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MLM Business Opportunities

MLM Madness!

     This newsletter is dedicated to those who are looking for business opportunities such as joining a multi-level marketing scheme. So before you waste your time calling up these "opportunities" from the classified ads, read this newsletter and be warned.

     Let us begin.

     Times are tough. A lot of people are currently unemployed or are not happy with their job and salary. This creates a vulnerable situation, making people easy prey to get rich quick schemes or business opportunities promising crazy incomes by simply working at home.

Do Not Fall for the Trap!

     I was looking at an issue of Buy & Sell, and I saw some advertisements that caught my attention…

     "Earn P30T/wk, no gimmick, no selling" and… "MLM Work from home" and… "MLM Earn your 1rst million."

     I admit, I was curious and tempted to join. So I asked my wife, Ges, to "inquire" about these exciting opportunities. So she called them up, and surprise, almost all of them have the same modus operandi which is…

     Wait, before I tell you, let me share with you the ads, and what they were really about (the phone numbers, company, and name are edited out).

MLM. Earn 30T/ week. No gimmick, no selling. Noel 853-xxxx

The real story... 

     I-xxx is a manufacturing company of shoes, bags and has been operational for 18 years. It was only last month that is started its networking scheme. They are the suppliers of Rusty Lopez, Manel's Leather Shoes and Boardwalk.

     To become a member/distributor, you have to pay a registration fee of 2,000 pesos. Membership will include the following: a pair of shoes, sales kit, Chinabank ATM debit card, an outright discount of 25% on all products you buy, and an accident insurance coverage of 500,000 pesos at Malayan Insurance Company. The P2,000 registration fee will be applied as follows: P1,200 for the insurance premium and P800 for the pair of shoes.

     According to "Noel", there are 6 ways to earn:

     For every pair you recruit, you get 200 pesos. The pair will be assigned as your "left" and "right" in a computer generated chart they will prepare. The purpose of the chart is to monitor your progress and to record all the accumulated points/ income. 

     If, for example, your pair of recruits should bring in their own recruits, you get to earn a minimum of 600, or more it their downlines are brisk sellers. The shoes you get upon registration is worth 400 points or a cash equivalent of 1,500 pesos.

 
Entrepreneurship. I earned 300T in 3 months, looking serious people to be trained, preferably with business background. 742-xxxx

The real story...  

     Wholesale/ retail of Herbalife products. US-based company in existence for 23 years in 58 countries, engaged in the health and nutrition business. They sell thermo genetic products for inner and outer nutrition, which include vitamins, health supplements, slimming aids, etc. 

     You have to attend a business orientation in Makati Shangri-la and become a member for 2,700 pesos. This will include a free starter kit. You can earn as much as 15-45T a month through your downlines. According to my interviewee, she started selling Herbalife 3 years ago while working at Metrobank. Now she is into it full time earning 100Ta month.

  
Distributorship 21-60 years old, earn extra income 8-25T a month. 750-xxxx

The real story...   

     Interviewee did not categorically mention the company but said it is a "US based company existing for 23 years in 58 countries" and that their Manila Office is located at 13/F JAKA Building, Ayala Avenue, Makati. The nature of the business is health and nutrition and if you become a member, you get as much as 25% discount on all the products.

     Hmmm… another Herbalife "opportunity?"

 
Advanced MLM Reload gold, easy way to earn prepaid card. 823-xxxx

The real story...   

     Wholesale/Retail of Cellphone Cards (work from home). Annual membership is at 250 pesos. Upon membership, you get cell card with a password so you can contact the company thru your cellphone. A discount of 8-10% on cellphone cards if you become a retailer with free delivery service (within Metro Manila) for a minimum of ten call cards, plus free repair service of your cellphone twice a year.

 
Networking

The real story...

     Once you become a member/retailer, you can earn your own pre-paid cards from your downlines. For every 2 recruits, you get a cell card worth 300 pesos. 

     At the 10th level downline (approximately 350 members) you get a brand new Nokia 3310. Here's how to check if you have earned any prepaid cards: type send_status and send to the company's cellphone number (this will take 2 minutes), the company will send back a message to inform you if you have earned a prepaid card, then all you have to do is send back a message by typing reload_password_globe/smart.

