No Profits in MLM

This article explains how you won’t get rich in multi-level marketing. The more accurate headline is that you won’t make any money.

The survey found that most people were making less than 70 cents an hour in sales, and that was before deducting their business expenses.

Nearly 60 percent of respondents said they earned less than $500 over the past five years.

“Our conclusions show that most participants could earn significantly more money in exchange for a lot less time and money invested if they were employed in a minimum wage job,” reported Brittney Laryea, a writer at MagnifyMoney.

Why do people make so little? They claim you can make unlimited amounts of money, that it’s a product that practically sells itself, and that you make 50 cents of every dollar you sell. But the reason why there are no profits is simple:

  1. Product is difficult (if not impossible) to sell at a price that earns any significant gross profit
  2. Expenses eat away at what little profits you potentially might make
  3. So the money is really in recruiting a large downline and making a small amount from each of those people (if they purchase a ton of products)
  4. It’s difficult to recruit enough people to make significant commissions
  5. Participants often end up spending lots of their own money on products they don’t need just to advance or maintain a rank

And lots of people go into debt. “Nearly 32 percent of multilevel-marketing participants said they financed their involvement in the business using a credit card, according to the survey.” I bet the real number is much higher than 32%.

 

16 Comments

  1. cindylu

    MK is worst with their dumbass dual marketing BS. My radar went up once my SD showed just how truly narcissistic and selfish she was. When I heard the bogus dual marketing term I was temporarily appeased. My radar screamed pyramid mlm scheme like Amway. Even in the MK books they had to deny it was an mlm. (Because they knew it began and continued to be about mostly recruiting or network marketing. The one director under her that managed to get through DIQ in spite of her, avoided meetings with her with good reason. My SD had sabotaged at least two DIQ’s and stollen their IBC’s to prop herself up. The NSD’s I heard from were no better. Seminar reeked of cultish behavior. The final straw was getting sick, going to corp about my SD’s behavior and the mostly male CEO’s taking her side. Most of those male CEO’s wouldn’t last a week trying to sell this over priced pink rubbish if they actually ad to work in the field and work their way up to their overpaid pedestals.

    1. eric

      seems like you have a bit of an issue with “males” at the corporate office.

      I think its important to point out that Mary Kay was founded and led by a woman for a very long time, and practically the entire NSD / director force are women- as are several key executives at corporate.

      Maybe its unintentional, but a number of your comments in the past have seemed to imply greedy men at corporate are the real culprits, as if Mary Kay was any more moral or legitimate when a woman ran the company.

      MLM is the culprit as a business model- regardless of sex.

      Just the male perspective on some of your comments.

      Thanks

      1. cindylu

        I agree there are many female NSD’s. The head of MK is her son. Many within Corp were males. I asked that I change unit but the male at Corp made it very clear that the MK directors were above reproach. No matter how or what my SD was doing, it was irrelevant. MK herself has been gone for years. The son inherited the money. For many years now this company with its pink make up has used every single female vulnerability to exploit females. They know that women want to work from home and be there for their family. I doubt that the NSD’s are the ones constantly changing the products making recently purchased product mostly obsolete. At any rate those at the top of the pyramid scheme whether female or male are profiting from a huge scam. They also limit the way in which their product can be sold or advertised.

        1. Eric

          Again, you seem very focused on males.

          I don’t want to go back and forth with you- I doubt it will be productive- we are in fundamental agreement on the main point- which is that MLM is an insidious business model that drains resources out of wider economic activity and funnels it to a very limited group comprised of corporate officers, shareholders, and a handful of senior pyramid participants who are crucial to keeping the illusion going.

          1. TRACY

            It is certainly interesting that over the years, the very top executives have tended to be males. While statistics would say this is normal, I just find it interesting that it is the case in a company that is so focused on pretending that it provides opportunities to women.

          2. Char

            To me, many people still see MK as doing things the “wrong way” and can be corrected. For example, they should have women in Corp because it’s about empowering women. That might be true for a legitimate business.

            To Tracy’s point, I agree. If they want to keep up the FACADE, they should have women at the helm. But this is only to help the illusion and not to show MK is a women’s company for women. It is not. It is a scam that happens to target women. Big difference.

