Sarah Grace Goolden
It starts with a Facebook message from an old friend you haven’t talked to since high school. After the pleasantries are exchanged, she brings up a recent business opportunity she’s gotten involved with. She claims it changed her life and can change yours too! Stay-at-home moms can make money from the comfort of their own home selling products like essential oils, makeup and clothing. Why wouldn’t you want to join her? Don’t you want to be your own boss?
There are a lot of reasons to be wary of Multi-level Marketing. It’s a practice that targets mostly women and, while some are reputable, a lot are dangerously close to pyramid schemes. MLM is just a method of selling products. It involves salespeople who buy the company’s products in bulk and sell them while recruiting new salespeople, being paid from commission. The products usually cannot be bought in stores, although there are exceptions like Tupperware and Mary Kay.
MLMs have existed since the 1920’s but have recently surged in popularity, thanks to social media. In the 19th century, housewives saw MLMs as a very attractive opportunity to make money from the house. Tupperware parties became popular for women at this time. Additionally, it allowed women to network and work with supportive sponsors. However, MLMs aren’t necessarily the empowering side hustle that they often claim to be.
Firstly, it’s important to understand that it’s less that women were drawn to MLMs and more that they are catered to draw in women. The products are those that women would be more interested in and would be easy to sell to friends, family and other female acquaintances. According to the Direct Selling Association, around 75 percent of direct sellers are women.
So a mom looking for some extra cash gets that Facebook message from her friend and decides to join. Now what? Now she needs to buy kits and sell the product. This is where she’s supposed to be making all the money- but if she’s not selling or recruiting, she’s not making any. In fact, she’s losing money. MLM is a profitable business plan because those selling the products will always need to buy the products. However, salespeople are left pouring money into things that may not necessarily turn a profit. The goal is to recruit more and more people who will struggle with the same problem. The cycle continues.
It’s also very hard to make a profit without a huge pool of friends to sell to and recruit. Without leads, there is no money to make. Often times, MLMs are advertised as side hustles, while they actually require a lot of effort to be successful. In order to reach a wider audience, many even spend money on advertising and have expensive parties.
Some people think MLMs are pyramid schemes but there is a big difference. MLMs have a product that they are selling while pyramid schemes rely solely on only recruiting new salespeople. MLMs are not pyramid schemes but they are predatory to women and are not as profitable as they are led to be.
MLMs may be great in theory but in practice often don’t provide the results promised by representatives and salespeople. As their popularity and social media influence increase, it’s important to do background research before diving into a financial opportunity that may not live up to its promises.