payments properly and on time be a plus?

Anyway, you've agreed that

(1) there's nothing inherently wrong with buying in bulk and getting a discount
(2) there's nothing inherently wrong with calculating the discount over a period of time and returning a rebate.

So -

(3) is there anything inherently wrong with then selling those product(s) to someone else at a markup?

Icerat's argument falls apart because IBO's are not buying in bulk and getting a discount. They are paying premium prices plus shipping because MLM opportunities creates many more middlemen (who get a cut) than a buyer's club such as Costco or Sam's club.

Again, there's not discount so there's nothing to calculate. What's more, some MLM's have leech companies attached to them that sell training, which nearly assures distributors of a net loss.

There's nothing wrong with selling items for a profit. But in many cases, MLMer's sell to nobody but themselves, save for sympathetic family and friends. Thus the opportunity is more about getting downline to leverage your volume but making the chain unsustainable.

 

[CynicalSkeptic]

Just an opinion or got anything remotely like evidence?

Here's a starting point, the world's top 100 largest direct sellers, nearly all of whom use MLM compensation incentives.

Here's another starting point, the best franchise opportunities, nearly none of whom use MLM compensation incentives.

 

[superfreddy]

I have a somewhat naive question.

Can I go directly to Amway and buy $100K worth of products and sell them directly to consumers via eBay?

If the products are as good as they claim, that would be the most efficient approach to get the products in the hands of consumers and for me, as the direct seller, to make a whole lot of money since no commissions would need to be paid to intermediates.

 

[CynicalSkeptic]

Yes, I made money and helped others make money. You can understand therefore why I find it absurd when people say you can't make money.

I missed this earlier. I don't think anybody has said you can't make money, just that 99% of IBOs don't. And someone gave a few examples of the most successful MLMers being successful because they moved into a new market, which reinforces the belief that only those at the top of the pyramid... err, sorry, those who get in early have a much better chance of success.

 

[CynicalSkeptic]

I have a somewhat naive question.

Can I go directly to Amway and buy $100K worth of products and sell them directly to consumers via eBay?

Apparently, you can.
http://www.ebay.com/sch/i.html?_odk...d=m570.l1313&_nkw=glister+toothpaste&_sacat=0


Icerat, what is the wholesale and retail price on Glister toothpaste?

If the products are as good as they claim, that would be the most efficient approach to get the products in the hands of consumers and for me, as the direct seller, to make a whole lot of money since no commissions would need to be paid to intermediates.

Ahh, but that's not the point of an MLM business. The point is to build a downline, and have them do that work for you.

 

[Joecool]

I have a somewhat naive question.

Can I go directly to Amway and buy $100K worth of products and sell them directly to consumers via eBay?

If the products are as good as they claim, that would be the most efficient approach to get the products in the hands of consumers and for me, as the direct seller, to make a whole lot of money since no commissions would need to be paid to intermediates.

While people sell stuff on ebay and craigslist, I believe it is against Amway rules. It is also against Amway rules to advertise (without going through Amway's red tape) without approval from Amway. You also aren't allowed to sell Amway stuff at retailers. Thus you couldn't sell the stuff to Walmart at cost (for example) just to get the volume bonuses.''

 

[CynicalSkeptic]

FTC Bureau of Consumer Protection

Not all multilevel marketing plans are legitimate. If the money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it’s not. It’s a pyramid scheme. Pyramid schemes are illegal, and the vast majority of participants lose money.

 

[icerat]

Here's another starting point, the best franchise opportunities, nearly none of whom use MLM compensation incentives.

How many on that list have startup costs less than $500, refundable?

 

[icerat]

I have a somewhat naive question.

Can I go directly to Amway and buy $100K worth of products and sell them directly to consumers via eBay?

You could, but you'd be in violation of your contract.

If the products are as good as they claim, that would be the most efficient approach to get the products in the hands of consumers and for me, as the direct seller, to make a whole lot of money since no commissions would need to be paid to intermediates.

A question for you, superfreddy. Let's say I create the best bluetooth stereo headset in the world. (I've been looking for one). The sound, comfort levels, and features are amazing and once you'd tried it you'd never use anything else.

I put it on ebay. It costs more than many of the other bluetooth stereo headsets on ebay.

How many people do you think would buy it?

 

[Joecool]

A question for you, superfreddy. Let's say I create the best bluetooth stereo headset in the world. (I've been looking for one). The sound, comfort levels, and features are amazing and once you'd tried it you'd never use anything else.

