Also known as network marketing or pyramid selling, is a business model that involves unsalaried,
hierarchical sales teams selling products directly to consumers in conjunction with recruiting additional company sales representatives.
Multi-level marketing may also be referred to as referral marketing or consumer-direct marketing.
Existing members of an MLM company sell and promote the products to a community of potential customers.
They are often expected to also bring in new recruits into the ever-expanding sales levels of the company.
MLM businesses often sell products that are not available in traditional retail stores. This can be a draw for consumers who are looking for unique or hard-to-find products. However, it can also be a red flag, as MLM businesses often use this as a way to justify their high prices.
MLM businesses also often require their distributors to purchase a large inventory of products upfront.
This can be a financial burden for distributors, especially if they are not able to sell all of the products they purchase.
In addition, MLM businesses often have a high turnover rate. This means that many distributors will not be able to make a profit, and some may even lose money.
Is MLM a scam?
MLM businesses are not inherently scams. However, there are many MLM businesses that are scams. These businesses are often designed to take advantage of distributors and consumers.
There are a few things you can look for to identify a scam MLM business:
- The business requires you to pay a large upfront fee.
- The business promises you easy money with little work.
- The business requires you to recruit new distributors in order to make money.
- The business does not sell real products or services.
- The business has a high turnover rate.
If you are considering joining an MLM business, it is important to do your research and to be aware of the risks involved.
Here are some tips for avoiding MLM scams:
- Do your research: Before you join any MLM business, it is important to do your research. Read reviews of the company online and talk to people who have been involved with the company.
- Be wary of high upfront fees: Legitimate MLM businesses should not require you to pay a large upfront fee. If a company does require you to pay a large upfront fee, it is likely a scam.
- Don’t believe promises of easy money: MLM businesses that promise you easy money with little work are likely scams. Making money in an MLM business takes hard work and dedication.
- Don’t be pressured to recruit new distributors: Legitimate MLM businesses should not pressure you to recruit new distributors. If a company does pressure you to recruit new distributors, it is likely a scam.
- Be aware of the risks: MLM businesses are not without risk. You could lose money if you join an MLM business that is not successful.