MLM (Multi Level Marketing) is a strategy which several companies are using to sell their products by giving incentives to their distributors when they can recruit more new distributors as their downline to sell their products and in the same time, all those distributors can also make money by selling their products direct to the customers. These kinds of MLM companies’ main focus is to sell their products. When distributors make direct sales, they will get a certain commission according to the sales volume and also get commission according to the sales volume of their recruited distributors. Many MLM companies provide the opportunity to earn commissions from multi-level downlines, which means if you recruit some distributors and those distributors recruit other distributors, then also you can earn a commission from the sales of your those third level distributors which your recruited distributors have recruited. Like these, some MLM companies even offer to earn commissions from several multi-level downlines, which means up to 5-10 levels. The main benefit that companies can get from this kind of MLM strategy is the more sales of their products. However, people often get confused between MLM and Pyramid Scheme about which we have explained in detail later in this post.
Is Multi-Level Marketing a Scam? Nope, if it is far from Pyramid Scheme
Although Multi-Level Marketing is a legitimate business platform, still there are many controversial. There are lots of business models out there that pretend to be MLM, but in reality, they are Pyramid Schemes which are making people confused. Actually, Multi-Level Marketing companies focus to sell their products by recruiting new people, but the Pyramid Schemes just focus on recruiting people more than selling their products. If you find the business plan of some MLM company is more focused on recruiting, then that is not a real MLM company but is a Pyramid scheme which is an illegal business model and even most of the time can’t sustain for a long run. If you find the compensation plan of some companies seems to be using the money from new recruits to pay the people at the top, then that is 100% Pyramid Scheme, not a Multi-Level Marketing company.
Is Multi-Level Marketing a Pyramid Scheme? If not, then how to differentiate?
Aforementioned, it is clear that Multi Level Marketing is not a Pyramid Scheme. So, now let’s find out how to differentiate it.
The legit Multi Level Marketing companies always focus to sell their products to real consumers, not to their distributors. However, if you find some self-claimed MLM companies whose compensation plans are more focused to sell their products to their members who recruit new members to buy their products than selling to the real consumers, then that is Pyramid Scheme. The Federal Trade Commission (FTC) which has been investigating in this field for many years, has found several Multi-Level Marketing companies that has been trying to blur the lines between the Pyramid Scheme and Muti Level Marketing and making many people confused. That is the reason why many people think MLM is a Pyramid Scheme, but it is not.
Conclusion. Is MLM a Worthy Place to Earn Money?
According to the industry data, although millions of people have been involved in this business, only a few have earned a good amount from legit MLM companies. According to our research on different MLM companies, we have always found only less than 5% of members of each MLM company are making a good income to make a living from it. And others who get confused to identify between Pyramid and MLM companies, most of the time even have lost the money than earning from this industry. So, according to this data, it is clear that it is not a cup of tea for everyone to earn a good amount from Multi-Level Marketing companies. You need to do lots of hard work and need to risk a certain amount of investments in order to get succeed from MLM companies and even sometimes still hard work doesn’t guarantee good returns. So, in this type of situation, we prefer Affiliate Marketing over Multi-Level Marketing companies.
We are not saying MLM is bad, but Affiliate Marketing is easier because first of all you can find every kind of product to promote through affiliate marketing, and companies like eBay and Amazon also provides affiliate commissions, which means the commission when you can sell their products. You can think yourself, won’t it be easier to sell the popular products of our choice directly to the consumers and earn commission than going over to some specific unpopular products for which we need to do some initial investments and need to explain consumers about what those products offer and also need to convince people to be our downline to sell those products and need to teach them to make more downlines?
Yep, maybe many here will argue with us when we say MLM offers unpopular products. But, can you give the name of a single MLM company that offers popular products like affiliate programs eBay and Amazon can offer? Yep, maybe you will say Amway, Herbalife, etc., but don’t you think those products are also just become popular by pushing up from MLM strategies? Even compare with other branded products, those products are still unknown for many people.
Actually, most of the time those companies start to follow the MLM strategies which get struggle to sell their products in the real market. So, according to us, we prefer Affiliate Marketing over MLM. Even our No.1 recommended online work company, known as Wealthy Affiliate, also offers only an affiliate program because its main focus is not to recruit the members in it, but to sell its detailed training program which will help anyone to be an expert affiliate marketer and make money from affiliate programs like eBay, Amazon, etc. and also teaches the expert business skills to make money by creating our own website in our own subject of interest and also teaches to make money from companies like Google AdSense as well as even from MLM companies. Even you can consider Wealthy Affiliate as a university for anyone who wants to make money online. You can find more details on Wealthy Affiliate by clicking this link:- newsonlineincome.com/wealthy-affiliate-review/
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