Hello there! Welcome to my "Is Multi-Level Marketing A Pyramid Scheme?" article!
Nowadays, our needs and wants have been growing. With that, we want to find reliable jobs and other sources of income.
One industry that be an answer to that is the direct-selling industry.
Multi-level marketing companies are one of the types of direct-selling.
Today, there are a lot of MLMs that offer great products and also an opportunity to start your own business to earn money.
However, as these companies continue to expand, scams arise too. One example is the pyramid scheme.
In this article, we will tackle the differences between an MLM and a pyramid scheme because people often think that they are the same.
Also, we will answer the question, is multi-level marketing a pyramid scheme?
Le's get started!
What is Direct-Selling?
Before we talk about pyramid schemes and multi-level marketing companies, there is no any better way to understand these two by tackling their "mother" or the origin.
Direct-selling. What is it?
Direct selling is basically the method of selling products and services to customers in a non-retail environment.
Instead, if you are a direct-seller, you sell products either at your home, or your work or anything that is a non-store location.
Being a direct-seller, you can earn commissions on each sale you make.
How does it work?
There are various direct sales company out there, providing different kinds of items.
So the first thing you need to do if ever you want to be a direct-seller, is to pick the right company and products.
Make sure to pick the products you are interested in so that you can easily promote them and make sales.
Afterwards, you just sign up and then purchase a starter kit or product packages that you wish to sell!
Then you can start selling and earning commissions
If ever you want to know how to succeed in direct-selling, click here!
What is Multi-Level Marketing?
Direct-selling has a couple of types. One of these is the multi-level marketing.
What is an MLM?
To be honest, I can just easily copy and paste my definition of direct-selling here. However, the only difference is that MLM has the aspect of multi-level marketing.
(Well, you don't say. Duh.)
With MLMs, there is a new addition to the equation. If in direct-selling you earn commissions on each sale you make, in an MLM, you can earn money in two ways; by selling and by recruiting new distributors.
How does it work?
Well, the same thing with direct-selling.
You need to choose a great company and products you want to promote.
Buy a starting kit or even sometimes, pay for a membership fee.
Start selling and then recruiting people.
The more people you recruit, the larger the network you will have. Remember, you earn a commission from your recruited distributors' sales.
If ever you want to know how to succeed in MLMs, click here!
What is a Pyramid Scheme?
Pyramid schemes are sometimes mistaken as an MLM business.
However, let me tell you this, pyramid schemes are scams and are illegal! It is best to avoid them.
A pyramid scheme is a business model that only involves people to recruit others.
It is called a "pyramid scheme" because it resembles a pyramid structure.
Pyramid schemes offer a very promising amount of income to people and all they have to do is to recruit other people.
In pyramid schemes, no services or products are offered.
How does it work?
The picture above shows how a pyramid scheme works.
This business model is very unsustainable.
If you learn more about it, you will know that the people at the top of the pyramid structure, are the only ones who will earn money.
While the people at the lower part of the pyramid, especially the newer recruits, they are the ones who will more likely to lose money rather than earn money.
Here are companies that were proven to be pyramid schemes and were shut down.
- Vemma Nutrition Company
- Sunshine Empire
- Nouveau Riche
- Nexgen 3000
- Holiday Magic
- Fortune Hi-Tech Marketing
- Burnlounge Inc.
Is Multi-Level Marketing A Pyramid Scheme?
To answer your question, "Is multi-level marketing a pyramid scheme?", NO.
Multi-level marketing companies are not pyramid schemes because of the sole reason that MLMs offer real products and services.
They do not just focus on recruiting people.
As time passes by, pyramid schemes learned how to adapt and improvise.
Some MLMs out there are pyramid schemes in disguise!
To make you you are safe from scams and pyramid schemes, you really have to research first before signing up in MLM companies.
You can check out my reviews about MLM companies. There, I will provide you answers whether they are worthy or not and if they are pyramid schemes or not.
Click here if you want to check them out.
Also, the Direct Selling Association can help you find out pyramid schemes using their guidelines here.
This is How I Make Money from Home!
In my opinion, there is nothing wrong with earning money with MLMs. However, it is too risky.
I have made a lot of reviews and research about different MLM companies. And let me share this to you.
The chances of you earning money is less than 1%. Apart from that, it requires too much work. You have to find customers and sell to them personally.
In my case, how I make money from home is through affiliate marketing.
All I have to do is to promote products and then I earn money each time a referral of mine makes a purchase!
It is a lot better than MLMs and direct-selling.
- You can work anytime and anywhere
- Your boss is yourself
- No need to sell products
- No need to recruit people
- Fun and easy
- You can earn a PASSIVE INCOME!
I have been doing affiliate marketing for quite some time and I can really say that it is a nice way of earning money online!
In fact, I have been earning affiliate commissions on a daily basis. Here's my proof!