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It boggles my mind when I hear people compare network marketing to a pyramid. Yes it’s true that when you look at how MLM is structured it is typically shown in a pyramid fashion. But what most people don’t understand is there are some key differences between a legitimate network marketing opportunity versus an illegal pyramid or chain letter schemes that tend to give MLM a bad rap.
You need to fully understand that multi level marketing is a perfectly legal way of moving merchandise. You are getting paid on the movement of products and services. Another key component is your company must adhere to guidelines such as paying commissions on product sales and permitting product returns of products kept in good condition within a certain time period. It’s a known fact that some of the biggest companies in existence today are involved in network marketing.
Another key factor between an MLM opportunity and an illegal pyramid is the fact that multi level marketing actually moves a valuable product or service whereby the payout of commissions come from sales of that product or service. An illegal pyramid typically offers no product with any real value and usually operates on the principle of payment for recruiting people. I’ve even seen some of these illegal pyramids try to offer some kind of product or service serving as a front but without real value or worth.
A big factor in the legitimacy of network marketing is consumers can and want to purchase your product or service without being forced to become a distributor or representative. Although most do, distributors do not have to buy the product to market it. When it comes to an illegal pyramid people are forced to join the network to participate.
Lastly, in a legitimate network marketing opportunity, everyone benefits due to the fact that consumers get valuable products and services and those who sell them reap the rewards for their marketing efforts which can be incredible because of the multiplication effect. In comparison, a pyramid is typically a get rich quick scheme whereby only a few individuals benefit. Once the saturation takes place, the folks on the bottom of the pyramid run out of new prospects to join and inevitably lose money.
In closing, network marketing provides the basis for building a long term business that offers a valuable product or service. An illegal pyramid scheme may produce a few winners but a lot more losers who get hurt because nothing is purchased and only the transfer of money takes place.
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