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Orginally posted by rajcanada
Though I am not part of any MLM scheme, they are not scam or fraud as such. You have to recruit people, people pay the company, and the company pays a part to you.

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The reason I label all MLM type schemes as scam/fraud is because they are inherently not workable as a business model.
The people who start the scheme and those you control the core of the business know this - they are the people who actually profit from the whole scheme.

Show me one single MLM scheme that does not have multi-millionaires at its core.

Also show me one single MLM scheme that has not been the subject of some govt. anti-scam investigation or some other kind of fraud/rip-off controversy.

Do you have any idea how many investigations Amway, Quixstar, etc. have been through with the FTC?

How many individual and class-action lawsuits that group has faced, defended, settled, and are still battling in the courts?

Back to the first point I made - an MLM scheme is inherently an unsustainable business model.
You must be familiar with the basics of demand/supply in a merket-driven economy (basic high school economics).
The basic assumption of an MLM is that there is an infinite demand for the goods and services that the company offers.
The only way it can work *profitably* for everyone involved is if this assumption is true - if people go on buying the products at an ever increasing rate.

This simply does not happen - there is no product that has an infinite demand.

An MLM model is destined to fail sooner or later - how soon or how late depends on how many new recruits the existing members can find.
If enough new members can be found at an increasing rate, then the business sustains itself on the membership fees and the purchase of the products from the members themselves - but that is again limited.

After all, how many herbal shakes can you drink in a day ?

It is not a business model that can succeed and profit everyone involved.

Not to even mention the real social cost of these kinds of schemes - the ways in which a lot of members end up screwing up their lives and personal relationships because of this.

N uf said - I guess you get my point.

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Orginally posted by pratickm

...The people who start the scheme and those you control the core of the business know this - they are the people who actually profit from the whole scheme...

...Back to the first point I made - an MLM scheme is inherently an unsustainable business model.
You must be familiar with the basics of demand/supply in a merket-driven economy (basic high school economics).
The basic assumption of an MLM is that there is an infinite demand for the goods and services that the company offers.
The only way it can work *profitably* for everyone involved is if this assumption is true - if people go on buying the products at an ever increasing rate...

This simply does not happen - there is no product that has an infinite demand.

An MLM model is destined to fail sooner or later - how soon or how late depends on how many new recruits the existing members can find.
If enough new members can be found at an increasing rate, then the business sustains itself on the membership fees and the purchase of the products from the members themselves - but that is again limited.

After all, how many herbal shakes can you drink in a day ? ...

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First point is true. The people who start MLM would profit the most.

MLM is basically set to replace the usual distribution channel. Instead of wholesaler, distributor, middlemen and retailers they have their recruits or agents doing that work and they share the profit which would otherwise go to wholesaler or distributor. Some companies make their own products and some do not.

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Orginally posted by BlueLobster

Here's some more info on this

http://www.canadiandesi.com/read.php?TID=1379&page=1#8550

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Thank you BlueLobster for your link ...got enough info.