Skepticism about MLM

[MallorcaMan]

Stands for Maybe/Must Lose Money doesn't it?

Or

Makes Losses Minimal/Manageable?

[Cuddles]

Doesn't it stand for "Really a pyraMid scheme but we're not allowed to call it that anymore so we'll change a coupLe of the details to avoid legislation and hope people are too stupid to notice we're still scamming them. Hey, look, the Money's just rolling in, turns out people really are that stupid. Hooray."

I can see why it's usually abbreviated.

[MallorcaMan]

I bet nobody asks you to expand on your theories!

I still don't know why people don't see "traditional" business models as "Pyramids" too.

[Admin]

I still don't know why people don't see "traditional" business models as "Pyramids" too.

MLMs are considered as being Product Based Pyramid Schemes.

The MLM propaganda tries to convince people that a traditional businesses organisation chart resembles a pyramid too therefore the two businesses are similar.

This is using the fallacy of equivocation to try to convince people that MLM is not really very different at all from traditional businesses.

Also, the supply chain in a traditional business can look similar to the supply chain in MLM. Again, this resemblance is only superficial.

The fundamental difference between the two is that MLM has a multi-level sales force (which is actually completely superfluous to get goods to customers) and there's no limit to how many layers can get involved and there's no control over its expansion.

This is the fundamental flaw of MLM. See: The Truth about the Downline.

If you have even a basic understanding of business you'll spot the flaw very easily.

[MallorcaMan]

This forum seems to not encourage anyone to join discussion. The "Skeptics" are - to themsleves - so clearly correct, in all circumstances, that any disagreement tends to be ridiculed.

If you have even a basic understanding of business you'll spot the flaw very easily.

That last posting of yours strongly suggests to me that you really do not know what MLM is all about.

but I'm surprised you couldn't work that out for yourself.

(That is a great shame - however I will continue to put forward my experiences and opinions!)
To try to give you a bit more information my wife is a Beauty Therapist of 26 years experience. She has a internationally based clientelle who come to her when they are resident on the island of Mallorca where we now live. The MLM we joined on 5th November is NSE (Nuskin / Pharmanex etc.).
To date we have bought one Galvanic Spa system and lotions an potions to use with it - I think we have spent about 325€ to date. Our approach is to ask my wifes customers to try using the system (which my wifes 26 years experience says is first class) and then to let them become "Preferred Customers" and buy directly from NSE at "wholesale prices" which are actually very competitive when compared to other ranges of similar quality. My wifes margin will go down from around 30% on her standard ranges to around 12% on these Preferred Customers' purchases. Will she sell 2.5 times as much product we doubt, however whilst her customers are wintering in the Caribbean or even back in the UK they can still get full access to their chosen products. They might even buy Nutritional products too! So our Gross Profits on these customers could go up or down but most likely will decline a little. However we will have no stocking issues (and holding the "wrong" stock I believe cost her around 4,000€ this year), reduced accounting costs (and our Gestor here cost 2,784€ last year) and greater customer satisfaction and thus retention year on year (we lost several good customers this year who because of lack of international access to my wife's suggested products moved to other suppliers). In other words we think we will probably end up with marginally more Euros in our pocket from the same customer base this year but with much reduced hassle.
Additionally we have half a dozen personal friends who have similar situations. We think that perhaps 2 or 3 of them might follow our route over the coming year or two. If 2 did this would quite possibly add a few hundred Euros a month to our income through their efforts - great if it happens - not critical if it doesn't. That's our situation.
Legaleagle asked if I thought MLM could work

in any other circumstances than the ones you have described?

I don't know but I suspect there are other particular sets of circumstances where individuals can use this route to market very succesfully but I have no direct experience.

I am going to occasionally add what I think is a Blog like paragraph or two, thus:-

BLOG: The 325€ we spent this month we would have spent anyway on roughly equivalent items but we got our free Global Web Pages too. I spent an hour studying these and the seem fine. I discovered a product called Maxcast that at 9.95$ per month seems a great way of putting promotional videos up on the Web - we will never get rich promoting that but I think we will be customers for it!
The first "big" negative hit last night when our immeadiate upline rang to say she was feeling pressure from above to keep expanding her mailing list and she didn't really want to do this as she had had some negative replies to her emails. We told her we were not doing these "cold call" emails and explained our particular route. She felt her upline had misled her into feeling that only the numbers game and replication as she called it worked. That's bad but I think that is an individual thing that can be deflected away completely by us and our immeadiate upline - and once gone we can get on with our plan. CLOSE BLOG!