     Enough. Hopeful by now you realize that these "opportunities" are not as attractive as the ads would have you believe.

     Let me tell you why.

     Notice that most of these business opportunities use a multi-level marketing scheme and... to join the scam… sorry, scheme, you need to pay a "fee" for membership, insurance, or whatever reason. Does this make sense… you have to "pay" the company for the privilege to work for them? No thank you.

     Second, their sales talk is centered around how much money you can make by "recruiting" people to join the opportunity, rather than focusing on selling the product. By the way… the products are not easy to sell, so the business opportunity lies in "recruiting" people, wherein you get a commission per recruit. What commission? The commission on the "fee" that new recruits have to pay for the privilege of working for the company, selling their hard to sell products.

     Third, multi-level marketing or MLM is flawed. Let me explain. Assuming that the company has an excellent product, no matter how good, there is a limited market for this product. Now, MLM allows the sales force to grow to exponential proportions because of the "downlines." And unlike franchising, MLM does not offer you "territorial" protection. That means there may be hundreds of you selling the same product, in the same area, to the same market.

     Eventually you will have too many people selling a product to a limited market. So the poor people who are down the line, or at the bottom of the "downlines" are stuck. They would have paid their "joining fee," they would have paid to buy the products which they will sell, and they will find out that there is no market for the product.

     If you do not believe me, let me tell you a real story. I have a friend who works as a gym instructor. He is a smart guy, and has won the Mr. Philippines bodybuilding contest due to hard work and dedication. He is a natural bodybuilder.

     Now the story goes like this. My friend is "recruited" by his friend to join a MLM company to sell supplements (e.g. vitamins, herbal stuff, etc.). The sales pitch is that other members are making thousands and millions of pesos by visualizing their goals and working hard.

     The pitch also goes… the more you recruit… the more income you will generate.

     So my friend joins, and he must buy a box of these herbal supplements, costing around P9,000. He then has to pay to get marketing materials that will help him sell these supplements. Fine… excited, my friend goes around selling this stuff. Anyways, how hard could it be? He is a former bodybuilder champion, and he is endorsing the supplement. So how much has he sold in one week? Thousands… hundreds… no, the grand total is…

3 Bottles Sold For a Whopping P1,500 Profit

     What's that you say, not too bad? Well consider this, he approached about 50 people to make the 3 sales. To make P15,000 a month, he must approach 500 people. And to make P30,000 he must approach 1000 people. Come on… is this the path to making millions?

     Ok, you want to try it. Fine… first you will try to sell this overpriced product to your friends and families. You will also try to recruit them, because the more you recruit, the more money you make. But what happens? Your friends and family will eventually know that they have been had, being stuck with products they are unable to sell. So congratulations… you have managed to destroy your friendship for a mere P1,500.

     Ok, you want to sell to people you do not know? Good luck. How are you going to approach the thousands of strangers you need to make any decent amount of money?

MLM is Madness!

     Let me repeat… MLM is madness. Do not waste your time… and find real ways of making money.
 

                                                                                Sincerely.
                                                                            
                                                                                 Joel R. Mangilit

 

P.S. There are some legitimate MLM operations. My mother-in-law works for AVON, which uses MLM. However, AVON does not charge a joining fee, and they give you P3,000 worth of products, on credit. That means there is no cash out on your part.
P.P.S. There are plenty of articles written about MLM on the Internet. Many of these companies have been shut down by the FTC in the USA for pyramiding. Just go to a search engine and type "MLM scams."

Here in the Philippines, there have been many MLMs that have been investigated by SEC, those involved in MLM for Internet Web Hosting, e-commerce, real estate, insurance... so be careful and do not be blinded the promise of earning unlimited income.

P.P.P.S. What is the difference between MLM and pyramiding? MLM is a marketing scheme used to sell products via networking. Pyramiding is normally a financial transaction, wherein a borrower promises a very high interest rate to the lender, and then eventually defaults on the payment.

But sometimes MLM is associated with pyramiding because money flows from the recruits (lenders) to the company (borrower). The product is just a "cover" for the pyramiding type of operation.