When I was a kid, I heard stories about “Tupperware Parties,” where people would gather together and experience the joy that is Tupperware, all while cooking and doing other stuff. As a boy, I didn’t know much about them, since these parties were predominantly hosted and attended by women. I also remember my mom talking, with more than a little skepticism, about some company called Amway which tried to not only sell things, but do it in a way that recruited other people to sell them.
As I’ve gotten older, I’ve become more aware of these companies. Now, as a guy, I rarely get asked to look over the products or attend a party, but my wife gets her fair share of invites, and I’ve looked over her shoulder more than a few times at the various requests on social media, which has become one of the biggest avenues for spreading the MLM word.
My wife and I have observed that these companies all vary in some ways. Some companies sell outstanding products, while some of them are more iffy. Some of them push physical parties, while others don’t. And they all deal with different products, from supplements to cleaning to beauty to accessories.
Regardless of the detail differences, though, most direct sales companies operate on three basic principles:
1. A would-be seller buys a starter package.
2. That seller markets products to other people.
3. The seller earns a commission based on sales.
Multi-level marketing also introduces a fourth component that takes it beyond direct sales:
4. Sellers recruit others to sell and make a commission based on their sales, too.
Why People Do MLM and Direct Sales
Most people get involved in MLM / direct sales for two reasons.
One, they want to make money on their own terms. From the very beginning, MLM and direct sales companies promise boundless opportunity, with high-quality products, sales kits, and methods that are supposed to lead to surefire revenue. Some MLMs will use the title independent business owner or independent consultant, giving the sellers a feel of being entrepreneurs out to start a business. The flexible nature of MLMs give sellers a sense that they’re operating on their own time clock rather than those of corporate overlords.
Two, they want community. Many of the MLM companies seek to cultivate a community climate among the various consultants, particularly between higher-level consultants and those working under them. More than once, I’ve seen MLM members say things on social media like “I’m so proud of my girls for their awesome month and they way they’re chasing their dreams.” Some of these women will also rave about their evening video conferences where they discuss strategy or otherwise plan out the future of the business. In a few cases, I’ve even seen photos of them as they go to national conferences where keynote speakers and workshops fire them up to go back and sell their wares.
The Potential Pitfalls
The reasons people do direct sales and MLM are powerful. But for each of the reasons that people do MLM and direct sales, there is the potential for things not to go as planned.
One, sellers can potentially lose money. Although the companies do everything they can to promote the opportunity of the company in their marketing literature, the cold truth is that the overwhelming majority of MLM sellers either make nothing or lose money. This isn’t intended as an attack on MLMs: it’s just a difficult statistical challenge, especially in contrast to the failure rate of traditional businesses. Even those consultants who do make money often only make a modest amount that translates, after commissions, product costs, and other expenses, to something far less than a minimum wage. While that’s not true of all sellers — and there are some success stories — the odds are not in your favor. (It’s worth noting that the trade organization for direct sales does a lot of research, but individual earnings are not part of that research.)
Two, sellers can potentially alienate friends. In a traditional business, while friends may help launch the business, it’s strangers who ultimately sustain it. I have relatives who own various small businesses, from HVAC repair to health services, and in all cases the lifeblood of the company’s survival and success are people who aren’t relatives or friends.
On the other hand, with an MLM, much of the selling ends up falling on friends and family. A well-intentioned seller who starts inviting people to product parties and showcasing products using their personal social media page can leave friends feeling like they’re sales marks rather than friends.
Alternatives That Can Meet MLM Needs
Before I go on, a note: I know people who currently do direct sales, they like it, and they intend to keep doing it. I also know people who do direct sales and have concluded that they don’t want to do it anymore … but aren’t sure what to do instead. What follows is for people who see themselves in that second category.
Other Ways to Make Money:
If you’re looking for flexible ways to make money, consider some of these possible alternatives. One of the pros of MLMs is (relatively) low startup costs, so I’ve tried to stick to areas that have either low startup costs or no startup costs.
- Look for part-time telecommuting jobs. There are many, many opportunities out there where you can work from home as a virtual assistant, data entry person, customer service rep, or any number of other jobs … even coding! These jobs often are very flexible, and while some of them do require some training, not all of them do. Even those that do aren’t usually outrageously expensive … and once you have work, the training costs typically pay off pretty quickly.
- Get paid to write. Many websites, for example, pay for blog posts.* If you have an area of experience, chances are there is a platform where you can write about it, and if you don’t feel you have an area of expertise, you can often learn.
- Write and sell a book or a course. Everyone has areas of expertise. There is some time and effort on the front end, but there can be a nice payoff, too.
- Sell things online. eBay and etsy are popular options.
- Look for part-time local work. There are a million temporary and seasonal jobs out there, many with flexible hours and low stress. Yes, they involve actually driving somewhere, but, depending on the job, they can also be a way to also find a little community, too.
Other Ways to Find Community:
One of the other pros of MLMs is the connection with other people, either online or offline. Here are some places you can seek that out in non-MLM settings.
- Church activities. Churches are still one of the best places to find connections with other people, and larger churches especially can have a range of different groups. This is less of an option if you are, say, an atheist, but it’s one of the more robust ones if you’re not.
- Hobby groups. If meeting with others in person is your thing, you can find choirs, crafting groups, running groups, swimming groups, amateur hockey teams, and book clubs, just to name a few. And if you’d rather connect online … well, those possibilities are just about endless.
- Community gatherings. Most communities have different gatherings, be it political, recreational, social, or otherwise.
- Volunteer opportunities. If you’d like to do something meaningful, there are no shortage of volunteer needs at soup kitchens, schools, churches, and charities.
- Have a party where you’re not selling anything. You know, just a normal party.
So what are your thoughts? Have you had experiences with MLMs? Were they good or bad? If you’ve sought out alternatives to MLMs, do you have ideas not on this list?
* If you want to get paid to write blog posts, the first thing you need to do is get good at writing, including, most likely, some posts you do for free. But practiced writers can make a little money here and there. I happen to run a blog that will pay experienced, quality writers in a very specific niche. If you’re curious, you can read about that blog here. To learn more, you can contact me here. Be sure to mention this blog post when you do.