            At its core, MK is MLM. There is no “right way”. This MLM uses the tool (makeup) that works for their prey – women. Other MLM scams target men. Crypto MLM is one example.

            What makes me wild is that women (and men) fall for this crap. But if women want to be truly empowered, take MLM down. (Think mothers against drunk drivers)

            And PinkTruth is well on its way!

            1. Char

              I should say “help the illusion to be even better.” Seems to me they don’t even care about that, and think women are so dumb that they can get away with it. And, they are getting away with it.

  2. enorth

    If you listen to/follow enough MLM people, the lies are obvious. The It Works people are so entertaining in their videos. I remember the twenty-something leader starting her video by gushing about how IW allowed her husband to “retire” from his job so he could stay home with her and the baby. Much later in the video, she slipped up and revealed he was home because he had been injured at his job.

    Live in a tiny apartment? No problem. Reps are told to go somewhere else to take social-media photos, preferably a place with a swimming pool.

    When they boast about “retiring” from other jobs, don’t just accept it at face value:

    Because of MLM, I retired from my previous job and I’m only 22! (#1-You’re working 24×7 for MLM, so you’re NOT retired and, #2-You’re only 22, so didn’t “retire” from your previous job, you QUIT.)

    Because of MLM, I replaced my full-time income at my corporate job. (But now you’re working FT for the MLM, putting in even more hours with no benefits.)

    Because of MLM, I was able to bring my husband home from the military. (His enlistment was up.)

    Because of MLM, I was able to retire my husband from his job in healthcare. (He was fired from his maintenance job at the hospital.)

    Because of MLM, I’m able to live in my dream home with a big yard! (You rent a two-bedroom house; the “big yard” is an empty lot next door that you use for social-media photos.)

    Because of MLM, I was able to leave my teaching job. (You quit your job as assistant at a day-care center.)

    Because of MLM, I was able to retire my mom from her retail job. (The local Sears store closed.)

    Because of MLM, I retired from my nursing career. (You were a student who worked part-time at a nursing home.)

    Because of MLM, my husband is golfing and fishing all the time! (He’s not home because he’s working out-of-town at construction jobs.)

      1. Enorth

        LOL. I don’t know Jade Hooper’s situation, and these examples don’t apply to anyone in particular. I’m just pointing out examples of exaggerations and inflated claims. MLM people are adept at “spinning” and there are still plenty of people who fall for it.

        “Because of MLM, my husband was able to leave a job he absolutely hated.” (I’ll just leave out the fact that he got another job.)

    1. Mickey2942

      Yes, MLM now have a “script” for social media, show how awesome and wealthy your life is. Everything you do is part of the story, creating a life of wealth, leisure, travel, fun, excitement. All because of your MLM income. Forget the fact that the house is mortgaged to the hilt, all bills are maxed out, there are liens because of not paying bills.

      It doesn’t surprise me that many husbands begin to get antsy about the situation. And of course, everyone in the MLM cult believes that the MLM’er is bringing in 1000’s a month, because they want to believe the lies.

      Sure, there are some people who are successful at MLM, .001%.

  3. Pink Jihad

    According to indeed.com, a Wal-Mart cashier in Colorado where I live makes $8-$9 an hour. I would imagine that “business costs” working at Wal-Mart would be minimal, maybe a few clothing items and the cost of gas getting to and from the job.

    I would also imagine that for the majority of Wal-Mart employees, once you’re off, you don’t have to worry about doing anything Wal-Mart related until your next shift. You don’t have to try to convince people to come in the store and shop (that’s what all that national advertising is for), you don’t have to use your own money to buy the items in the store and then re-sell them to Wal-Mart customers. You’re free to enjoy your off time however you wish.

    Someone with additional skills could likely advance to other positions like assistant manager or manager and make more money.

    Employees also get a discount which they can use to buy things they might actually need for themselves and their families.

    So…yeah, if someone really just wanted to make some extra money, a minimum wage part-time job would be a great way to achieve that goal!

    1. Mickey2942

      Yes, Lularoe went for the money grab. Independent distributors had to purchase set starter package, for $4000, with set sizes and patterns, the distributor couldn’t pick the sizes or colors. And the quality went into the toilet for the people on top to make more.

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