This is in no way to defend Multi-Level marketing but one should know that the failure rate is very similar to that of more traditional small business start ups and those are a lot more than a $35.00 kit and a few hundred dollars of product per month until you wise up and figure out you're part of the 97% that it isn't going to work out for.
Nobody faults a person for blowing 10's of thousands of of their hard earned nest egg dollars to start their dream coffee or sandwich shop that ends up going belly up because Starbucks or Subway still does better marketing and maybe better coffee or subs. It's okay if someone sells the farm for what we deem acceptable...but try a kit for $35.00 and several hundred or a few thousand dollars later without results and it's the evil pyramid scheme. These companies wouldn't exist if it wasn't legal. Think cash advance stores. No one is all proud of those rip off artists are they? But they're legal and profitable!
Also, look at McDonalds...are their burgers really the best burgers you can get in any given town? No way...but they know how to market and be consistent.
What gives network marketing a bad name is all the network marketers that peddle the "it's so easy, just use the products and share them with a few who will also get three who will get three, it's not sales"...all entirely B.S.
Those that strike gold with network marketing are those who already have a very large network of people to tap into and/or absolutely positively bust their rear end off and get the proper training just like in any other profession.
In the end...its very hard work in a business that requires marketing mastery and yes...the phrase that no one in network marketing wants to hear or tell anyone else "sales excellence". At the end of the day...it's just another form of sales period....nothing more, nothing less unless of course you've told someone otherwise (lied like many do).
I have to get in a comment or two on this one. MLM's like Amway are still legal because they have a small army of attorneys working constantly to repel legislation that would shut them down. The corruption within the MLM industry is well documented. I cannot see any correlation to the failure of an MLM "distributor" to that of a traditional brick and mortar business. I have not checked the stats, so I am speculating that individual small business failure is nowhere near the failure rate of individual MLM failures. I'd say over 99% of MLM ventures by individuals fail.
With most MLM, the losses are small, usually in the hundreds before the individual distributor wises up and realizes that no rational person will buy their over priced product from them when they can get it cheaper at Wal-Mart. However, there are some people who wind up with bankruptcy and ruined lives. Here is one example of a guy who feels he was decieved by Amway/Quixtar and the associated Amway Marketing Association:
Merchants of Deception
This guy is so pissed, he has taken on the Amway legal machine. And he is not the only one. These orginizations are legal by the skin of their teeth and remain legal by the manipulation of the legal system. I cannot see any relation to MLM and the traditional business world.
The money in MLM is made by those who get in first and remain at the top of the pyrimid. To verify this, just look to the king of MLM, which is still Amway/Quixtar. Look at their top distributors like Bill Britt, Paul Miller, and Dexter Yeager. That is where the real money is. You can only make so much money off a bar of soap, and by the time the profits are spread down to the direct distributor level, there is nothing left; how could there be?
The real money in Amway is made through the sales of the so-called motivational material which is sold to the down line distributors. The downline is expected to purchase one motivational tape and one motivational book from their direct distributor's at a minimum each week. The big diamonds are the greatest beneficiaries of the revenue from these motivational materials. If these young distributors do not make the minimum required purchases each week, peer pressure is applied until they either buy or quit. I have seen this with my own eyes and know it to be true, and there are never ending reports of this all over the internet.
The way I see MLM is that it is basically a way to market over priced products to gullable people. If the products sold via MLM are so good, then why don't they sell it retail or over the Internet? Sales by coercion is what most MLM amounts to in my experience.
), and claim you'll get your investment back easily in the first year....even if you don't choose to market the plan and make 6 figures in your first year. Now a less than savy consumer who happens to do a lot of shopping could probably make the savings: else, you're either going to sucker a bunch of people or become one. It was friends/and reletives that showed me the plan; I tried to run the numbers for them, but didn't phase them, so I didn't have the heart to push it. The one I think will do alright in savings anyway, and they all like to meet people, so I guess they have a win-win situation even if they lose; but I'm not going down that road.
Won't be long though ......