[Matt]

MallorcaMan, I see you've already spent money. It's too late for you to get that money back. It's too late to avoid being a victim if this is a scam. However (once again if this is a scam) it's not too late to avoid being a perpetrator.

Here is some infomation about Nuskin Pharmanex you may have already seen.

http://www.mlm-thetruth.com/NuSkin'sNaughtyNumbers.htm
http://www.falseprofits.com/MLM%20Lies.html
http://www.ftc.gov/opa/1997/08/nuskin3.shtm

Can you let me know whay you think about it?

[Legaleagle]

MallorcaMan,

You spent 325e on products last month. What commission were you paid by Pharmanex for those sales?

Is there a minimum amount of sales that you have to make in a month before commission becomes payable at all?

How much have you spent already on welcome packs, time and fuel to attend presentations, motivational literature, samples, joining fees etc?

The hassle from your upline will continue and it will get worse. Believe me, these people won't take "no" for an answer.

We have already had another person on this forum who was involved in Pharanex/Nu Skin so some of us have examined available information on this Company already. Have you looked into whether the products they are selling are actually effective, properly tested and licensed? Have you considered the disclaimers printed on the products and the fact that the efficacy of many of the products is disputed by independent sources, including the US government?

[MallorcaMan]

Matt, I had read the first two links - I thought the first one was really silly to be honest - I have now read the 3rd. These all have an accurate strand and that is that NSE publish lots of numbers that read incorrectly (and I don't deny that they may intend this) imply that lots of people make lots of money. Obviously if you want to believe any 10 plus 10 or even Power of 2 calculation you are swiftly going to be parted from your money whether its in MLM, gambling or a traditional business. So I accept pretty fully and dismiss those articles.

Legaleagle, If you read what I have said you will see we don't expect to get rich. We are hoping that we might add a little marginal income (500-2000€ per month) by continuing to do what we (or more accurately my wife does) do now. But doing even the same net revenue would be a big win because we would have lost a lot of the hassles of her "traditional" model.

You need to spend around 100€ per month on products to be eligable for commission - but we already spend around 1,200€ a month average on similar skin care products and equipment. Indeed the Galvanic Spa net price is quite a lot cheaper than the alternative we purchased before and is much more user friendly and safety conscious.

We haven't spent 1 cent on collateral things but have agreed to spend 8.30€ (I think) per month to maintain the web domains and web sites. We have attended about 4 hours of training (foc) and Mallorca is a small place so fuel costs etc are minimal!

The disclaimers, testing or not etc are entirely normal in my wife's industry - so yes I have examined these and am satisfied that all is as it should be!

I hate the idea that I am defending NSE because I haven't enough experience of them to do that. I will continue to tell it like it is (from our now 4 days old) experience. Bear with it a bit - I will tell you if it's all a crock - but I will tell you from real experience, not theoretical, third hand or predetermined views.

Cheers Guys - interesting times may lay ahead!

[Admin]

This forum seems to not encourage anyone to join discussion. The "Skeptics" are - to themsleves - so clearly correct, in all circumstances, that any disagreement tends to be ridiculed.

That's an incorrect generalization, but yes, when it comes to MLM you're right. MLM is an out and out scam and it doesn't matter how you discuss it the conclusion is always the same.

Remember, this may be your first time of being involved with MLM but we've been through the same thing countless times before. So if it looks like we've already formed a conclusion, that's because we have.

I always advise people against getting involved with MLM but if they want to 'give it a go' I also strongly stress that they should only do so by using money they can afford to lose. That's because it's virtually guaranteed that they will fail and lose money.

MallorcaMan, as I said to you privately, you are not just risking money you can't afford to lose here you're actually gambling with your own business, your own livelihood. The consequences could be disastrous for you.

Still, all we can do is provide information. We're not guardian angels here to save people from their own irrational decisions etc.

I feel strongly that you have jumped into something here that you really don't understand (by the way you talk about it) and that you are taking a huge, and probably unnecessary, risk.

