The Case Against MLM

The Case Against Multi-Level Marketing (MLM)

As the famous saying goes: There are many roads to Jerusalem. I believe there are equally, if not more approaches to accumulating great wealth too. However, it is simply premature to assume that all methods are completely feasible and desirable. This is a rather feeble attempt to present the case against the widely popular business sales tactic, namely multi-level marketing, also known as pyramid selling. Although the altered version of MLM is legal in the context of the law and regulations pertaining to commercial affairs, its inherent exploitative nature leaves it an undesirable ploy to achieve spectacular sales. An inquiry shall be made in the paragraphs below.

This seemingly profitable business transaction lands the new members (they are NOT classified as investors) into financial jeopardy by leveraging on their optimism on the positive general outlook of the business or industry. IBOs, in short for Independent Business Owner, is merely an artificial term generated by "financial psychologists" to form the illusion that one is a business owner and can receive a substantial passive monthly income without doing any productive work. Productive work here is defined as creating sales by selling products to customers, who are usually friends or relatives of the IBOs. This is what I identify as emotional selling, where the IBO intentionally or unintentionally deploys his or her relationship with another party as a marketing tool to influence him to purchase the overpriced product in order to push sales figures to new heights. Why do I mention overpriced? Direct selling provides convienence to consumers by bringing the product right in front of them but that comes with a cost. The addition of a distributor network pushes up prices due to the inclusion of a third party between the producer and the consumer. Thus, it is not surprising to find the prices of products highly inflated relative to the production costs.

Even so, it is necessary to acknowledge the fact that this marketing and sales system has proven to produce magnificent profits for the firm with its line of products. However, this delusional success has been achieved at the expense of violating business ethics and principles. Philip Fisher wrote a book called "Conservative Investors Sleep Well", while I hope I can write "Ethical Businessmen Snore Loud" sometime in the future haha..

PS: I find it a pity that due to time constraint and mental strain serving in the Army, many arguments are not thoroughly developed and elaborated with valid, compelling examples. This load of crap would have failed as a GP essay, but I think it fits the criteria as an interesting read and a time killer. Anyway there is still SO much for me to learn, any idea how to compress 12 years of academic load into 2 years of personal learning? Accounting, Business and Economics integrated in a 2 year course. How does that sound to you?