Where forth art thou?: Network Marketing Needs a Miracle

Wednesday, July 26, 2006

Network Marketing Needs a Miracle

Network Marketing Needs a Miracle

by Ramcem from SBF

"Network Marketing also known as Multi-Level Marketing started officially in the late 1940s with a company called Nutrilite. Amway is currently the world's largest MLM company. Network marketing is also considered a form of direct selling.

Wal-Mart started in 1962 by Sam Walton with discount retailing in mind. Started slightly later than Amway, let's see what the whole of network marketing industry & Wal-Mart, which is just one of the companies in discount retailing, has achieved.

Based on reliable statistics for the last 5 years, the whole of MLM industry has an average turnover of US$90 billion. Wal-Mart alone has an average turnover of US$250 billion, almost 3 times the whole MLM industry combined. (Based on the latest annual report, Wal Mart's latest turnover till end Jan 06 is US$312.427 billion)

Funny, we have the whole of MLM industry competing against a single company yet Wal-Mart's astonishing results almost crush the whole MLM industry 3 times over.

Network marketing has been touted as the "future" of doing business since the days of Nutrilite. After half a century, Wal-Mart alone leapfrog the whole MLM industry 3 times over. MLM industry has a long way to go to even break the record of Wal-Mart today, even longer if Amway were to compete with Wal-Mart.

Don't get me wrong. I love the concept of network marketing more than discount retailing. If I buy a magic mattress from Wal-Mart at US$69.90, I get only that mattress even if I introduce my whole family to buy it. But if I buy that magic mattress in an MLM company and I introduce to my family, I can get recurrent income!

Hold on, wait a moment. The same magic mattress in an MLM company would have cost US$800 or more. So much hot air about MLM being a subset of direct selling!

Little wonder why the whole of MLM industry can't even beat a supermarket?

As of last year September 2005, the Walton family occupied the 6th to 10th position of the richest American with a total combined wealth of over US$75 billion surpassing even Bill Gates by a third. Sam Walton would be the world's richest man if he is still alive. Sam died in 1992.

Of the top 25 richest Americans, none of them come from the MLM industry. Most of them reached their positions by owning their companies (non-MLM), casinos, real estate etc.

Adding insult to injury to the MLM industry, Michael Dell occupy the 4th position after Bill Gates, Warren Buffet & Paul Allen. Michael Dell started his company using direct selling in 1984, much later than Amway in 1959. Today, Dell's turnover is about US$50 billion compared to Alticor (Amway's parent company) US$6.4 billion. Michael don't sell computers using direct selling approach at US$10k a unit.

What went wrong? Network marketing need a miracle."


Anonymous said...

well... wal-mart works on the basis of capitalism... cheap labour => more profit... it will only benefit the guy at the top. its the same for mlm. unless u are guy at the top, u wont earn anything. however, unlike capitalism which uses cheap labour to earn loads of cash, i believe that the top guy at mlm earn his money by exploiting men's greed... there is no such thing as earning big bucks without hard work. take a look at the people at the top, they have all done their homework before they started. dont be a follower, be a leader...

Anonymous said...

Thanks for thinking my article is worth your attention. :)


Ct™ said...

for ur infomation..wal mart only make himself rich...but thru MLM or amway..everyone will actually become rich and the risk of it to start a business thru mlm is so much smaller compare to other high risk business...if u compare it properly..eveything is quite balance...high risk high profit..low risk less profit...simple as tat..don be too stubborn looking at one side only...

sh said...

don u think anyone to become another wal mart owner will be miracle too...

Edgar said...

We have seen time and time again negative net profits for individual distributors of MLM. Why would anyone join a scheme that is almost certain of failing and yet refuse to participate in a higher risk investment that at least has a fighting chance of making money eludes me.

Go check out http://www.mlm-thetruth.com

blog posts said...

To CT, MLM is low risk, high profits (profits that are shared together with the qualified uplines). Make no mistake, MLM plans are not that balanced and the margins of said products are enforced through the High Selling Prices of the said products in MLM. It is not being stubborn, merely stating facts. Think about it and deal with it. And about the only "unconventional" business model it has, is that I have to pay cash to be an employee (or MLM terms - members).
To sh, it does not take a miracle to become the next Walmart. Think about it. It took Sam Walton, a lifetime of hard work (his hand-ons approach by helping out in the front-line ie. helping customers load up their purchases into their cars etc), learning (not just about his business, but also makes personal visits to stores that are failing to learn why they have failed so he can make sure Walmart doesn't make the same mistakes, etc), dedication (stick to his vision, even when he was laughed at or ridiculed in the first 5 years of his business) etc. How many of us can do what Sam Walton has accomplished? Hard Work, Life-long learning, Dedication to his Dreams to make them become a reality? In China, there are already several major Chain retail-outlets (numbering in the thousands throughout China and HK and Taiwan), and able to compete with Walmart for the long-term. Today, to many, a miracle often means "Divine Intervention" or "God's Deliverance". But in my dictionary, a miracle often means Hard work, Life-long Learning, Dedication together with God's Will. It cannot happen without both sides working together!