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MLM and the Ponzi Scheme saga

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Multi-Level Marketing (MLM) also known as Network Marketing has suddenly gained prominence as a result of the ravaging COVID-19 pandemic that has rendered lots of persons who are either suffering from massive wage cuts or even lost their jobs.

Global economies have been forced into recession following the bludgeoning impact of the virus. Consequently, many people have resorted to so many unorthodox schemes in a bid to make out a living.

One of them is MLM or network marketing.

This Scheme had been around for a long time with most MLM outfits emerging from the US in the ’90s. The scheme basically involves a company coming up with products that could be sold via a system that connects different Individuals in a pyramidal structure.

A prospective upline is required to register via a financial obligation with the company. That upline will need to introduce two persons into the system. To further extend the pyramidal chain and kick-start the multiplying effect, these two persons are expected to introduce two other persons commonly referred to as downlines.

With sales of products by the downlines, profits would be distributed in that bottom-up link. As the chain is extended, downlines als earn a profit. Interestingly, the upline turns out to be the biggest beneficiary, earning from each member of the pyramid.

Simple as it sounds, there is a myriad of cons that are noticeable in this business approach. Firstly, sourcing of downlines can be a big headache as most prospects view this as a scam, considering the juicy offer from some of these MLM outfits.

Furthermore, the market is not as profitable, especially for new entrants to the scheme. However, many of these new marketers get frustrated when it becomes too cumbersome to obtain prospects as downlines and they consequently leave, only to be replaced by another new set of entrants.

At the end of the day, only a few get to make it to the top, but this is fraught with a lot of effort and sacrifice.

The question as to whether MLM’s are Ponzi schemes remains one issue that beclouds the judgment of a lot of persons.

While a good number of persons hit it big with MLM schemes, a vast majority remain worse off than when they joined the networking market.

Another fear many persons harbor towards this scheme is the fact that several MLM’s are fast emerging and yet some of them do not have any products for sales. They promise quicker avenues to become rich and promise all paid expense trips to various countries abroad and many more.

While this article is simply an opinion, the advice to prospective network marketers is to appraise the situation before jumping into any of them. Albeit, a good number of MLM’s have helped in changing the lives of several Individuals for the better, the same cannot be said of a lot more.

Thus, it would be wise to carry out extensive research, seek the opinion of mentors in this field, and also Individuals who have failed in this regard.

Although, several marketers only encourage prospective entrants to the market to engage in programmes organized by the MLM outfit, which is meant to train prospective marketers. Seeking knowledge would do one no harm, but it is wise to consider the options available and know if the motivation is there to engage in this tedious venture or not.

This is an opinion article. The views contained in this article is solely the responsibility of the author and does not in any way reflect the views of Hanoky Media.

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