As an expat, I spend a lot of time cultivating friendships through social media. When a longtime girlfriend suggested I “meet” an artist and entrepreneur looking for a business partner in South Korea, where I am based, it only took us a matter of days to schedule a Skype chat.
Of course, I did what a millennial would: I googled her. It turned out Deborah was an Ivy League graduate whose success in a tough, creative field was documented by nothing less than her own Wikipedia page, studded with big names and impressive awards. I was slightly intimidated but excited to meet her, curious what business she had in mind.
The chat window revealed a lively and warm face, and conversation flowed easily. After half an hour of congenial chitchatting I realized what was being offered—an opportunity to get involved in a multilevel marketing (MLM) business.
I was shocked. Deborah was a brilliant woman with enviable success by any measure. She was eloquent and charismatic. Why on earth would someone like that be involved with something like this? I didn’t mince words in asking her, “How is this different from a pyramid scheme?”
She appreciated my candor and did not shy away from giving me direct answers. There were a lot of questionable companies engaged in unethical practices and making headlines, she explained, but not all MLM companies are created equal. Point by point, Deborah built a case for an ethical multilevel marketing business that truly supports people’s livelihoods and dreams. By the end, she had sold me—not on the idea of becoming a wellness consultant, but on the fact that I had sorely misjudged the industry.
Today’s Multi-Level Marketing Ain’t Your Momma’s
It wasn’t just Deborah. I’d started to notice some of my friends—women with full-time jobs and degrees from elite schools—post on Facebook about the income they’re earning selling skin care products or hosting “wine parties.” I recently reconnected with my childhood best friend who told me she’d just abandoned a career in education to work full-time selling anti-aging products. When we met for the first time in 15 years, she had just come back from a glamorous tropical vacation, “unthinkable on a teacher’s salary.”
MLM is no longer the domain of the middle-aged neighborhood mom. It’s your real estate agent, doctor, lawyer, entertainment executive, and overachieving girlfriend who just had a baby. The ubiquity of social media means that you can create invitations with mere clicks, and even host a virtual “party.” In 2017, top MLM companies are raking in billions in revenue. Can such numbers be wrong? How out of date was my kneejerk aversion to the business model?
Listening to Deborah’s pitch, I could see how attractive MLM could seem. Deborah thought to recruit me because, like her, I am an artist and freelancer. An opportunity that allows a woman the freedom to pursue her dreams, on top of (theoretical) unlimited earning potential, is the veritable holy grail.
In 2017, MLM may be a new facet of the “gig economy,” characterized by at-will, flexible employment in precarious economic environments. In many instances, MLM businesses are women’s version of driving for Uber and Lyft, a supplemental job that earns you extra cash on your own time. Of course, some women drive and some men sell makeup, but the larger gender-based trends are unmistakable. The marketing pitches of some of these companies explicitly emphasize sisterhood and empowering women with the option to become financially independent stay-at-home moms. Women post dreamy photos overlaid with inspirational quotes in pastel script fonts, urging you to embrace your dreams and start living the life you’ve always imagined.
Lack of Opportunities Drives Multilevel Marketing Growth
Learning about changes in the MLM world, I was suddenly made painfully aware of my urban provincialism. Having lived in coastal cities all my life, my reflexive reaction to MLM had always been one of extreme wariness. I had never been to a Tupperware party, and had never been pitched an opportunity to become a “consultant” — until now. Many of my friends in Los Angeles and New York City report having similar experiences.
On the other hand, trends are different in middle America. Acquaintances from Idaho to Missouri said they know of many involved in MLM. On a typical Friday evening, one might go to a jewelry party. “It’s a way to support friends who need it,” a friend from a rural area explained. By many accounts, MLM flourishes in climates where many people face a limited range of opportunities or find themselves excluded from the conventional workforce.
I was surprised to learn that in-person sales events can serve a positive function. For a community that isn’t inundated with good options for entertainment and leisure, the built-in sociability that direct sales events require can be a boon. A Forbes article forecasts that the MLM model will experience a growth for retirees, and the possibility of earning post-retirement income is only part of the equation. MLM gives retirees a reason to leave home and engage with other people, and that vital sense that they are engaged in economic activities once again.
Where This Economic Model Is Weak
I am all for low barriers to entrepreneurship and applaud any woman who hustles to provide for herself or her family. But I wondered whether MLM could be a good answer to depressed communities. Associates sell to their friends, who may be peddling products for another brand themselves. The money gets passed around in a small town, but the biggest profits can go to the remote headquarters, and whoever is at the top of the collective commissions tree. There can also be a profitability ceiling as MLM-based businesses saturate a community. If friends and neighbors are competing for the same business, how many customers will remain for detox shakes or press-on nails after a while?
Further, a common MLM practice involves selling to your friends and recruiting them to sell for you. But blurring the line between the personal and the professional can damage relationships. If a company prides itself on promoting “sisterhood,” it should not encourage you to subject all of your acquaintances to unsolicited invites and high-pressure sales pitches.
However, these trends may be changing as virtual connections and transactions allow many sellers to transcend the limits of geography and existing social circles. Deborah, for instance, says that she built her thriving business largely through digital networking. She suggests the necessity of relying on one’s friends is a fallacy based on a common but unwise MLM practice. If a budding entrepreneur is willing to learn the new set of skills required to expand the market digitally, as Deborah did, she may reap the rewards of sustainable profitability and help to shift common perceptions about MLM.
Some Tips If You’re Considering This Kind of Gig
If you are considering getting involved, here are some pointers gleaned from interviewing many former and current MLM associates.
Beware of the difference between direct-selling and MLM, and check how exactly you will be paid. Direct sales is any means of selling directly to the consumer, whereas MLM describes different modes by which sellers receive compensation, including by recruiting other sellers.
Be realistic about the risks associated with maintaining your own inventory and the associated high start-up costs, which can keep new sellers in a vicious cycle of buying more with hopes of selling enough to offset losses. And make no mistake — this is a salesperson’s job. Someone who has worked in both conventional sales and MLM told me the required skills for success are similar.
Know that MLM is, in many ways, “the Wild West”: standards of ethics and quality vary wildly, so do your research. You can peruse trade association guidelines, but as a former employee of the corporate side of a MLM company confided in me, the seal of the Direct Selling Association is not necessarily a guarantee that a company is profitable or well-run.
In an industry with so much churn-and-burn, company history matters. Look at industry numbers for companies that are more than five years old and are developing thriving and sustainable businesses beyond the first few dozen builders who got in at the beginning levels. Fast and frequent turnover in leadership is, as with any industry, a red flag.
Lastly, a common ingredient I have found among successful and happy MLM sellers is a genuine enthusiasm for the product. Sell something you can genuinely get behind, and it will probably be easier on your life and your bottom line.
Anyone who has built a successful business knows there are no freebies or shortcuts in life and entrepreneurship. One must put in hard work and persist through setbacks to see any measure of sustained success. Someone who understands this stands a much better chance of doing well in any venture.
While I declined Deborah’s offer for now, I was happy to try out a few of her products and am interested to observe how this industry will develop with changing technologies and demographics. If MLM companies can self-regulate, adhere to stronger sets of ethics and standards, and benefit local economies to a greater extent, it can follow the path of online dating — once reserved for outsiders, now the new norm.
In the meantime, please don’t send me any unsolicited Facebook invites.