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.
Please don't join and waste your time. You have higher chances of becoming wealthy and successful by doing more respectable jobs.
My personal experience:
Not say I look down on these people but can you imagine working under a superior who has not even have a basic N/O Level certificate and can't even pronounce the word "Athlete" properly and cant read sentences in full when explaining the products.
That was when I realised this superior was not promoted based on merit (How the hell does he sell a product when he cant even speak properly?) but rather through recruiting more people to join the scheme.