From
Wiki:
The
network marketing or multi-level marketing business has become
associated with pyramid schemes as "Some schemes may purport to
sell a product, but they often simply use the product to hide their
pyramid structure." and the fact while some people call MLMs in
general "pyramid selling" others use the term to denote an illegal
pyramid scheme masquerading as an MLM.
The FTC
warns "Not all multilevel marketing plans are legitimate. Some are
pyramid schemes. It’s best not to get involved in plans
where the money you make is based primarily on the number of
distributors you recruit and your sales to them, rather than on
your sales to people outside the plan who intend to use the
products."
Criticisms of MLM include: price-fixing of
products, high initial start-up costs, emphasis on
recruitment of lower-tiered salespeople over actual sales,
encouraging if not requiring salespeople to purchase and
use the company's products, potential exploitation of
personal relationships which are used as new sales and recruiting
targets, complex and sometimes exaggerated compensation schemes,
and cult-like techniques which some groups use to enhance
their members' enthusiasm and devotion.
-
And
here's my personal experience, fresh out of JC last year:
I tagged
along with my friend to Premier Pure's office at Bugis and they
were hard selling us the job. Firstly, they insisted that we sign
employment forms immediately (we did, which I realized was a stupid
decision on my part later). Lots of her friends were working there
and one of her ex classmate gave us a 'job overview' - and despite
repeatedly asking him what EXACTLY does the job entail, he did not
answer the question and went on and on about stuff like their
successful bosses and the cars they drive.
Then he
handed us over to someone more senior and she then proceeded to
tell us in EXCRUCIATING detail about all their health products,
which are all found in the market like water purifiers, health
pills and mattresses. That I found strange, cause we hadn't exactly
agreed to the job.
Finally
at the end of the whole session which lasted more than an hour, she
said we should come down the next day for the training session,
simply assuming that we were already working for the company. My
friend and I declined and asked for them to return our employment
forms, which rather curiously, they were very hesitant or in fact,
quite persistent on not returning. At this point in time, I got
pretty annoyed and kept insisting for the forms, so I guess they
realized that we were lost cases and finally let us go.
-
So my
first encounter with an MLM company wasn't exactly fantastic, I
grew warier as the interview dragged on. And this raises a few
questions:
1.
Selling the health products. As I've mentioned before, they're
stuff that you already see in the market, cost in the hundreds and
run up to a thou. As a student, I can't sell most of them to my
friends, leaving me with family and relatives. I enquired if the
company has any 'contacts' for us to sell them to, and again they
were fudging with the issue, which led me to conclude that
essentially you're on your own when it comes to selling.
2. And
that leads to the second question of hyper inflated prices / price
rigging. I recall a magnetic mattress costing thousand plus, no
idea how much that is in stores though. Any ideas?
3.
Do you earn primarily from selling the products or your
downline? (For the uninitiated, I think a visual best explains a
downline: think of a pyramid where you're above the friends you
refer the job to, and from whom you earn a cut from when they sell
the products - hence the term pyramid scheme) And if it's the
latter, is that legitimate?
-
I
apologise in advance for the very wordy post. Just like to bring
this to attention, especially to other students out there looking
for a job like I was. Some clarifications regarding the nature of
this kind of business would also be appreciated.