Why MLM business opportunities do not work anymore

MLM refers to Multi Level Marketing. It is essentially a
form of business involving several stratas of people who
market or sell a product. Also, it is very similar to
franchising, where the franchisor receives royalty for
every sale made. However in a MLM prototype, the royalties
can be distributed across several layers of people carrying
out the sales.

Top reasons why MLM is intrinsically faulty

Selling "dreams" vs. selling products

MLM is not very different from the pyramid structure of
marketing, where you have ten people "?selling' an idea to
ten others. These ten then try and catch the fancy of ten
more and so on. The process is infinite and the growth of
fresh recruits is exponential. So where's the problem you
ask? The issue lies in the fundamental truth of not trying
to sell the product per se, but getting more and more
people to buy into your idea. This not just creates false
hopes but also is doomed to saturate the market in no time.
In the next section, we elaborate why and how saturation
will occur.

Impending market saturation

The very fact that the growth of the MLM chain is
exponential is reason enough to evidence the fact that
saturation is going to happen, come what may. Take the
example of ten people who are trying to sell to another ten
and so on. Three levels down and you have 103 times the
people trying to "?sell' your concept to ten more. That's
1000 people in just three levels. Another few levels down
and you'll have 100000 people! That's way more supply than
any city or town could possibly have the demand for.
Imagine if the product is a cosmetic line. If you have 1000
or even 100000 people trying to sell you the same brand,
would you consider? Not really!

Dynamics of market demand and supply

There's a reason why economists exist. They understand the
nuances of the demand supply chain and the fact that it's
dynamic and transient all at the same time. The reason
being changing demographics that determine the need for a
product, behavioral patterns, societal status etc. all of
which play a big role in creating demand for any line of
products. Consider this. There are people who will almost
always purchase substandard products simply because they
suffer from the low price tunnel syndrome! Then there are
others who will purchase only high priced stuff even if it
means low quality or something trivial and unnecessary. So,
businesses which have even the best of products will
typically have a tough time finding their ground on where
the product will sell and what's the optimal time. So
imagine an MLM mode of marketing where demand is still the
same but supply is expanding exponentially. Shocking isn't
it? And what's scarier is that all of it is happening
without anyone's notice.

False hopes

Most recruits in an MLM marketing scheme will need to
purchase a certain percentage of inventory every month,
irrespective of whether they sell it or not. This can eat
into a substantial amount of the revenue earned through
sales. Then there are those who make not make a sale but
will still need to keep purchasing new stock. However legal
recognized MLMs will have a prerequisite that a recruit
will need to sell off atleast 70% of previous stock before
purchasing new inventory. This prevents undue hoarding.

Relationships gone sour

MLMs have not surprisingly been the cause of the disruption
of many relationships. Be it friends or family, the people
you have "sold" your idea to, may get lured into the
scheme. If later on, they do not succeed for some reason,
they may end up losing a lot of money along with their
faith in you. Many friends and families have suffered
broken ties because of the sheer falsity of MLMs.

The bottomliners are the losers

The ones at the bottom of the pyramid chain or MLMs are
typically the ones to lose out. The reason being all their
royalty earned through any sales made, will be shared among
those higher up in the chain. This is the proverbial
example of "being at the receiving end" of things.

MLMs are intrinsically flawed because rather than selling
products, they sell false hopes to people. Businesses are
built and grown on trust, confidence and goodwill. If these
fundamental characteristics are lacking, no business will
ever succeed in the long term. That's why MLMs are
outdated, done to death and do not work anymore.

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