Myth-busting MLM

Why is it that a style of business that generates literally billions and billions of dollars is so misunderstood in the UK?

Multilevel Marketing (MLM) has been around for many years and the top three are pretty much household names across the globe – Amwaym Herbalife and Avon.

They have a combined turnover of $18 billion.

Here in the UK many people mistakenly associate MLM with pyramid schemes. But they are fundamentally different. For a start they are completely legal and a tried and tested way of doing business.

Indeed, MLM offerings are just another way of getting products to market – and many would argue a better way because MLM companies rely on longer conversations between individuals to help decide on a purchase decision rather than traditional TV or print advertising.

There are many ways to exchange goods for cash and MLM is just another of them.

Shops are going out of fashion as e-commerce takes a global stranglehold on sales. Door to door selling no longer really exists.

The European Direct Selling Association describes MLM as: “The oldest form of retail in the world and refers to selling products directly to consumers, away from permanent business premises. The recipe for success? Trust in freedom and human relations.”

And from my experience it’s a great way of doing business.

I invested a small amount to secure business support and training from the company and buy the products to use myself. Then if I like the products and they work I recommend them to others who pay the company for them, and I get a commission. Brilliant – where’s the problem? Receiving a commission for a sale is perfectly normal.

I then also earn money if I recruit others to do what I’m doing – I create a sales team of like-minded people who believe in the product and sell it on. We all run our own little business for as much or as little time as we choose.

We control our own financial and work-life balance and destiny don’t we?

That’s MLM. And maybe that’s why it can get a bad press – we control our own destiny. It’s not 9 to 5 earning a set salary doing a job we hate. It’s not “normal”.

The mighty Wikipedia describes MLM thus: “Multi-level marketing (MLM), also called pyramid selling, network marketing, and referral marketing, is a controversial marketing strategy for the sale of products or services where the revenue of the MLM company is derived from a non-salaried workforce selling the company's products/services, while the earnings of the participants are derived from a pyramid-shaped or binary compensation commission system.”

Wikipedia is wrong. MLM is not “also called pyramid selling” – because pyramid selling is fundamentally different and is illegal.

The difference between a pyramid scheme and a lawful MLM program is that there is no real product that is sold in a pyramid scheme. Simple.

Here’s some advice if you want to check out a company in the MLM world. Find out:

  • How long the company has been in business – more than five years is good but new companies are not necessarily a bad thing – they may have a brilliant new product.
  • Whether it has a positive reputation for customer satisfaction
  • What the buzz is about the company and its product on blogs and websites
  • Is it registered with official bodies?
  • Does it have scientific, medical or other official efficacy?
  • Is it listed on a stock exchange?
  • Is it a member of the Direct Selling Association?

The Direct Selling Association UK (DSA UK) was founded in 1965 to represent the interest of the business engaged in the Direct Sales of Consumer goods (MLMs).

It is an incorporated association with more than 50 members, who engage with at least half a million people in the UK in the distribution of their products. It is first and foremost an association controlled by its Members.

Half a million people in the UK work in MLMs….with some quite famous brand names including: Herbalife Nutrition, Amway, Neolife and Nu Skin.

The volume of direct sales has been constantly growing over the last five years. Europe’s direct selling market is the third largest in the world, with total sales of over €34 bn in 2019, out of which €30.3 bn were achieved in the European Union.

More than six million people are engaged in direct selling in European Union. In the whole European region, the number of people engaged reaches over 15 million. Direct selling companies offer permanent employment to over 25,000 people in Europe.

Can 15 million people doing €34 billion in business be bad?