A Warning on Network Marketing and Multi-Level Marketing (MLM) in South Africa

This website contains some essays, links, and resources for you to learn more about Network Marketing (NM), also known as Multi-level Marketing (MLM) or Direct Marketing (DM), so that you can make an informed choice if you want to continue on this journey.

Essay: I have an opportunity for you

Have you ever heard this hook: “In these tough economic times, don’t you want to do things differently this year? I have joined forces with a bunch of like-minded people. We have a meeting planned this week, can I reserve a seat for you?” Read more

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I have an opportunity for you

Have you ever heard this hook: “In these tough economic times, don’t you want to do things differently this year? I have joined forces with a bunch of like-minded people. We have a meeting planned this week, can I reserve a seat for you?”This might have come from a family member, colleague or acquaintance to get you to listen to their groundbreaking business opportunity. It will turn out to be a network marketing, multi-level marketing or, touch wood, a pyramid scheme based business.This type of business originated in America in the 1950s. The longest-standing of them is Amway, meaning the American Way. They will claim that this longevity is proof of their legitimacy. However, history will show that they exert tremendous political power to influence regulation. The most recent example is the appointment of Betsy De Vos, daughter-in-law to Amway’s founder, as the American Secretary of Education under Donald Trump.But, I am starting to sound like a conspiracy theorist, let me get back on track!There is still hope when governments step in to protect the people. In 2016 American-based Herbalife was investigated and fined $200 million [1]. The South African Reserve Bank (SARB) investigated MMM and has declared it is a Ponzi scheme. [2,3]While their share of the world economy is a mere 0.2%, it represents close to $180 billion. This still entitles them to some bragging rights.Let's take a closer look at the opportunity.They start by allowing you to buy a “starter pack” from them, giving you the right to sell their products. When you sell the products to your friends, you get paid a commission on the sales. As soon as you refer another friend to buy a starter pack, you get more commission on their sales as well. And guess what, if they refer another friend, you get even more commission. You are not limited to the amount to “levels” you can build, so infinite income is up for brags!I agree that on paper this is exceptional.The company is first shielded from being branded with the pyramid label because they offer ‘real’ products to their clients. Commissions are also not earned on the sign-up fee.You need to however look closer to determine if staying in the Network Marketing industry is worth your time, effort and reputation.The following statistics are from a study published by the US Federal Trade Commission (FTC). Half of the people do not stick around for longer than a year, and after 5 years it falls to 1 in 10 people. Further, 99% of people lose money. [4]If you were able to create a perfect referral structure, with you referring 6 people and them repeating the processes, you will have the entire population on earth under you in less than 13 levels. According to most promotional material, 100 levels are typically required for a viable business...Understandably, most people do not know how to do marketing and work with people. In the case of Amway, a company such as Network 21 will step in to guide you. The person that refers you will, however, not declare that they earn a commission on these learning products. Hiding this at the start changes the opportunity. [5]Similar to franchise opportunities, you will always be limited by the type of products to sell and the market in which you can enter.I will not end this article before giving some alternatives to how you can do things “differently this year”.

  • Invest in a skill that will make you world-class and increase your income potential.

  • If you’re a master of your craft, you can develop a product or service that nobody uses already, but desperately need.

  • And lastly, if you invest in something, considering the risk, you must be willing to lose that money if it fails.

Media

Playlist: Youtube

Dailymotion video: Welcome To Life aka Witajcie w Zyciu, 1997, English Subs. Previously censored in Poland.

Podcast: The Dream

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