Still, it's your decision. Your call. No-one can get harmed by this other than you and your wife.

[Cuddles]

You need to spend around 100€ per month on products to be eligable for commission - but we already spend around 1,200€ a month average on similar skin care products and equipment. Indeed the Galvanic Spa net price is quite a lot cheaper than the alternative we purchased before and is much more user friendly and safety conscious.

You spend £600 on cosmetics every month? My god, if you've got that much more money that sense, why the hell are you wasting your time trying to get a couple of hundred pounds more?

[seren]

Cuddles his wife runs a beauty business! I'd hope such huge cosmetics bills are evidence of nothing more than a healthy business...

[jonmtaylor]

One can’t help noticing that some who have posted on this blog ask the usual questions about the legitimacy of MLM/network marketing. Having over 12 years independent research and experience with this topic, I felt it a good idea to post online answers to the most frequently asked questions about MLM.


Some challenge submitters to the blog to “Show me the facts.” Well here you have them, along with references on how the research was done to verify the rather startling conclusions. Typical questions treated include:

• How can I clearly distinguish between a pyramid scheme and a legitimate sales opportunity?
• Who is pocketing the money from huge MLM revenues?
• Are MLM promoters lying to the public, the media, and to law enforcement?
• Are MLM promoters crooks?
• If MLM products really work, what is the harm in buying them?
• Why are laws against pyramid schemes or endless chains seldom enforced in the case of MLM programs?
• What can I do for legitimate income without leaving home or entrepreneurship and entering the standard job market?

For answers to these and other relevant questions, go to –
http://www.mlm-thetruth.com/FAQreMLM.htm Then please post your reactions on this blog. Was the information genuinely helpful, and if so, how?

- Jon M. Taylor, MBA, Ph.D., President, Consumer Awareness Institute
and Advisor, Pyramid Scheme Alert
“Truth on MLM” Web site for MLM research and guides

[brianp]

Where do these MLM propagandists come from? It's amazing - one by one they're parachuting into the forum to take on the massed ranks of skeptics with their well-rehearsed, if predictable and unconvincing, blather. They just appear from nowhere, join the forum and wade into the debate singing the praises of MLM in general or of some particular sub-species thereof. It doesn't seem to happen with other controversial topics, be they scams, woomongeries or both, but point out the obvious drawbacks and serious risks of MLM schemes, and in come the defenders of the faith to try to undo any damage that might have been done lest - heaven forbid - the supply of credulous mugs with a few pounds to throw away should dry up.

[MallorcaMan]

As I seem to be the only person still open minded about MLM contributing to this Forum I can only assume that the "MLM propagandists" with their "blather" that friend brianp refers to is me!

I haven't tried to convince anyone of anything, simply relating how I feel. However if this Forum exists only as a soapbox for a single point of view then perhaps I should withdraw...

Discuss....

[seren]

Hey Mallorca Man,

If you don't mind me butting in.

You will find that most regulars on this board think the same way about MLM- that it is a scam. However, this is not just a "point of view". "Point of view" suggests that it's just what they believe based on their thoughts, their lives and experiences, and from another person's life and experience the view would be different. From my point of view trees are beautiful, from a dog's point of view they're a handy toilet, that kind of thing.

This is a Skeptic site, and skepticism doesn't work like that. People here think MLM doesn't work because it has been examined, looked at, tested, questioned, prodded, poked and possibly fondled, and in every case it has been found to not work.

If Skeptics have a soapbox, it's one that just asks people to look at what has been measured and tested and found to be demonstrably true, rather than having "points of view" which have no basis in fact. It can be your point of view that most people who get involved in MLM could make a sustained profit from it, but that won't change the fact that the vast majority of people don't. They don't. That's a fact. Not a point of view.

This is the message you'll get here, because it's what all known evidence tells us is true. I don't know what other opinion you could want to hear; the only other ones I could think of would be:

"It's great! I made a mint!" Mr A Totally Unbiased Example, Amway marketing literature.
or
"Well, why not? You've got to try these things. If opportunity comes knocking you should always answer!" Mrs Bankrupt (nee Miss Uninformed but Hopeful).

There are plenty of places you can find both these people and their "points of view". But, to nick someone else's signature (sorry): the truth will set you free, but first it will piss you off.

Stick around and see.