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Multi-level marketing is a controversial marketing method where the company's revenue comes from non-salaried individual distributors. MLMs may also be associated with pyramid schemes.
Why MLM companies are rotten
- The FTC estimates that 99% of people joining MLM distribution lose money, with a very slim chance of actually earning money. Those that do earn money are very unlikely to be able to earn the national minimum wage.
- To distributors, it is very difficult to receive sales of products, therefore, they are likely to lose money on supplies they cannot sell.
- MLM companies blame distributors for failure. Even though it is very difficult to become successful as an MLM distributor, MLM companies will blame distributors for not working hard enough. They recommend distributors to spend money on advertising (which will lead to them losing even more money), or to try in-person door to door sales.
- Many MLM companies require distributors to recruit people to become distributors, and the recruited distributors to recruit distributors, and so on. This is where the pyramid scheme comes into place.
- They tend to target people who they see as desperate to become distributors, such as people who lost their job due to the COVID-19 pandemic, disabled people who cannot work, housewives, college students, etc.
- They promise high amounts of return when the chance of accomplishing that is very slim.
Why distributors are rotten
- It gets annoying on social media seeing advertisement posts from distributors trying to get sales.
- As it is difficult to get sales, some even turn to false advertising or exaggerated advertising.
- They tend to brag about their products.
- Unfortunately, there are many new distributors who aren't aware they will be losing money.
Notable MLM companies
- Amway - health and beauty products
- Arbonne - health and skincare products
- Cutco - kitchen cutlery
- Discovery Toys - toys for children (not to be confused with Discovery Kids, an unrelated toy brand)
- doTerra - essential oils
- Enagic - water ionizers
- Herbalife - nutritional products
- It Works! - health and beauty products
- Norwex - home cleaning products
- Rainbow - vacuum cleaners
- Tastefully Simple - packaged foods
- Young Living - essential oils