Most people tend to place Pyramid Schemes and MLM together. Seems like both were mistakenly simply labelled "evil" due to that fine line in differentiating them. Lets learn the difference between both Pyramid Schemes and MLM.
Pyramid schemes are pure scams. They cheat people of their hard-earned cash by convincing the public to make payments for non-physical items or services. These products or services could be non-existent or even offered for free. But pyramid schemes tend to mask the selling of these "non-existent" items and services by re-packaging them into a product with a price tag. Most online work from home or easy to profit schemes work in that manner.
However, MLM selling is practised by businesses all over the world since the 1920s. MLM is a form of marketing strategy that has been proven to be very effective in generating hype and exposure for businesses selling almost anything. Due to its capability to expand and reach millions by going the public route, it has been the best way for any simple and effective marketing campaign.
Did you know your retail industry takes form as one big MLM?
Let me just state an example.
Business A is a manufacturer. He doesn't have the ability to sell his item himself.
He looks for businesses B and C to market his items for him.
Business B takes the product and puts it into the retail front of business D, E and F.
Business C takes the product and puts it into the retail front of business G, H and I.
When a sales is made in either D,E,F, G,H,I, everybody up the line(A&B/A&C) profits for the business.
Are they un-legit? Of course not, else, it would have been long shut down by their local governments all over the world.
Did you know that Everything Under Global simulates the retail industry online?
This is one of the simpler examples out there. There can be extended multiple levels to the retail industry. The retail industry and its millions and billions of shops out there is in fact one big MLM system. However, strong systems have been in place to restrict most ordinary commoners from entering the game unless you've got a ton of market on your hands, have money to invest in that will allow a business to entrust the selling of the products to you.
Pyramid schemes exploits this phase. They know that the barriers of entry to selling can be hard for ordinary consumers who wants to get into doing their own businesses.
This is where a business MLM marketing plan can turn black.
In order, to generate more hype and increase sales and find distributors, they make it very easy for distributors to enter the business game. Even the ordinary consumers who have no market share or no money can enter the game.
Nothing wrong with that. A business is free to allow anyone into their distributorship programs.
The problem starts when the individual is not making any money and starts to lose interest in the business. This is because, being in business simply means making money. No point if a distributor gets into a business program but yet is not able to sustain themselves.
The business have to think of ways to keep its distributors less he/she runs away. So what happens is that a business then have to turn to un-legit business selling (such as selling of easy membership packages and or the promise of business opportunity) to make sure their distributors can find a way to sustain himself for business.
Pyramid Marketing schemes are bad, but businesses don't have a choice. They know its bad, but they have to do it. Its a matter of morality for those who comes to this stage.
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