MLM a.k.a. Multi-level Marketing, Direct Sales, Network Marketing

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What is an MLM?

The terms MLM, multi-level marketing, direct sales, and network marketing will be used interchangably throughout this website. Direct sales is technically different from multi-level, however, the MLM industry uses the term to describe all MLM's. They generally refer to the same type of company structure. In addition, distributor and consultant will also be used interchangably.

Simply put, when you become a consultant for a MLM company, you have two goals: sell the product and recruit team members. Ultimately the more team members you have, the more money you will make. You start your business by having friends and family buy from you and then refer you to more people. Many MLM's use "parties" to sell their products and recruit new team members. If you have ever been to a Mary Kay™, Pampered Chef™, or Party Lite™ party, you know what I am talking about.

Why do people join MLM's?

Usually because their friend persuades them to or because they attended a "party" and have become excited about the opportunity. Usually they do not do any research ahead of time. If you are considering joining an MLM, I urge you to spend a lot of time reading about various companies, and make an informed decision rather then an emotional one.

Pyramid Scheme or MLM?

Can MLM's look like Pyramids? Yes
Can Pyramid's look like MLM's? Yes
How can you tell the difference?

Sometimes it is very difficult to tell the difference. There can be a lot of grey area. However, I will list some guidelines.

Companies structured as pyramids are illegal! MLM's are not. However, their structure looks like a pyramid, so they are often confused. Pyramid's often masquerade as MLM's. This too, makes it confusing.

Pyramid Companies Schemes

They focus on how wealthy their members have become, and how wealthy you will become.
Distributors are pressured to "recruit, recruit, recruit". The pyramid scheme focuses on fast profits from signing people up and getting their money. If recruiting is more important than the company's product, this is a red flag! Very little emphasis is put on the quality or actual sales of the product. Pyramids get your money and then use you to get other people's money.

They usually require a large investment up front to become a distributor. They may pressure you to stock up on a lot of inventory. Pyramid's usually will not have a "buy-back" policy. Once you purchase the inventory, you are stuck with it.

Before you join a company, we recommend the following:

Read all of the companies literature, including the contract, policies and procedures, compensation structure, etc. If you do not understand something, get an answer from a company rep. Read as many articles and websites as you can about the company. If the company or leaders of the company have had or currently have pending lawsuits, think twice!

MLM Companies

These offer you the opportunity to own your own business without having to start from scratch. The start-up cost is minimal, you do not have to manufacture product, training is provided, etc. There is a market for their product(s) and they put a lot of emphasis on their product and selling it. The best MLM's will have a buy-back policy that will allow you to return unused inventory in the event you drop out (within a reasonable amount of time).

MLM's and Emotion

Most folks have some type of emotion connected to MLM's. If you have ever been a part of an MLM company, typically you either LOVE THEM, and know that you are going to the top of the millionairre group while you leave the nay-sayer's in the dust, or you had a bad experience, and you HATE THEM.

If you have not been a part of an MLM, you may cringe when a friend asks you to host a party, or buy a product. The reverse may be the case, you might love the product and support your friend, but have no interest in doing the business yourself.

Watch-dog organizations

Consumer Affairs

MLM Watch