Are All MLMs A Scam?
MLMs or Multi Level Marketing schemes tend to get a lot of publicity (usually bad!) but I was wondering whether that is everyone's experience.
I have been reading several reviews of different MLM schemes both within WA sites and also outside, and I have seen people focusing on certain aspects of them - like really good products, but not mentioning any of the other aspects associated with MLMs that can cause problems. I have even read reviews that have completely misunderstand the company they were reviewing and didn't even realise it was an MLM structure.
What is Multi-Level Marketing?
For those of you who are not sure what an MLM is - basically it is a scheme that has products that you access, although in many cases these have to be bought from the company first. Then you make a commission on the sale. However you also recruit new members into the scheme and you will receive a commission for each new recruit.
What differentiates it from affiliate programmes is that you also receive a commission from each sale or recruitment made by any of your recruits. It works like a pyramid structure your recruits are lined below you and then their recruits are lined below them. You end up at the top of your own mini pyramid, whilst you are part of other people's pyramids above you.
The Difference Between a Pyramid Scheme and a MLM?
There are those that will say there is very little difference, other than pyramid schemes are illegal in many countries. They operate in the same way as a MLM but they don't have any products it is purely recruitment based.
Research would show that even within the largest MLM schemes such as Tupperware and Avon which are frequently used as positive examples, the potential to earn large amounts of money (which is often what is advertised) is next to impossible because of the nature of the structure. (i.e. 70% of all funds will be paid out to the very top layer which is usually the founding group). Once recruitment stops the scheme collapses.
Is Wealthy Affiliate an MLM?
I know this question has been asked a few times but no it isn't for a couple of reasons. Firstly there are no products to buy, it is a training programme (and web hosting service), which you pay to access. You don't sell this product onto anyone else.
Secondly although it has an affiliate referral programme this is completely voluntary and independent to the monthly fee and the training material that you access. Finally each member you recruit becomes their own business and you don't receive any commissions for anything related to the work that they do, or any recruits that they bring into WA.
Finally the funding structure of WA is sustainable i.e. you won't lose all your money if you fail to bring in any affiliates of your own to WA.
I know it is a highly controversial subject but with new members joining WA all the time it is probably no harm to chat about it again.