Where forth art thou?: Views on MLM from a reader

Monday, July 24, 2006

Views on MLM from a reader

Here's some views on MLM by a reader.

The entire concept of profiting from one's "downlines" is but a rehash of the impossible "something for nothing" pipe dream. MLM sell the dream of being able to sit back and take it easy while taking a cut from the junior agents' sales (i.e. downline).

At the end of the day, MLMs are but pyramid schemes in disguise.

Think about it, if the MLM concept of marketing is so effective, so revolutionary, so profitable, why is there not a single class in any reputable school of business offered on MLM?

But the way to make money in all this is clearly not by only selling product, otherwise you might have shown an interest in it before, through conventional market opportunities. No, the "hook" is selling others on selling others on "the dream."

Math and Common Sense

MLMs work by geometric expansion, where you get ten to sponsor ten to sponsor ten, and so on. This is usually shown as an expanding matrix (just don't say "pyramid"!) with corresponding kick-backs at various levels.

The problem here is one of common sense. At a mere three levels deep this would be 1,000 people. There goes the neighborhood! At six levels deep, that would be 1,000,000 people believing they can make money selling. But to whom? There goes the city! And the MLM is just getting its steam going. Think of all the meetings! Think of all the "dreams" being sold! Think of the false hopes being generated. Think of the money being lost.

[ . . . ]

The claim that an MLM is merely a "common man" implementation of a normal real-world distribution channel becomes even more absurd in this case. Imagine buying a product or service in the real world and having to pay overrides and royalties to five or ten unneeded and uninvolved "distributor" layers. Would this be efficient? What value do these layers of "distributors" provide to the consumer? Is this rational? Would such a company exist long in a competitive environment?

At the end of the day, MLMs are only powered by one thing: greed.

So far, I have not received any success stories - Maybe those people who made it big with MLM don't bother with the internet these days...


Anonymous said...

Hey xlx..

Thanks for highlighting the issues of MLM!

Ty Tribble said...

You're right MLM is not a good way to move products and services.

Mainstream companies and business people like Warren Buffet, Citicorp, Jones Apparel Group, Hallmark, Vanity Fair, Lillian Vernon and Jockey are all wrong.