Mr. Dunning was very clear on his definitions, and clarified more in the comment section under the transcript. There are legitimate companies that resemble MLM. They are direct marketing where local people are recruited to sell catalog items to their friends. However, they do not rely on recruiting more and more distributors, creating a horrendously long supply chain or 'pyramid'.
This is where the clear misunderstanding is occuring. Companies that rely on "creating a horrendously long supply chain" are indeed pyramids - but they are not multilevel marketing companies by any definition I've seen outside themselves and those they've conned. One of the companies he attacked, Amway, certainly doesn't do this. Nor do any of the 95% of companies that are members of the Direct Selling Association and use multilevel plans.
What you, and Mr Dunning, are calling MLMs are not MLMs. Furthermore it appears you've taken the failings of pyramids and then attributed them, incorrectly, to legitimate MLM companies. For some circular reasoning I don't quite understand he then excludes some well known MLM companies, such as Avon and Mary Kay and says they're not MLM
even though they are, because they don't do the things that pyramids (not MLMS) do!
Besides that, legal or not MLM does have many of the same exact problems as pyramid schemes.
Such as? And please only list ones that
do not apply to other business types as well.
The other 9 out of 10 are eating the loss, having inventory that never sells.
Again your point out a feature of pyramid schemes posing as MLM, not pyramid schemes. Inventory loading is explictly against the rules of legitimate MLM companies, and such companies all offer buy-back policies. With Amway for example you can buy anything
and even if you use it, you can get a 100% refund. Anyone with unsold inventory is actively breaking rules to get bonuses or recognition they have not earned.
Plus you're being deceptive by counting the people who 'join' but never purchase. They didn't really join then did they?
Where in 100% agreement of the latter!But please tell that to Mr Dunning, as the "statistics" of "99% loss rates" etc include all of those types of people. It's he "including" them, not me.
No, it is not more logical. First off, who the hell likes Amway products?
Excuse me? My mother for a start. Me too. Insult me all you like, but leave my mother out of it!
I'd venture to suggest you don't have much experience with Amway products. You may want to review this (incomplete) list of
Amway's Awards and Recognitions. Amway has some of the best selling brands in the world, and has won many independent consumer awards for all sorts of products.
I also refer you to a University of Westminster publication -
Public Perceptions of Direct Selling: An International Perspective. You'll note that people who actually had experience purchasing products from direct sales companies (which are primarily multilevel) expressed positive opinions of both the products and service. Negative opinions were more likely to be expressed by those who had
not actually had any experience. Curiously then, people with experience have positive perceptions, but those with negative perceptions are relying on hearsay.
Secondly, Amway and Shaklee aren't the only MLMs. They aren't the be all and end all. If MLMs really make money by selling membership fees to 'distributors' and that is their main business, then they are not MLM. That makes them Membership, or Discount, clubs. Just like Costco.
I entirely agree. But first, neither Amway nor Shaklee make money from "selling membership fees", they're charged on a cost-recovery basis only. They make their money only from product sales. But yes, a great deal of their revenue is indeed through a "shopping club" type of arrangement. Even then you still need to market the service, and that's where the multilevel compensation aspect come in to play. It's not an either/or situation.
Your focus on Amway gives away your status as an Amway rep, distributor, or other shill.
My affinity with Amway is well known and not hidden. I run a number of pro-Amway websites. I'd please ask you to stick to talking facts though, rather than resorting to ad hominems.
Also, I'm guessing that the latest post on the comment's page didn't go up because you kept in your tags to get hits on your Amazon account. It counts as advertising or spam, and gets cleaned off the comment page. Of course it never hurts to try another little scam right?
The Amazon affiliate program is a scam?
Oh, and Avon and Mary Kay are NOT MLMs, so they can't help you.
Clearly, as I've already stated, you appear to be using the term "multilevel marketing" in a manner different to that which is generally accepted. I quote from the Westminster paper I linked to earlier -
In a multi-level marketing (MLM) company, the new participant is immediately offered the opportunity of benefiting not only from their personal sales, which again may be from person-to-person or party plan, but also from the sales of those who they may recruit, directly and indirectly, into the business. They will be paid over-ride commissions and bonuses based on the acceptance of their ongoing responsibility to train and motivate these recruits.
From the glossary of terms of an EU study on
Door to Door Selling - Pyramid Selling and Multilevel Marketing.
Multilevel Marketing is a form of Direct Selling where Direct
Sellers are independent (buy/sell-) dealers who may
- purchase the company's products at a rebated price for resale or own and the family's use or consumption,
- resell them to consumers and/or independent dealers and
- recruit (sponsor) other independent dealers who in turn may recruit additional independent dealers.
They receive overrides based upon their own sales (or purchases) of such products as well as upon the sales (or purchases) of independent dealers in their direct recruiting line to the extent defined by the company marketing plan.
From the FTC -
Multilevel marketing plans, also known as "network" or "matrix" marketing, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you will receive commissions -- for both your sales of the plan's goods or services and those of other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributor's "downline."
From
avoncompany.com -
The Avon Leadership Program is a multitiered compensation program that gives top-selling Representatives, known as Leadership Representatives, an enhanced career path. The program allows Representatives to obtain earnings from commissions based on sales made by the Representatives that they have recruited and trained, as well as profits derived from their own sales of Avon's products.
From marykay.com -
Independent Sales Directors still maintain their customer base and sell Mary Kay® products while sharing the business opportunity with other women. Independent Sales Directors serve as mentors to Independent Beauty Consultants by providing ongoing leadership, guidance and recognition.
Independent Sales Directors can earn additional income through commissions paid directly by Mary Kay Inc.