I put it on ebay. It costs more than many of the other bluetooth stereo headsets on ebay.

How many people do you think would buy it?

That's why Amway products don't sell. They aren't the best products but they cost more than other same or similar products.

 

[icerat]

Icerat, what is the wholesale and retail price on Glister toothpaste?

Cheapest you can get it is about $3.06/tube (3 months use, brushing twice/day)
Rec Retail is $4.35, but it's not a product that's usually retailed.

Why?

Ahh, but that's not the point of an MLM business. The point is to build a downline, and have them do that work for you.

Yes, just like most business owners want to develop their business such that there's more people working for it that just themselves, and helping them increase their profit. If all you are interested in is a sales job, and you want to do that full-time, then there are almost certainly better options for you.

I missed this earlier. I don't think anybody has said you can't make money, just that 99% of IBOs don't. And someone gave a few examples of the most successful MLMers being successful because they moved into a new market, which reinforces the belief that only those at the top of the pyramid... err, sorry, those who get in early have a much better chance of success.

Oh good grief. Do I need to put you on my ignore list like Joetroll? I may as well since you're apparently ignoring me. I've already, several times on this thread, pointed out that virtually ALL of the most successful people in Amway in the US joined long, long after Amway began and are nowhere near "the top".

This isn't theoretical, this is well known history, covered in many independent sources. Heck, as I also have already pointed out, several times on this thread, the FTC also linked in to this kind of belief more than 35 years ago and dismissed it as wrong. Even just a cursory understanding of the compensation plan shows this to be nothing more than misinformed nonsense.

You seem to be very choosy on what you want to be cynical and skeptical about, Cynical Skeptic.

FTC Bureau of Consumer Protection

Yup, what's your point?

 

[Joecool]

Cheapest you can get it is about $3.06/tube (3 months brushing twice/day)
Rec Retail is $4.35, but it's not a product that's usually retailed.

Yes, and although you can get Aim for like $1.00 a tube, icerat still argues that glister is a better value because of a smaller hole in the tube, "forcing you to use less"

Oh good grief. Do I need to put you on my ignore list also? Since you're apparently ignoring me already. I've already, several times on this thread, pointed out that virtually ALL of the most successful people in Amway in the US joined long, long after Amway began and are nowhere near "the top".

Even if these "successful" people joined long after Amway began, non of them are relative newbies. There are folks like Puryear who joined in the early 80 and Yager who joined in the 70's. There are no US crown ambassadors that I know of who joined from 2000 to now.

I know there might be some big pins in foreign countries where Amway's name and reputation have not yet been saturated and tarnished like is has in the US.

Still, these "successful" people are still a tiny fraction of 1%.

With all the tools being sold these days, I would guess that even platinums are losing money, in line with the AG study done in Wisconsin showing that the top 1% of Amway distributors were losing over $900 annually.

 

[maximara]

The fact you continue to quote a fake study by Taylor says everything about you and little about the industry. Just because a couple of mathematicians in a non-peer reviewed conference presentation cite his fake study in their paper doesn't make it any less fake.

You tried this piece of delusion on Wikipedia's MLM talk page claiming Cruz's Paper wasn't peer reviewed and that spectacularly blew up in your face. Since your link goes to a reference to Cruz's paper I must assume you are trying the same BS here.

The requirements for the 2007 conference papers were as follows: "Papers may be submitted from January 2, 2007 to March 26, 2007 and must be in sufficient detail for the referees to judge their meaning and value. Submissions must be in English and should be 5 - 30 pages in length (there is also a maximum 2 MB electronic file size). Abstracts will not be accepted. Submission of models and other supporting materials to enable replication and aid the review process is encouraged in all cases (maximum file size 2 MB in addition to the paper). [...] All works submitted will be assigned for double blind peer review. The results, with the oversight of the program chairs, will determine whether a work will be accepted, and the presentation format for the work." Other than the dates the 2009 requirements are the same.

The fact is Taylor's paper is cited in peer reviewed work after peer reviewed work shows that there is something there...otherwise the reviewing communities wouldn't allow it to be used. As pointed out in the above linked talk page Taylor as well as Fitzpatrick have been cited in peer reviewed works in anthropology, law, and psychology as well as in business. As was stated on the referenced wikipedia page "(e)ither the scholarly review boards across four different profession have lost their marbles and the Law students have lost theirs as well or these people are considered reliable. I wager the later is more likely."

