While I personally believe that there are some MLM (multi-level marketing) companies out there that have a valid product and a solid business structure, I also know that such companies are in the minority. The majority of MLMs – even if well-intentioned – can never deliver on the promises they make.
Even large and well-established firms like Herbalife are finding themselves coming under scrutiny these days, being accused of selling products only within the own ranks and not to outside users.
I came across this great article the other day. The author uses reason and logic to show how most MLMs follow a flawed business model – too much supply and too little demand. He writes:
Not only is there no one assigned to make the decision of how much is enough, the MLM is set up by design to blindly go past the saturation point and keep on going. It will grow till it collapses under its own weight, without even a bureaucrat noticing. MLM is like a train with no brakes and no engineer headed full-throttle towards a terminal…In a normal company a manager says, “We have enough, let’s stop hiring people at this point.” But in an MLM, there is no way to do this. An MLM is a human “churning” machine with no “off button.” Out of control by design, its gears will grind up the money, time, credibility, and entrepreneurial energy of well-meaning people who joined merely to supplement their income.
The website even tackled some of the moral issues inherent with MLMs – like targeting friends and family and the ways we can become so focused on the bottom line that we end up alienating the people we love.
It should give us some food for thought. Here is the complete post: http://www.vandruff.com/mlm.html