How does network marketing work?

[itsgiantjoe]

Why is it so hard to define and why do people go around and around the topic when trying to sell it to you? Why is it a lifestyle? How does money get made .

 

[TiedInsurer]

Why is it so hard to define and why do people go around and around the topic when trying to sell it to you? Why is it a lifestyle? How does money get made .

Network marketing aka (multi-level marketing/ direct selling) basically just means that the company selling the product, bypasses traditional channels of marketing, and instead sells their product to salespeople, who proceeds to sell them to other people, who proceeds to sell them to other people, who proceeds to sell them to other people.....

It's a lifestyle because you will not be able to sleep at night, knowing that you didn't move enough inventory this month to cover your costs of operation, and you're going to lose money again this month. Your entire life will revolve around the MLM company because you're stressing out so much about how you went in expecting them to pay you, but now you're paying them instead.

Money get made like this:

1. MLM company makes a product for dirt cheap. Say $1. Claim the item has a retail price of $100. There's a reason why all of them do health and beauty. You can make all sorts of wild claims for your product and charge correspondingly wild prices, all for very little cost. Just make sure you don't poison someone.
2. MLM company sells the product to tier 1 resellers for $50, based on the claim that the product is retailing for $100. Convinces the T1 reseller to buy a lot of the stock to resell.
3. T1 sells the product to tier 2 resellers for $60, based on the claim that the product is retailing for $100. Convinces the T2 resellers to buy a lot of stock to resell.
4. T2 sells the product to tier 3 resellers for $70, based on the claim that the product is retailing for $100. Convinces the T3 resellers to buy a lot of stock to resell.
5. Rinse and repeat

This is a simplified version. In reality, every reseller starts out as the lowest tier, and they have to recruit more resellers in order to get the really favorable rates available only to Tier 1 resellers. This incentivises everyone in the structure, to sell on the premise of recruiting more people to sell for them. Nobody actually sells the product to end consumers, because you earn sh*t money and can't love the dream that way. (Besides, there aren't many idiots who would actually buy that crap for full $100 "retail" price).

The problem with all this, is that there's a limit to how many tiers you can have. Singapore has a population of 5.6m. Say there are 10 Tier 1 resellers in Singapore. Each of them manage to find 10 T2 resellers to work under them, and those manage to find 10 T3 resellers each etc etc. The number of people "working" in this reselling business would be:

T1: 10
T2: 100
T3: 1,000
T4: 10,000
T5: 100,000
T6: 1,000,000
T7: doesn't exist, not enough population to sustain. Crafty individuals start recruiting overseas, and this plague is on it's way to becoming international.

From the above, T6 are the idiots who are paying the salaries of everyone else. T6 people will never make any money doing this. Instead they lose money buying product that nobody wants, and failing to resell them.

T5 are the people who make way too little money off this to quit their day job. T4 are the people who make the same amount of money as their day job. They've basically switched career paths to "salesman". T3 are the people who have won this game, and are living the high life. T2 and T1 are obscenely rich and never have to work again. The founder of the MLM company is T0, and buys an island in the Caribbeans.

If you've noticed... 1,111,110 people are in this network marketing scheme. Only 1,110 people "made it". The rest didn't become more well-off. The vast majority lost money doing this. This is a rat race that's even harder to win, then the conventional office rat race. The odds are stacked high against you.

One of my favorite talk-show segments that explores this: https://www.youtube.com/watch?v=s6MwGeOm8iI

 

[Thoreldan]

Remember donkeys years ago fresh from the army, friend asked me to attend career talk on "networking".

Enthusiastic cuz I'm an IT guy, turned out to be "network marketing".

 

[occifer]

It cant work well these days with so much online shopping.

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