Of course what else can we expect from someone who FALSELY claimed The Business School for People Who Like Helping People, Robert Kiyosaki was by "recognized publishing companies and not self-published" even trying to claim that they never made that statement in the first place.

Please note the original link provided by "Insider201283" goes to the edition published by Cashflow Technologies ... a publisher '"owned'' by Kiyosaki and who he is the president of so it NEVER fit the claim he made of "The books I've listed are only from recognized publishing companies and not self-published. As such they are considered good sources under Wikipedia guidelines WP:RS and WP:V."

 

[CynicalSkeptic]

Cheapest you can get it is about $3.06/tube (3 months use, brushing twice/day)
Rec Retail is $4.35, but it's not a product that's usually retailed.

Why?

To compare to prices on ebay. But you say thats not usually retailed, care to suggest something else?

 

[icerat]

The fact is Taylor's paper is cited in peer reviewed work after peer reviewed work shows that there is something there

Taylor's work remained non-peer-reviewed and unpublished. Peer reviewers rarely check sourcing, particularly when concerned with a field they no little about. Bad work being cited simply makes for more bad work. It doesn't suddenly make it good work.

Taylor's analysis fails even elementary statistics.

Instead of babbling your same old rants, how about you show where I'm wrong and Taylor is right? Do you believe it's OK to use "average" when working with data such as this?

 

[icerat]

To compare to prices on ebay. But you say thats not usually retailed, care to suggest something else?

Pretty much the point with direct sales is that you have products that have some unique features or benefits over competitors that need explaining by a marketing force. They're not trying to compete on price per se, they're trying to provide better value.

Herbalife for example has their nutrition clubs to provide weightloss support. Nutrilite the fact it's based on organic plant concentrates, Natura it's eco-friendliness etc etc.

And all of course (in theory) offer personal service.

I've noticed when "critics" do price comparisons they often simply go see if they can find some similar product cheaper. That's a ridiculously naive way of evaluating a business. There's probably not a business in the world were you can't find some competitor somewhere selling at least one similar product cheaper.

Price is not the only factor people evaluate in purchasing decisions, or in evaluating "value". The usual approach of the mlm critic implies that virtually every business in the world is somehow a bad proposition because you can usually get something vaguely similar, somewhere, cheaper.

Without having identical products, and ignoring "value added" service, my suggested approach to judging if an MLM product is legitimately priced is to not only look for the cheapest possible competitor, but also for the most expensive competitor. If people are buying those you then have an idea of the range of prices people are willing to pay, so it means there's a legitimate market within that price range. For an MLM with more than one product you need to repeat this for a range of products as well, to get an overall view.

Of course you still need to actually look at the products claims, ingredients etc, but simply looking for the cheapest might be competitor is not a legitimate approach.

 

[CynicalSkeptic]

How many on that list have startup costs less than $500, refundable?

Probably none. But then TANSTAAFL.

 

[CynicalSkeptic]

Pretty much the point with direct sales is that you have products that have some unique features or benefits over competitors that need explaining by a marketing force. They're not trying to compete on price per se, they're trying to provide better value.

Herbalife for example has their nutrition clubs to provide weightloss support. Nutrilite the fact it's based on organic plant concentrates, Natura it's eco-friendliness etc etc.

And all of course (in theory) offer personal service.

I've noticed when "critics" do price comparisons they often simply go see if they can find some similar product cheaper. That's a ridiculously naive way of evaluating a business. There's probably not a business in the world were you can't find some competitor somewhere selling at least one similar product cheaper.

Price is not the only factor people evaluate in purchasing decisions, or in evaluating "value". The usual approach of the mlm critic implies that virtually every business in the world is somehow a bad proposition because you can usually get something vaguely similar, somewhere, cheaper.

Without having identical products, and ignoring "value added" service, my suggested approach to judging if an MLM product is legitimately priced is to not only look for the cheapest possible competitor, but also for the most expensive competitor. If people are buying those you then have an idea of the range of prices people are willing to pay, so it means there's a legitimate market within that price range. For an MLM with more than one product you need to repeat this for a range of products as well, to get an overall view.

Of course you still need to actually look at the products claims, ingredients etc, but simply looking for the cheapest might be competitor is not a legitimate approach.

Yes thats why I asked about wholesale & retail price for glisten so I could compare to prices for the exact same product on ebay (see my previous link).