Multilevel marketing (MLM) programs — depending on exactly who you ask, they’re the best thing that’s ever happened or the devil incarnate. The truth, of course, usually lies somewhere in the middle. The overwhelming majority of these programs are little more than pyramid schemes with a slightly more positive spin. From Younique to It Works! Wraps, they only make money for the people at the top, leaving little old you struggling at the bottom. But that’s not the only reason to avoid them — there’s much more at stake, too.
You Could Get Stuck With the Bill
Most MLM programs force you to place orders at your own expense, either indirectly or directly. When you place your order, you may be asked to use your own credit card or bank account to do so. When the orders arrive, if your intended purchasers don’t pay you for the products, you’re stuck with either the inventory or the bill for it. Sure, you can return it — but most of the time you’ll pay a restocking fee, too. Either way, you’re taking a lot of risk for people who purchase on a whim and may decide to refuse acceptance upon arrival.
You Might Have Hefty Sales Quotas
Sales quotas are common in MLM programs; Avon has them, Younique has them, and many other programs work them in, too. In some cases, these amounts can be prohibitively high. Younique’s quota, for example, requires you to sell at least $42 worth of product yourself every single month. If you happen to hit a bad month or get sick, you can’t waive it; you have to pay for that quota by purchasing products for yourself. In a sales environment where over-saturation is common, that’s a disaster waiting to happen.
Over-saturation refers to exactly how many sales people exist in your local area. For example, if you live in a city of 100,000 people, having two or three sales representatives for a company is quite reasonable. Each should be able to draft a loyal client list without running into each other that frequently. However, if you have 50 sales people in that same area, the market begins to shrink for each person. The result is that all 50 people end up fighting each other for sales and clients, causing them to become pushier and pushier. Over-saturation frequently leads to poor client satisfaction and a bad company reputation. If you’ve ever seen someone reply to an MLM sales post with, “not another one of these damned posts,” you’ve seen this first-hand.
~Here’s to Your Financial Health!