| Introduction | | | | that many promoters did not mention, in their push |
| Multi-Level Marketing (MLM) is a system of marketing | | | | for more people in their downline (and hence greater |
| that has been around for some time. Also known as | | | | wealth for them). |
| Network Marketing, it is a method of distributing | | | | Another practice many companies have (that makes |
| products that involves little or no mass advertising. | | | | for high dropout rates) is that of a 'maintenance'. |
| Instead, marketing of the product is spread by word | | | | Each month, their distributors must buy a certain |
| of mouth of its users. | | | | amount of their product to keep their downlines. |
| Of course, word-of-mouth marketing is around even | | | | With increasing expenditure and of both money and |
| longer than MLMs, so what makes it different? Unlike | | | | time (especially time) and sometimes alienation from |
| traditional word-of-mouth marketing, the users who | | | | friends and family (due to overzealous promoting of |
| spread the word for the company, and gets others | | | | the products to get a downline), the distributor gives |
| to buy the products, gets a commission for doing so. | | | | up - and all their work goes down the drain. |
| The person who spreads the word is called the | | | | The final point that personally bugs me is the fact |
| Sponsor or Upline, while the person whom he | | | | that the promoters always harp on the fact that |
| sponsors is called his Downline. | | | | MLM is a sure-win business model. They insist that |
| To make the deal even sweeter, the company gives | | | | everybody can succeed in having the MLM as a |
| the Sponsor a commission for products the Downline | | | | business, to attain financial freedom. |
| of his Downline buys! Many companies allow each | | | | Let me put it across very plainly. Is it possible for |
| Sponsor a network up to 6 levels deep. Hence the | | | | everybody to earn money from MLM? In order for a |
| name for this style of marketing - Multi-Level | | | | person to earn money from MLM, you need a critical |
| Marketing or Network Marketing. | | | | mass of downlines (as little as 256 persons or as |
| Legal Concerns | | | | many as 1024, if not more). Mathematically, it is a |
| Legally speaking, MLMs have been legal in Singapore | | | | folly to assume that there is no bottom of such a |
| since June 2000, when the government finally | | | | pyramid network. For those near the bottom, where |
| recognised it as a method of product distribution, | | | | are their critical masses coming from? |
| rather than a Pyramid Scheme. The U.S. government | | | | Ultimately, there must be somebody who is taking |
| (the land where MLMs first originated with a company | | | | money from outside of the MLM structure, and |
| called Amway) has slapped a whole list of conditions | | | | pumping it into the network of sponsors above. Now, |
| on an MLM system to set it apart from Pyramid | | | | I have no problem with that. There might be those |
| Schemes. | | | | who buys the products without taking it as a |
| Ethical Concerns | | | | business (also known in network marketing circles as |
| To me, many MLMs toe a very thin line to Pyramid | | | | 'consumers'). I was one of them (my money comes |
| Schemes. The problem does not lie with the | | | | from outside of the MLM structure). However, to |
| marketing system (which actually represents a very | | | | push MLM as a business where everybody can make |
| cheap method of product distribution for the parent | | | | money is simply unethical. |
| company). Rather, it lies with the people who | | | | Conclusion |
| promote the products. In some cases, the way the | | | | I personally do not have an anti-MLM pose (I used to |
| system is run by the company also makes it a form | | | | be a consumer, but not an active MLM business |
| of legalised Pyramid Scheme (if there is such a thing). | | | | leader). To me, it represents a distribution system |
| Why do I say that the problem lies with the people | | | | that takes away the wealth from the big boys (the |
| who promote the products? The problem is with the | | | | advertisers, the warehousing systems, the transport |
| fact that it is promoted as a means to get rich. Its | | | | systems, etc) and put it in the consumers |
| promoters want the downlines at all costs - it means | | | | themselves. For those who went in early and helped |
| more money for them. In order to get the downlines, | | | | the company market their products, their income will |
| they push the 'business model' and use hype and | | | | increase. |
| emotional draws to appeal to those who are looking | | | | For those who come in later, however, it is a |
| for more income. | | | | different story. My desire, for those who read this |
| More often than not, the products are very | | | | article, is to warn against the hype and emotional |
| expensive and marketable only to certain segments | | | | traps that comes from a desire to get rich quick. I |
| of the population (e.g. health products). In addition, | | | | also hope (against hope, perhaps) that those |
| many who are drawn to such MLMs are actually not | | | | promoters who have been pushing that |
| prepared for the kind of sacrifices and time required | | | | mathematically-impossible model will at least tell the |
| for the business to work. It can take as long as 1-2 | | | | truth to their potential downlines. |
| years, and thousands of dollars in expenditure before | | | | I welcome all feedback on this article. Till then, may |
| a profit can be turned in. These are the 'hidden' stuff | | | | you find health and wealth in your endeavours. |