Multi-level marketing: “You can’t lose”?

I have a friend who’s been job-seeking for a while, who recently signed up with a MLM company. Now that she has joined the company’s sales force as an independent contractor, she must purchase her own samples and products for company-set prices, and then market and sell those products (ideally at a profit) to make any money. She also can make money by recruiting others to sign up to do the same.  That is, when her recruits buy their own samples and products, at cost (for personal use and/or resale), my friend will get a commission on those purchases by her recruits.  So she can make money by selling and/or by recruiting others to buy/sell.  Costs of selling and marketing are not reimbursed, so the more she must spend to promote and compete, the less she will make.  

Let’s assume the products are indeed high quality products, albeit fairly unknown. Since the producing company does little marketing in the traditional sense of the word, my friend first will have to sell the brand to sell the product. Price, product, promotion, place… the marketing P’s are all her responsibility, along with those product samples. There is limit on the number of salespeople who can be recruited… no national brand advertising… no set retail prices… no defined territories. Every salesperson completes with every other salesperson and every customer can buy at wholesale by joining up as a salesperson. (My first thought: Why would anyone pay a marked up price by buying through someone else?)

They say she can’t lose. I can see only where the people at the top can’t lose. As for my friend – I don’t see how she can win.

This entry was posted in Uncategorized and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s